Using this metric, it might be hard for alumni donors to justify giving money to a university to refurbish a building or fix a football stadium scoreboard when they could instead give that money to a nonprofit helping to improve the environment or provide clean drinking water to impoverished communities.
The Overwealthy want their money to have an impact, like everyone else.
Selfish Selflessness
In 2018, journalist Anand Giridharadas shook the world of philanthropy and social corporate responsibility with the release of his book Winners Take All: The Elite Charade of Changing the World. In it, Giridharadas argues that people and institutions who are very wealthy are motivated to give by a deep desire to maintain the status quo and ensure that the current income inequality in the world continues. Much of the charitable giving and big programs intended to help the lower classes might be unnecessary, he argues, if those people were simply better paid by corporations and taken care of by governments in the first place.
At a critical point in the book, he writes of his conflicted experience at the renowned Aspen Institute, where he was invited alongside wealthy business leaders and entrepreneurs to be a Fellow. “It bothered me that the fellowship asked fellows to do virtuous side projects instead of doing their day jobs more honorably,” he writes. “Instead of asking [elites] to make their firms less monopolistic, greedy, or harmful to children, it urged them to create side hustles to ‘change the world.’ I began to feel like a casual participant in—and timid accomplice to, as well as a cowardly beneficiary of—a giant, sweet-lipped lie.”[85]
Giridharadas offers a radical idea, and one that is unpopular among some circles of the Overwealthy precisely because it exposes the tension that lives within them: the tension between a desire to accumulate and retain wealth and their reluctance or guilt over how to handle the inequity this accumulation of wealth might create. It is also an idea that was put to the test directly last year in Finland, with the entire world watching.
Finland’s Bold Experiment
In 2016, Finland gave a small group of 2,000 citizens the equivalent of $670 a month for two years, with no strings attached. The purpose of the experiment was to understand how that money affected the lives of its recipients, and to decide whether it may be a good idea to roll out this “universal basic income” to the entire country.
There have been several tests of universal basic income in the past, but the results have been generally inconclusive. For one thing, the money typically offered in most tests (including this one in Finland) is not enough to fully replace an annual income. For another, it generally discounts the human psychological need to have a sense of purpose by meaningfully contributing to something–which survey after survey shows to be the key to workplace happiness.[86] Still, many people believe that the pace of automation will significantly shrink the number of jobs in the future. Giving everyone some sort of basic income could ensure that people can live with dignity and maintain their societies.
When Finland looked at the early results of their experiment, they found that some participants chose to go back to school, while others simply used the money to pay debts or ordinary everyday expenses. The more interesting finding, however, emerged when they studied what they would need to do to roll the program out for the entire country. Researchers estimated that to financially support the program, they would have to institute a flat tax of 55 percent on everyone’s earnings. According to national polls, support for the idea dropped from 70 percent to below 30 percent almost immediately.
Why did support decline so drastically? As soon as people understood the personal sacrifice that they would be required to make in order to bridge the income inequality gap, the program become nearly impossible to sell. The story speaks to one of the most fundamental issues that the trend of the Overwealthy exposes: most affluent people who want to make an impact in the world struggle to maintain their resolve when doing so might challenge the status or financial comfort they currently enjoy.
The struggle is the reaction Giridharadas anticipated when he wrote, “If helping others means making a buck or buffing your reputation, it’s fine. But making a sacrifice to help others without getting credit? No way.”[87]
Why It Matters
This is a complex trend because of its two-sided nature. On the one hand, we have the growing elite’s mastery of making money and benefiting from leaders around the world, who are erecting policies designed to help them maintain their wealth. On the other is their growing unease about the scale of the inequality which benefits them—and the many people who are being left behind because of it.
Understanding this trend requires self-reflection from many of us. Are you currently Overwealthy? What does that mean in terms of how you live or what you choose to consume? How do you make an impact in the world? Are you enabling the inequality to continue? These are not easy questions, and may cause more than their fair share of defensiveness. Of course, none of us wants to see ourselves as part of the problem. Asking the question, however, is the key to doing better as individuals, and also as leaders of companies that have the power to impact the lives of others who are not in the same economic class.
When it comes to organizations, those trying to promote new products, services, and experiences to sell to the Overwealthy must find new ways to match their product, price, and experience to the purpose the customer is seeking to fulfill with the purchase. Inside companies, those with Overwealthy employees often face a variety of organizational challenges that can lead to conflict between differently-compensated employee groups within a company. To avoid workplace and interpersonal conflicts, resentment, and misunderstanding, it is important to explore and address this issue explicitly.
