Innovator’s Toolkit: Trust economy 2.0 — shifting purchase decisions
by Preetesh Sewraj (@iPreetesh) As consumers experience strain as the economic markets undergo turbulent times, we find that some organisations choose to take the tried-and-tested option and continue with their long-planned activities and launches. This may be a dangerous position, especially when consumer mindsets are evolving with the ever-changing economic climate. This change in mindset doesn’t only impact brand-owners but also those of us who play within the communication space.
A recent study evaluated 11 key influence areas and only 3 (27%) of the attributes were shown to be top-of-mind purchase-drivers for the consumer. Recommendations by close social circles proved to be the key driver. When a family member recommends a product or service, we saw that 80% of the sample claimed that this had the ability to induce actual product purchase (vs merely considering a product based upon a recommendation). This represents an increase of 4% points from 2015.
The trend is similar for recommendations from friends, which jumped from 76% (2015) to 79% (2016). We live in a media-rich world and media fragmentation is impacting the way consumers view brand messaging. This is a strong factor in consumers seeking out carefully curated social circles that they can trust to give them a view of how best to maximise their disposable income.
These carefully curated social circles also transcend physical proximity, and trust in internet reviews is also seeing growth by increasing from 39% (2015) to 46% (2016). This data shows a trend towards consumers moving towards a trust-based economy mindset similar to those found in the mid-20th century, when the challenge was not ubiquitous media exposure but instead too little access to the education that media exposure brought with it.
There are some harsh realities that also need to be addressed: the study shows that trust in traditional advertising has been on a steady decline from a 77% trust level (2014) to 69% (2016). Free instore samples also seem to have lost their sheen, as trust in sampling dropped from 76% (2014) to 72% (2016), especially as consumers explore online and then fulfill their purchase offline.
Other areas hit hard include celebrity endorsements, dropping from 51% (2014) to a mere 38% (2016) and recommendations by an expert (such as a dentist in a toothpaste advertisement) which saw a drop from 65% (2014) to 54% (2016). These two communication attributes suffer from the awareness that such recommendations are the result of a transactional relationship between the brand and endorser vs a genuine attempt to help consumers find the products that best fit their needs.
The message from consumers is clear: tried-and-tested methods of reaching them are no longer the only ones that have the ability to impact their purchase decisions. The level of consumer awareness has transcended from pure product mechanics to a general understanding of how advertising is designed to influence them. Consumers interrogate the communication they receive and ensure that this information is viewed in the context of competitor product communication.
The need to innovate in the way we speak to consumers is of paramount importance to ensure that our clients find success with their offerings in an ever-competitive market. This does not mean a complete revamp of the marketing plan but instead a better marketing plan-mix that is willing to incorporate new thinking and also willing to tackle tough challenges such as creating grass-root loyalty that ultimately generates word of mouth.
Preetesh Sewraj (@iPreetesh) is the CEO and chief innovation analyst at Product of the Year South Africa. He is passionate about the various facets of innovation that touch our lives and improve our life’s journey. He contributes the regular column, “Innovator’s Toolkit”, looking at innovation trends and the impact of innovation upon our ability to capture the hearts and minds or consumers, to MarkLives.