New Approach Addresses Changing Mindset

While consumer confidence has certainly tanked in this uncertain environment, business has not come to a standstill. But it takes a different approach to reach today’s gun-shy consumers, whose mindset is radically different than a year ago.

First, let’s look at the big picture. Yes, foreclosures are up and their effects have been seismic. But it’s important to remember that nearly one-third of homeowners (24 million) own their homes outright. And households that do have mortgages owe on average 55% of their home’s value, meaning they have a sizeable cushion of equity. What’s more, 81 percent of mortgages are at fixed rates, with a median rate of only six percent.

Clearly there is still opportunity out there today, providing you tell your story the right way and connect to consumers in a manner that resonates with the tenor of the times. Here are some key aspects of consumer sentiment today and what they mean for our industry. Some of them are contradictory, but that is not surprising. In an era of uncertainty, consumer behavior becomes less predictable.

Addressing Fears

In this environment, even people with relatively secure jobs and plenty of equity become risk-averse. They are afraid to spend money. If they do spend, they don’t want to take any chances. They are looking for reassurance.
Reassurance comes from promoting your experience and your warranties or guarantees. Your marketing materials – ads, brochures, Web site and e-newsletters – should talk in depth about your history and heritage, show pictures of your people, provide their bios and describe in detail your warranties and guarantees.

Now is the time to be sure you have meaningful testimonials in all of your marketing. Talk about prestigious projects or designers or chefs or other personalities who have used your products or services. Keep a notebook of testimonials in the showroom with local names that people will recognize. See if you can use their full names on your Web site or in other materials.

Demonstrate your financial strength. Offer bank references or supplier references. Erase any doubts. Consider branding your warranties or guarantees under a name such as the ABC Kitchen & Baths No-Worries Warranty™ or Peace of Mind Guarantee.™ The trademark adds an element of credibility. Take prospects to jobs you’ve done. The more transparent you are, the more confidence people will have in you.

Nesting Instincts

Numerous reports show that consumers are staying in more, entertaining and cooking at home and eating out less. All of this means they are more focused on their homes than ever before.

Faith Popcorn, trend guru, says we’ve gone from cocooning to über-cocooning. However, she points out, this “need not be boring or solitary. It can involve hosting a game night for friends, inventing a new recipe [or] relaxing into at-home spa treatments.” Sales of electronics such as flat-screen TVs are up, meaning there is an increasing market for home entertainment centers. Why can’t a new bathroom be the ultimate Staycation with in-home spa?

“When economic hard times loom, we tend to retreat to our village. Look for cozy hearth-and-home family scenes in advertising. Discretionary spending on home furnishings and home entertainment will hold up well, as uncertainty prompts us to stay at home but also stay connected with family and friends,” says John Quelch, Harvard Business School professor. Now more than ever, kitchens will truly be the heart of the home, not empty trophy rooms.

In-Home Selling

The retreat to home is creating demand for in-home parties. So why not stage your own kitchen warming parties or at-home spa parties for past customers and their friends.
Another factor encouraging consumers to spend at home, behind closed doors, is that conspicuous consumption is no longer cool. No one wants to be perceived as a greedy Wall Street tycoon type. But spending quietly on the home is okay, especially if it supports family values.