The Power of Information

“Mmmphhmmphh… mummmphhh.. mumph.. mphh…”

What’s that? That’s the sound of my foot firmly implanted in my mouth, which some of you may have detected after last week’s article. There I was, touting the benefits of buzz and, at the same time, not recognizing how some of the aspects of good buzz (namely customer service) hadn’t swayed me when I went to purchase a cordless phone. To reiterate, I walked into a big box retailer, had them show me the phones, picked one, and then used MySimon.com on my Palm VII to purchase the phone online.

What I was trying to do was make a point about the good buzz that gets generated when a company like MySimon creates a cool service and promotes it mainly by word of mouth. What I didn’t realize was the reactions that people had to my callousness of getting a human to do the legwork and then buying the product elsewhere. The service I had received wasn’t enough to sway me to purchase on the spot.

But after receiving (and responding to) about 20 emails shaming me for my exploitation of the salesperson, I really began thinking about the implications of what I’d done. For me, it came down to price at the point of purchase and having the information available in the palm of my hand (pun intended); I purchased at the lowest price.

What caused me to make that decision, discounting the service I had received? The answer, quite simply, was information. At the point I needed it, I had access to relatively perfect pricing comparison information and I acted on it. The retailer couldn’t match the price and lost the sale.

Even though what I did was probably pretty rude, it really isn’t all that different from what people do these days when buying cars. According to J.D. Power and Associates, more than 40 percent of U.S. consumers researched their purchases online before walking into the dealership to purchase a car. In addition, most consumers who were referred to dealerships from an online source were given a discounted price without even asking, saving an average of $490 over those who hadn’t gone online before buying a car. Dealerships are seeing the pricing pressure and the power of information in the hands of a consumer and are responding, after much initial resistance a few years ago.

Consumers’ behaviors are being changed by ready access to information, something that’s been the case since Sears & Roebuck introduced its mail order catalog in the 1890s. Prior to this, local merchants had been able to set prices based on the scarcity of readily available pricing information to the local consumers who shopped at their stores. After this, the country had a common source of pricing comparisons, and retailers had to respond.

What’s going on with the Internet right now is similar, and the explosion in availability that wireless brings is going to have an even bigger impact. Consumers who typically had limited access to pricing information on a local basis mainly through sales flyers are now armed with the capability to walk into any retailer, whip open their cell phones, and compare prices right in the store. And it’s not just the geeks who are going to do this: Both Sprint PCS and Verizon currently have content deals with eCompare.com, allowing anyone with a web-capable cell phone to compare prices virtually anywhere in the United States.

A lot of people don’t realize they have this capability now, but they will… that’s for sure. And if local retailers don’t have procedures in place to deal with this new capability (most don’t… they just respond that they can match only local sale prices), they’re going to be in trouble.

Overall, this access to information is one more element to a much larger shift in control that’s been happening for years but has been kicked into light speed since the web has gained popular usage. In a nutshell, power is shifting from the producer to the consumer, powered by access to information. This shift can be seen in the plethora of “mywhatever” sites on the web, the rapid explosion of e-pinion-type sites, the incredible growth of the online travel industry, pricing-comparison sites, and the explosion in do-it-yourself healthcare information on the web. (Recently, searches for health information surpassed searches for porn!)

Today’s consumers are taking control of their own destiny, searching for information to help them get the best price, the best service, and the best products. They’re networked to each other through email and through cell phones, constantly in touch with their networks of influence. Today, buzz travels faster than ever, and consumers are listening to it before making a purchase. And, like the famous “fax effect,” the more people that come into the network, the more power it will have.

I think what we’re really looking at is the beginnings of the Golden Age of the Consumer. It will be an age where consumers have access to all the information they need to make a purchase when they need it, either from “official” sources, such as price comparison bots, or “unofficial” sources, such as email or discussion groups. No longer will retailers or producers have full control of their messages or control over the consumer through limited access to information. Instead, they’re going to have to deal with a world where the consumer is able to compare prices, compare features, and compare opinions… no matter where they are.

What does this power shift mean to us as marketers? I think it means that service, flexibility, and honesty are going to be more important than ever. Sure, it was nice that somebody could help me with my purchasing decision in the store, but I would have actually made a purchase if the store could have matched (or come close to matching) the price I found online.

It means that we’re going to have to start crafting our messages from the outside in, considering the customer first. It means that word of mouth can become our most powerful ally… or enemy… and we’re going to have to monitor and respond to it quickly. And it means that brand is going to be more important than ever before: In a world where everything becomes a commodity, the brand story and experience are what are going to be the ultimate differentiators.

Is this world of perfect consumer information going to be fun for those selling goods and services? Probably not it’s going to make life a lot tougher. But, like it or not, it’s out there and can’t be bottled up. The shift is already in progress. Are we prepared to respond?

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