I still listen to AM radio. Every day.
I have an all-news station or sports radio on in my car virtually every minute I’m in it. Radio still does local better than anything online – but that is a column for another day.
One morning this week came the news that U.S. consumer confidence was up in September, above expectations and the previous month’s numbers. The implications? Rising stocks, correlations with unemployment, spillover effects on the Canadian economy.
I thought to myself: “Funny, I thought confidence was down the month before.” And I reflected on this because I was pretty sure I had heard a report noting August U.S. consumer confidence was down and thinking at that time: “Funny, I thought confidence was up the month before.” So I checked.
It turns out if you go back two years, U.S. consumer confidence has risen in 11 of the 24 months, and fallen in the other 13. Canadian data show a similar trend. If you stare hard enough at the data you can see a year-over-year cyclical pattern with 2012, which is almost an exact repeat of 2011. You could also argue there is no pattern, with confidence randomly rising and falling on a month-to-month basis.
What I see is a confused consumer base that doesn’t know what to make of Greece, Spain, the U.S. election, the housing market, and the host of other over-reported stories where even economic experts disagree on future expectations and timing. I see emotion and irrationality.
For small businesses, what I see is noise. Noise to be tuned out and ignored. Uncertainty is the new certainty, so live with it and move on.
I speak regularly with clients about how economic conditions and metrics such as consumer confidence affect their decision making. With small and medium-sized businesses, a typical answer is “we are waiting to see what happens with (insert factor).” Really? Analysis paralysis. Indecision. Inaction.
To actively decide to do nothing is one thing, but to hope for an invest-or-cut signal is a risky proposition. It is a fool’s errand to wait to see what will happen with anything economically. What it will lead to is more waiting and more inaction. What hard evidence do we have that we are headed for another late 2008? What hard evidence do we have that we are headed deeper into recovery territory? Some and none.
A year ago, the TSX was just above 12,000 and today it is just above 12,000. Maybe experts can break the tie, only they disagree, and CBC recently ran a great documentary on the fallacy of expert predictions, with economists having the worst record.
The only rational response is to put aside the macro and focus on the micro. As a private business owner, you cannot control or predict economic forces. But you can control your own management decisions.
One business imperative that has not changed and will not change is the need to deeply understand customers and to then serve them accordingly. This is true in strong economies, in weak economies, and in economies like the one we’re experiencing now. “Take care of your customers and they will take care of you” is an old adage, and full of truth.
So what of customers in late 2012? Are they different today in comparison with years past? They probably are. There is evidence of higher prudence on the part of customers, with both a segment of more value-conscious and savvy, hard-to-influence customers emerging, and a segment of customers looking for help in the form of curation. But is this really a new trend, or a return to how customers behaved in the 1950s?
More to the point, do these trends apply to your business?
When it comes to knowing your customers, we could spend hours thinking about the “how?” But more importantly, let’s look at “what:” what we should try to understand about them right now. There are five customer myths that drive strategy and decision making that should be carefully evaluated when setting a marketing and sales plans. I’m not saying they are uniformly untrue, but they are often untrue and if they are, they lead to dangerous decisions.
Oct. 30: The five customer myths, and why they need to be carefully evaluated. Look for it on theReport on Small Businesswebsite.
Mark Healy is a managing partner atTorque Consulting Group, a division of Satov Consultants, specializing in market entry, product launch and customer insight. Mark is a regular speaker and media contributor, and he is known as much for his penchant for loud socks and a healthy NFL football obsession as he is for his commitment to coaching and developing professionals early in their careers. He is a passionate Queen's Engineering and Ivey Business School grad, a past chair of the Ivey Alumni Association board of directors and currently an advisory board member for Holiday Helpers. Mark lives in Toronto with his wife Charlotte, his daughter Evangeline and their two bulldogs, McDuff and Duke.
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