How to Use This Trend
Empathize with the Overwealthy–If you are selling a luxury experience or catering primarily to help people indulge in an experience, consider what you might do to offer a greater purpose or mission to that experience. Even the Gläce Luxury Ice company donates a portion of their earnings to support drinking water projects in places like Nicaragua and Honduras. Having a bigger mission and doing something positive in the world is more important than ever when you are selling to an audience who is already uneasy about all that they have.
Demonstrate equitability–Pay people you interact with and purchase from more, especially those who are not as wealthy. If you don’t run your own business or manage a team, this advice might not seem to apply to you. But there are many times in our daily lives when we could choose to give people more money, and don’t. How about paying slightly more to the street vendor selling you something? Or tipping the Lyft or Uber driver more for safely and generously getting you to your destination? Each of us finds ourselves in situations in which we can choose to share more of our wealth with others. By demonstrating equitability in personal relationships or as leaders in our organizations, we are making a statement and doing our small part to help rebalance the stark disparity between the haves and have nots.
18
Passive Loyalty
What’s the Trend?
As switching from brands becomes easier, companies reevaluate who is loyal, who isn’t, and how to inspire true loyalty.
What if all loyal customers aren’t as loyal as they seem?
Most companies think about customer loyalty as a binary choice: you are either a loyal customer or you are not. In recent years, this bias has become apparent through both the rapid growth of investment in loyalty programs and their often-disappointing results.
In 2017, the biennial loyalty research from marketing research firm Colloquy found that even though U.S. consumers hold 3.8 billion memberships in customer loyalty programs, membership growth slowed to just 15 percent, with 57 percent of consumers reporting that their number-one reason for leaving a loyalty program was because it took too long to earn rewards.[88]
According to the 2018 Maritz-Wise Marketer report, which surveyed more than 2,000 U.S. consumers, 68 percent of consumers
identify as “transient” loyalists–which means they say they could be convinced to buy a competitor’s brand. In the same survey, only 29 percent of consumers identified as “resolute” loyalists who buy only their favorite brands.[89]
Where most of these programs miss the mark is that they fail to account for the fact that there are two forms of loyalty: the loyalty of convenience (passive) and loyalty of belief (active).
In this trend, we focus on the fact that both exist, and that Passive Loyalty may account for a far larger percentage of supposedly loyal customers than most businesses realize.
Why Real Brand Loyalty Might be a Myth
The market for selling automotive insurance is a good industry from which to spotlight the difference between passive and active loyalty.
On the surface, it seems that many companies in this sector have a loyal base of consumers who renew every year. Yet as a widely-cited article on the consumer decision journey from consulting firm McKinsey notes, there is actually “a significant number of customers who are loyal in name only...they remain with their carrier more out of inertia than satisfaction.”[90] The McKinsey article goes on to note that the problem with most companies when it comes to earning loyalty is that “they are giving consumers reasons to leave, not excuses to stay.”
When seen in this light, the ever-present advertising from insurance brands like GEICO and Progressive, encouraging consumers to comparison-shop in “15 minutes or less” for insurance quotes and switch providers, makes perfect sense.
Part of the reason these messages work is because the friction and cost of switching is getting lower and lower. All sorts of services, from cable companies to credit cards to mortgage loans, have created easy processes to optimize the process of switching from one to another. Today, it can often happen at the push of a button, with a fully automated process that makes it almost seamless and instant.
Because of all the marketing, consumers are being trained to chase better deals, look to save money, and reward businesses who offer short-term incentives–with the expectation that they will quickly move on and offer that same short-term loyalty to another brand, where the same cycle will repeat.
So, the natural question to wonder is whether active loyalty is even possible anymore. The answer is yes, and to see how, let’s look at an example of how one company has managed to do it in the highly competitive industry of U.S. wireless carriers.
The Uncarrier
T-Mobile has a reputation as a disruptor, thanks largely to the unorthodox business strategies of CEO John Legere. The brand was the first to break with industry convention by offering consistent pricing, free roaming while traveling internationally, elimination of predatory overage fees, and even payment of early termination fees (ETFs) from other carriers to buy out the rest of your contract and make it easier for customers to switch (most of which competitors have since copied).
The experience becomes even more customer-friendly after you switch. The brand offers free surprise “thank-you gifts” such as free pizzas and discounted concert tickets to customers every week through it’s T-Mobile Tuesdays program. They also proactively give customers a “kickback” credit on their bill for extra data they are paying for but not using in any given month.
All of these moves are paying off. According to 2018 analyst reporting from the industry firm Consumer Intelligence Research Partners (CIRP), in the past year, T-Mobile topped all wireless carriers with a 19 percent growth rate (30 percent of which came from customers switching from competitors). The carrier also posted the highest retention rate of any wireless carrier at 85- percent.[91]
As T-Mobile is proving, it is possible to create Active Loyalty even in a competitive industry by focusing on delivering a great experience and putting customers first. The same principles can apply when it comes to keeping your best people and improving your employee loyalty.
