19 Aug 09 Social Networking and the Web: An unreliable distribution channel?

Just before I went on my summer break, an interesting article crossed my PC screen – “Social sites losing popularity with young“  – an article in the FT on 6th August[1].

This article makes two interesting points:

(1)  The number of “young” internet users (defined as 15 to 24 year olds) using social networking sites (such as MySpace and Facebook) has, surprisingly, declined for the first time.
(2)  These sites (and others such as LinkedIn) are growing in popularity – but only in terms of older internet users.  However,  these may be totally new social networking users looking to adopt social networking as part of a post redundancy job search exercise.

For me, these are interesting findings and support my own thinking that both the use of the internet and social networking media is at a relatively immature stage and may not offer businesses the total relationship building and distribution solution that many are wishing for.  Therefore, basing a long-term business model on these routes may be risky.

We can make some early inferences:

(a) Usage of the web, and particularly social networking sites, will probably change depending upon the user’s age and life cycle stage.

(b) Users – and I would suggest particularly younger users – will be relatively ‘promiscuous’. From my own family experience, I was surprised to see how quickly MySpace fell from fashion to be replaced by Facebook.

(c) Social networking – a lifecycle. Early indications are that the lifecycle of social networking sites – such as Friends Reunited for example – may be surprisingly short. This leaves us with the question – what will replace Facebook?

If we couple these findings with other work (for example [2]) that looks at the emerging effects on consumer behaviour of the recession – especially amongst generation Y (the offspring of generation X – the ‘baby boomers’) – a complex picture merges. Early research on recession effects inform us that there may be a growing mistrust of larger corporations – and a need for greater personal inter-action – a ‘visible not digital handshake’.

So, a wholly web based distribution and relationship building strategy could look fairly shakey.

If customer lifetime and loyalty maximisation are important for your business then a far more complex model may be needed of which the web and social networking are but two components.

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References:

[1] M. Palmer, “Social sites losing popularity with young,” Financial Times, August 6.
[2] U. Haque, “The Generation M Manifesto,” Harvard Business Publishing, Jul. 2009.

Tags: generation y, internet, recession, relationship management, social networking, strategy, web

16 Jul 09 Behavioural Shifts: An X, Y or M issue?

In my last entry I focused on looking at behaviours and responses to the downturn from a B2B perspective – judging the likely winners and losers amongst business customers.  But what about consumers?  Will their attitudes change?

My argument is that the deeper the recession runs and the longer that it takes for economies to regain the wealth levels that they enjoyed before the recession then the greater will be the behavioural shifts that we will have to get to grips with.

It is interesting to note that the issue of a behavioural shift amongst consumers in the advanced economies has been picked up by some economic forecasters. The latest OECD forecast[1] makes for thoughtful reading.  In the US, consumers spent 2.4% more in GDP terms than income in 2007.  A debt and confidence fuelled spending spree.  The OECD now assumes that the same consumers will spend 7.9% in GDP terms less than income.  In other words, a massive shift from debt fuelled spending to saving is predicted.

But what other behavioural shifts are being detected amongst consumers?  What about Generation Y – the children of Generation X – the baby boomers (and, yes, I’m a baby boomer with Generation Y examples to observe).

A study[2] looking at the political stance of Generation Y (18 to 29 year olds in this study) in the US has some interesting pointers including:

• Rejection of military force to solve external problems and threats to the US.
• Belief that the state should step into protect the economy.
• Less supportive of “free market” solutions.  42% agree that “our current economic problems show what happens when you rely too much on markets and reduce regulations on corporations”.
• Progressive views on climate change, energy, sustainable living and the role of government as the “central protector”.
• Holding the view that past policies have benefited the rich.

Well you could say that in the current circumstances these views are to be expected but will soon change when things get better.  But what if it takes a long time to get better?

There are other observers to who think that a behavioural shift might be more widespread than within Generation Y.  Umair Haque[3] talks about Generation M – defined broadly as those people who are “acting very differently”.  Some of the proposed characteristics of Generation M are:

• A preference to small responsive enterprises.  An anti large corporate viewpoint.
• Less focus on shareholder value – more focus on the benefits of commerce for the individual.
• More inclusive leadership and trust – both in the political and commercial arenas.
• Rejection of material trappings of wealth.
• Rejection of the continuous growth mantra.
• Experiences with people, friends and family matters more than tangible goods.

Is this a permanent shift or just a temporary reaction?

Nobody knows.

But we had better make sure that we are out there finding out.

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References
[1] See: M. Wolf, “After the storm comes a hard climb,” FT.com, Jul. 2009.
[2] Teixeira, “Millennials Are a Progressive Generation,” Center for American Progress, May. 2009.
[3] U. Haque, “The Generation M Manifesto,” Harvard Business Publishing, Jul. 2009.

Tags: baby boomer, consumer behavior, downturn, generation m, generation x, generation y, recession