Consumers' perception of how a business is doing

[SuzanneDIngram]

I just read about new study out by Ad-ology that demonstrates:

"More than 48% of U.S. adults believe that a lack of advertising by a retail store, bank or auto dealership during a recession indicates the business must be struggling. Likewise, a vast majority perceives businesses that continue to advertise as being competitive or committed to doing business."

(Quoted from New Ad-ology Study: Reduced Advertising During Recession Negatively Impacts Consumer Perception (http://www.marketinginsightstoday.com/archives/1223))

What do you think?

I know there are studies that show that companies who continue to do marketing in a down economy have far greater chance of success during the following 2-5 years (compared to those do who not do any marketing). But I think this study into consumers' preception is quite interesting.

Any thoughts?

[vangogh]

Interesting. I can't say I've ever thought about advertising or lack of advertising specifically tied to a recession, but I do think something similar when looking in the phone book. I usually assume that the businesses with ads in a phone book are doing well and those that only list their phone number aren't doing as well. I've always been more likely to call a business with an ad than without one. Part is the more info the ad can deliver, but part is the thought that the business that can afford to advertise must be doing something right.

Makes sense that companies that continue to market in the down economy do better once the economy picks up. They've kept their brand out there in front of people. Besides it should cost less to advertise when the economy is bad. Less people advertising reduces demand which reduces price.

[KristineS]

I saw that study too and I thought it was interesting. I think there's something to be said for their results. I know if I see a lot of advertising from a business and then suddenly it's gone, I wonder what happened.

I think companies that advertise are always perceived as more robust and viable than companies that don't advertise. The theory seems to be if you have money to advertise you probably have money to do everything else. Not sure if that's always true, but I believe a lot of people think that way.

[vangogh]

I've usually thought of it as if a company can afford advertising they must have money to pay for the advertising and consequently they must be doing something right to make that money. Granted none of those things have to be true. For all I know a company mortgaged their entire future to buy the one ad I see, but the connection between advertising and a successful company is still there for me.

[orion_joel]

I think the problem is that perception can often be very tainted. For example, that study may have had leading questions, and simply by mentioning recession in the questions if they did could have gained different answers to otherwise.

I think the biggest problem for businesses lies in that consumer's impressions are often wrong.

The yellow pages is a great example, recently there has been some real bad weather and at home we had two very big trees come down. We called almost every tree lopping company with a display ad in the yellow pages. and only one answered the phone. Then after searching on google we found one, who answered the phone and came out to have a look in under an hour. look back all he has is a name and number in the yellow pages. He would have got the job as well except for the way the insurance company handled things.

Now this may not and probably isn't mirrored in all areas of the yellow pages, but companies that advertise 24/7, storm cleanup you would think would at least make an effort to answer the phone at 4.30 pm in the afternoon

[vangogh]

I think the biggest problem for businesses lies in that consumer's impressions are often wrong.

I'm going to disagree, though you might have meant what I'm about to say, and if so, my bad for misinterpreting your statement. A consumer's impression of a business is never wrong for them. If you think company A provides good customer service, they do. You'll forgive small things and see those small things as the exception. By contrast if someone else sees that same company as having poor customer service, they do. Those same small things that the first person forgave, the second person sees as proof of poor service.

It's up to us as businesses to give people a favorable impression of us from before they hire or buy to long after. That's branding. You want people to think of you in a good light and have positive associations with your company. Naturally it's easiest to give that favorable impression if it's who you really are. The best way to give a favorable impression about your customer service is to actually have good customer service.

[KristineS]

I think consumers may attach different motives to a company's action that might be entirely different than what the company actually intended. So perception may have a huge impact on how consumers react to a particular move by a company. The message can get tangled, and often does.

I agree with Vangogh, businesses must manage their brands, and it must be a full time job. Business owners also need to be aware that everything impacts the brand.

[vangogh]

consumers may attach different motives to a company's action that might be entirely different than what the company actually intended.

Yep. My thought is that it's always the company's responsibility when that happens and not the customer's. The customer may have an impression of you that's completely different than who you are, but if that's the case then it's you not doing a good enough job of getting across who you are. Customer's aren't going to change, just because you want them to. You have to adapt to meet them.

[KristineS]

I think a lot of business owners also forget that everything action and word can impact the brand, even when it's not intended to do so. Say, for instance, that you claim your company is environmentally responsible. You reuse boxes. You reduce packaging, You print all your sales materials on recycled paper. Your company makes a lot of money and you get a lot of publicity and suddenly you buy a Hummer. Your environmentally friendly reputation takes a hit. Even though the car you choose to drive as your personal vehicle has nothing to do with the business, what you drive still has an impact on the message your business sends. Everything matters, even if it really doesn't seem to have any connection at all.

