Almost three years ago, the stock market was raging forward, consumers were buying their second and third homes, waiters were being tipped 25-35%, and people were thinking their next raise was on the horizon. People were fearless.
Then the market tanked. Jobs were lost. Goods went unsold. And businesses clamped down. Heck, even major media companies began to collapse like an opera singer at a Cardinals baseball game in late August.
What changed to create such a pother in the markets? I think it was caused by consumers coming face-to-face with their fears.
Everyone heard stories about business struggling, neighbors losing their jobs and even their homes, and retirees running out of their investments, causing just about everyone to analyze their own situations to determine what they would do, “just in case”. So just about everyone tightened their belts to wait it out, watching every report they could find and researching every bit of gossip they heard that could help them determine the future.
This isn’t right, is it?
The stock market to me isn’t a barometer of a company’s or industry’s worth. Rather, it’s a barometer of the country’s overall fear level. In good times, we buy into almost anything, regardless of whether it’s worth it. And in bad times, we flee. For proof, look at what happened to the stock market over the past three years. Did those companies really lose half their value because they no longer provided a good product or service? Hardly. They lost because people sold their stock in droves, plain and simple. And the more people sold, the more others became worried to the point that they sold their shares as well. And the spiral downward continued.
Funny, but that’s not how anyone is taught to play the stocks. You buy low and sell high. Mr. Potter, in the Christmas classic “It’s a Wonderful Life”, made this really clear way back in the late 1940’s movie when he chastised those in Bedford Falls for “losing their heads” and selling things for pennies on the dollar out of fear, while only George Bailey and Mr. Potter himself were smart enough to stay calm and buy things knowing that the time was right. Years later, Potter owned most of the city while everyone else tried to figure out why they had so much less.
The thing is, none of this will change while people have fear. You can reduce your prices by 50% and still not sell. That’s because fear causes paralysis.
But this is nothing new to a good salesperson. Fear is the number one reason people do not buy (of those who can). What’s more, fear is the number one reason people cancel an order after making it. This behavior is so well known that there’s a name for it — “buyer’s remorse”.
So what’s an advertiser to do?
First, deal with it and stop trying to provide solutions that don’t alleviate the market’s fears (50% off sales enforce our fears). Understand that some people do not want to buy your homes, or products or services simply because they fear it will be the wrong decision and will cause them some major discomfort. After all, most people simply don’t want to be afraid. So regardless of how good your product is or how much the price has been reduced, or how “safe” purchasing it is, you won’t sell a thing to a market that fears making the wrong decision.
So get rid of their fear by making a purchase from you the “right” decision.
Since times have changed dramatically, so must your advertising. Fear is eliminated by knowledge, so you need to help people understand why they should not fear purchasing from you. But since this cannot be accomplished in ads alone, look for your advertising to build relationships with people so you can communicate more often with them. Get them to sign up for eblasts, tweets, etc. And then educate them, over and over again.
For example, potential new home buyers lament that they cannot buy now because they won’t get enough out of their current home if they sell it now. While that fear might be real in terms of their ability to get a jumbo mortgage, most people simply believe their current home is worth more and don’t want to “foolishly” sell it for less than they believe they would have received a year or more ago. But that’s foolish, right? The home they are looking to buy is likely much lower in price as well. So the two kind of cancel each other out, right? Plus, with mortgage rates still very low, a new home buyer might only see an increase of $500 or so in their mortgage now if they’re buying a bigger home. That’s likely less of an increase than it would have been a year or two ago. And an increase of $6,000 per year is little when weighed against the advantages of having a bigger, nicer home for the family.
But how do you get these fearful people off the couch?
Play to their fears, of course.
Homeowners now know they must pay their mortgage, and what troubles them is the fear that they won’t be able to in the future. Some should be worried, but not all (a simply prequalification form can separate the groups). For those who can buy, can their misguided fear of not being able to afford the home be overwhelmed by the fear of living their lives in less than desirable surroundings? Don’t people still want to chase their dreams? Don’t people still want to “keep up with the Jones'”?
I say yes, but remember consumers are sissies. I believe these consumers have to know that others like them have taken the plunge too. They have to see that the Joneses are alive and well and that their real fear is that they’re not living up to their own potential. And they must have more fear of their current condition than they do of moving to a new home.
So scare them, in a good way.
When your advertising generates relationship building email address, use them often. Pepper these potential customers with testimonials from your current customers frequently. Let your customers tell others why they should “take the plunge”. Let your customers tell others that they should have no fear. And let them tell others in eblasts, on blogs and in the “comments” section of news stories.
After all, we’re all sissies looking for someone to tell us everything is okay before we make a decision. So tell us all is well, over and over again. And then over and over again.
Next thing you know, everyone will be fearless and, with any luck, we can return back to a more manageable version of 2006.