British businesses have failed to adjust to the needs of the ‘Recommendation Generation’ and are wasting billions on out of date techniques, according to a new study.
The research published by customer experience consultancy Onva, found that 70% of UK consumers purchase on the back of a personal recommendation/online review.
While £14bn was spent on advertising, the survey found only 10% buy a product on the back of an advertising campaign.
With organisations such as the CBI complaining that the government does not listen to its needs, the research illustrates that the same accusation can be leveled at UK commerce and the way it treats British consumers.
To reinforce this view, just 16% said they would spend money on advertising to make a brand more attractive. While 64% said they would invest in providing a better experience to give customers more reasons to recommend.
Matt Manners, managing director of Onva stated: “It’s clear that British business is trapped in a 1960s time warp. Consumers want to be listened to and involved in a brand’s future and all they get is an expensive diet of advertising.” It’s evident that marketing budgets are not split accordingly. How much do British businesses spend on listening to customers and focusing stimulating recommendations from loyal customers?
UK consumers shocked at advertising wastage
Borders, MFI, Jane Norman, Woolworths, and Habitat are all iconic brands that have gone to the wall. Hundreds of stores closed and thousands of employees are out of work with many more on the brink and yet the great advertising debacle continues at the despair of the British public.
When asked for their response at how much is spent on failing advertising each year almost half (45%) stated: “It’s shocking, they should find a lower cost way to communicate their message and keep more people employed.”
Manners continued: “With cult TV figure Don Draper of Mad Men regaling the glory years of the 1960s advertising executives, it seems British business can’t tell fact from fiction and are stuck there with its antiquated ‘tell’ techniques. They might have moved online or to social media but the technique is still the same; tell customers what to think and continue to throw money at advertising. It’s just not working anymore and it’s time to focus on the needs and expectations of the recommendation generation.”
Re-evaluate advertising, ditch the celebs and start listening to your customers
When respondents were asked what would make them more likely to continue buying a product or service almost half (48%) highlighted that they’d like a company to listen to them and act on feedback and 28% wanted exclusive access to try products before anyone else.
In fact, this clear desire to be involved was supported by 25% wanting to be involved in the development of new products and services and 22% wanting advance information. In marked contrast less than one in ten would be swayed by a big advertising campaign and only 6% by a celebrity endorsement.
“It is quite clear, consumers listen to other consumers and are deaf to what business and marketing executives want to tell them. Involving the customer is the key to success. They want to be listened to, they want their feedback and loyalty to matter, and they want to help shape future developments and be given the inside track on what will happen next. We’ve seen the rewards this approach can deliver and it’s time for the rest of the market to wake up,” Manners concluded.
Methodology and results
Results come from an independent survey of 1000 UK consumers, (50/50 split men and women) conducted through Toluna Quick Survey on behalf of Onva in 2011.
1. Which of the following is most likely to encourage you to try a new product or service?
• Recommendations from a friend – 51%
• An online review from another consumer – 19%
• A story in a magazine or newspaper – 10%
• An advertising campaign – 10%
• A celebrity endorsement – 10%
2. If one of your favourite brands gave you £1m to spend to help them become more attractive to customers, which of the following would you spend the money on?
• Providing a better experience for customers – 36%
• Giving customers more reasons to recommend the company – 28%
• Developing a new product or service – 18%
• An advertising campaign – 16%
• Other – 2%
3. £14bn is the amount British companies spent on advertising last year. This could pay for over 500,000 jobs at the UK’s average wage instead. Which of the following best describes your reaction?
• It’s shocking, they should find a lower cost way to communicate their message and keep more people employed – 45%
• We need more adverts as they keep people employed too – 32%
• I don’t care, stopping advertising wouldn’t mean more people were employed – 24%
4. A number of famous high street retailers have either closed shop or gone out of business recently. Which of the following do you think they should have done to protect their jobs? Please choose one
• Given their current customers reasons to recommend them to attract more business – 30%
• Spent less on advertising to keep people employed longer – 23%
• Asked their customers for ideas on how to improve – 21%
• Asked employees for ideas on how to improve – 13%
• Continued to spend money on advertising to attract more customers – 11%
• Other, please specify – 3%
5. Which of the following statements would make you more likely to continue buying a product or service?
• The company listens to me and acts on my feedback – 48%
• The company lets me try new products before anyone else – 28%
• The company involves me in the development of new products and services – 25%
• The company gives me advance information about new products or services – 22%
• The company spends a lot of money on advertising campaigns – 9%
• The company uses celebrities in advertising campaigns – 6%
Source: www.onva.co.uk