The Myth of Employee Satisfaction
In April 2016, the results of the MetLife Annual U.S. Employee Benefit Trends Study were released with the optimistic framing that for the first time in years, employee loyalty was on the rise. The “rise” celebrated by the study was from 41% to 45%. To underscore the low standards these numbers illustrate, just consider that when employees were asked whether they planned to stay at their jobs beyond the next 12 months, only 45 percent answered yes.[92]
The 2017 edition of the same study found that over half (51 percent) of employees said they would be interested in freelance or contract work in exchange for more flexible hours. These statistics are hardly worthy of celebration. When less than half of your employees want to be there a year from now, and most are dreaming of working freelance instead of full time, is that really the sort of news that should inspire confidence?
Sadly, when the bar for employee loyalty is so low, the honest answer is often yes.
Yet for every statistic indicating that employees are dreaming of leaving and unhappy in their roles, there is another, such as the recent finding from the Society of Human Resource Management (SHRM) that concluded that 89 percent of U.S. employees reported being somewhat or very satisfied with their current job role.[93]
I realize this seems like a strange contradiction. If people are satisfied, why do they seem to be dreaming of leaving, and generally lack loyalty? The fact is, satisfaction is not the same thing as loyalty.
All these “satisfied” employees are just exhibiting the traits of Passive Loyalty. They are loyal...until something better shows up. They don’t hate their jobs or their companies, but they don’t love them, either. And the moment an opportunity for career advancement, higher pay, or better benefits comes along, they will leave without a second thought.
Automated Consumerism
Any discussion of loyalty, either from employees or consumers, would be incomplete without looking at the impact of technology on loyalty, as well. To do this, let’s consider the rise of voice-enabled assistants like Google Home or Amazon Alexa. Both offer shopping capabilities that allow you to create lists and then use them to decide what to buy.
Amazon, in particular, has invested significantly in creating more ways to automate the experience for their customers. In 2015, they introduced the Amazon Dash, a Bluetooth-enabled ordering button that would stick to any surface and offer an easy way to reorder products like paper towels or laundry detergent.
At the time, it was a cute but underwhelming idea. Many consumers ordered one and never really used it. But the intent was never really about filling your house with these little reorder buttons. Instead, it was testing Amazon’s vision of a home in which you could program everything you need to be automatically reordered whenever you needed it.
This is what automated consumerism could look like one day: technology that anticipates what you need, reorders it, and has it delivered to your home without you even thinking about it. Baked into this idea is a sort of forced brand loyalty in which consumers could end up locked into a brand simply because it happens to be the one that was available or most visible at the time when they first placed an order. Or the one offered by the retailer themselves; a distinct possibility, considering how consistently Amazon has been launching its own private-label products.
Loyalty, by extension, would become something that a consumer is assigned rather than something they willfully choose. It would be passive instead of active by default...and would perhaps always remain that way.
Why It Matters
For years, marketers and business leaders have misunderstood loyalty as a singular concept. Today, we are starting to understand that there is more nuance in the idea of loyalty, and examples of passive loyalty are all around us: in our jobs, the things we buy, and how we engage (or don’t engage) with brands.
To better drive loyalty, brands will need to rethink their overly complex yet often ineffective loyalty programs, and instead dream up new methods to reward customers that do truly drive brand loyalty. Satisfied customers are not the same as loyal customers. Satisfied employees wh
o perform well are not the same as loyal employees.
Rather than seeing this as a negative, though, smart leaders and organizations understand that passive loyalty is just another stage of the journey toward active loyalty. Passively loyal customers are better than disloyal customers, haters, or the indifferent, who have no idea you exist. The business opportunity is to operationalize ways to transform these people–whether they are consumers or employees–into being actively loyal instead.
How To Use This Trend:
Segment into passively and actively loyal–If you can’t tell your truly loyal customers or employees from the ones who would leave the first time they get a better offer, this is the first place you need to focus. Of course, making this distinction isn’t easy, and it doesn’t always match up nicely with tenure or spend. There are behaviors, indicators, and analytics to understand or even predict the migration down to passive or up to active loyalty. Instead, you need to build your own “ultimate questions” to help you measure this. One example might be asking, “If we could keep your business for the next two years, what would we need to do?” These sorts of questions can help you get a deeper sense of who’s actually loyal and who is going to leave they next chance they get.
Non-Obvious 2019- How To Predict Trends and Win The Future Page 18