[vangogh]

Yep. A very large part of branding is consistency in your message and your actions. You're right that a lot of people miss how what they do impacts what you believe about what they say. Think of all the companies that claim good customer service and yet never respond to an email. Everything you do or say in public can and will affect people's perceptions of you personally and your brand.

[orion_joel]

I think Vangogh, we are both correct in what we have said. I was more so saying that customers impressions are often wrong, in respect to the topic of what more less advertising means in terms of the current financial climate. Which is really something that is not controlled really by what a customer thinks or not. For example if a company stops advertising because they are booked for months in advance, then a customer stops seeing the advertising and thinks they must be not doing well and cannot afford to advertise, then this impression is wrong, The customers impression is irrelevant.

Where you are talking about customer service, and in this respect you are right, the customers impression makes a big difference to the customer. And in this case perception is absolutely everything.

[vangogh]

I agree with most of what you're saying though I want to rephrase it a bit. I wouldn't say a customer's impression is wrong. I'd say a customers impression of a business may not accurately reflect that business. Maybe it's just semantics, but I'm not sure an impression can really be right or wrong. It just is.

Your advertising example is a good one. The obvious thought is the lack of advertising means a lack of success, when in truth it could mean too much success.


The customers impression is irrelevant.

This I'll disagree with. I don't think a customer's impression is ever irrelevant. It doesn't matter whether or not you've stopped advertising because you have too many customers at the moment. If the customer's impression is you aren't doing well enough to afford advertising then they aren't going to do any business with you in the future when you do want customers unless you can change that impression. The customer's perception is everything in business.

Ultimately everything you sell is based not on who you are, but on who the customer thinks you are. In the long run and on a mass scale the two will eventually be the same or very close, though in the short run and in specific cases they may never be the same.

[jrobconsult]

The study results are interesting and have plenty of truth. During a bad economy business cut expenses especially advertising. Smart business owners would spend the same or more. They may need to rearrange their advertising dollars, but it is a necessary part of being a successful small business.

[vangogh]

Yep. If you've done a good job during the better economy and have your finances in order you generally would do well to spend more during a bad economy since prices are down and opportunities are there to be had.

[GBlack]

I agree with Vangogh's point. In Seth Godin's book, All Marketers Are Liars. he talks about how Amazon did such a great job of establishing themselves as #1 at customer service that their regular customers willingly ignore mistakes and excuse them as one-offs. The mistake is easily forgotten because Amazon has done such a great job of establishing their story as a customer service giant.

[Dan Furman]

I agree with Vangogh's point. In Seth Godin's book, All Marketers Are Liars. he talks about how Amazon did such a great job of establishing themselves as #1 at customer service that their regular customers willingly ignore mistakes and excuse them as one-offs. The mistake is easily forgotten because Amazon has done such a great job of establishing their story as a customer service giant.

The thing with Amazon also, though, is they *do* it. I'm a long time customer, with hundreds of orders. Stuff is regularly received early, things are almost always right, etc. I can count negative experiences on one hand, and still be able to snap my fingers.

[vangogh]

Same here with Amazon. Sure they make the occasional mistake, but overall they deliver better than I expect and so I'm a loyal customer. They create a great perception of their business by delivering on that perception.

[Harold Mansfield]

Got to jump in...I fricken' love Amazon. I'm a weekly customer.
I remember when they first launched with just books, and they were flooding the national radio stations every 10 minutes.
i am very proud of them, and am also very loyal.

[Ad-Vice_Man]

Meeting expectations is one thing exceeding them is another... I'll give you an example. When I first started out, I used Godaddy for hosting, e-mail and to purchase my domain name. Given the size of the company(perceived at any rate), the low price and the DIY nature of it all i imagined customer service would have to be near non-existant. Imagine my surprise when a week or two after my site was up and running I received a phone call from godaddy welcoming me to the service, reviewing my account and pointing out that I had overbought from them and they ultimately put me into a more appropriate and less expensive service.

I was floored.

[vangogh]

Oh yeah, exceeding expectations is always better than meeting them. I only use GoDaddy to regsiter domains, but they do a good job with them.

For any company all it takes is a little extra to exceed expectations. How hard was it for GoDaddy to call you? How much good will did that one call generate. Unless they screw up royally you're probably a customer for life. All for the price of a phone call and a few minutes of time.

[KristineS]

What's really sad is that exceeding expectations isn't that hard anymore because so many companies offer abysmal service.

I'll give you an example. I have a rule with our companies that inquiries are answered as quickly as possible. If we need to get more information about something we at least acknowledge the question and let the person know when they can expect an answer. Most people are replied to within an hour at the longest.

I've had more people express astonishment at the fast reply time than I can count. To me it's a very simple, basic customer service tenant, but to our customers it is awesome. Our response time has won us a lot of business, and it's all for something other companies could easily do but choose not to do.