“The Christian Science Monitor” told the story: “Americans have stopped saving for a rainy day. The United States is on track to record a savings rate for the year below 1%, which would be the lowest since the depths of the Great Depression as Americans put their faith in the rising value of their home.” This was from June 2005.
The story from earlier this week from UPI told of a dramatic change: “Thrift is making a comeback in the United States after Americans spent most of the past 15 years spending freely on borrowed money, statistics indicate — the personal savings rate rose to 6.9 percent in May, the highest level since December 1993.”
Sounds like a great thing, right? The economic challenges have made us all wake up to the fact that we need to be saving more and spending less. What could be wrong with that?
Consider this — we know that many families are now having great difficulty in making ends meet because of job losses, cutbacks, and reduction of hours worked. There is no reasonable way they are saving a significant part of their income now — they are struggling to just get by.
Which means that those families that are doing reasonably well are saving much more than 6.9%! (They have to be to get the average up to where it is.) However, let’s just say for argument’s sake that the savings number is about 7% for middle and upper-income families, even though my guess is that it is a few points higher. Remember — that’s up from ZERO percent just a few years ago.
That means there is seven percent less money being spent and circulated in the marketplace today. Instead, it is parked in accounts at banks, brokerages, and other financial institutions. It means that your sales are going to be down 7% just from your customers sitting on their cash!
There are two things that have to happen to get this economy moving again.
First, we have to feel confident enough in our future to start spending again. NOT that we shouldn’t be saving! It’s just that adding an extra 2 – 3% back into the economy now would be great for businesses…and would still mean we were saving 5% more than 2005.
But the second step is what you have control over. You have to provide such compelling service in such a remarkable manner that customers perceive it is better to spend their money with you than have it sitting in the bank.
(I can already perceive many readers saying to themselves, “I didn’t think it would be THAT hard!” It’s breathtakingly difficult — however, the question is, do you want to survive and thrive in these challenging times?)
No customer becomes a raving fan of a generic! Not a single client is enthralled by imitation and blandness. If you want to get your customers and prospects to spend with you, then you must work today…and every day…on strategies that create distinction for you in your marketplace.
Creating an Ultimate Customer Experience (TM) is a primary reason they will choose to spend with you — and realize the value that you bring to them — rather than merely sock their cash away. It’s what it takes to get things moving once again…