The Modern Day Consumer and Discounts

This blog was founded on the idea that the world has seen a shift in power from the company to the consumer. We’ve discussed how this shift was fueled by the internet, e-commerce, and social media, and how it continues to be influenced through the mass acceptance of online reviews, which now show up on almost every site.

The modern day consumer is in charge of commerce, and they know it. The majority of consumers, at least the ones who spend the most, know that they have all the power in the relationship they have with the companies they buy from. And they’ve started using this power more and more. Some business owners would say they’re abusing this power.

Discounts and sales used to be special occurrences. No more. Today’s consumers know where to look for discounts and sales when they want them. The smart ones won’t buy anything at full price. And as business owners and marketers, we’ve taken the bait. We offer more sales and more discounts than ever before, to satisfy the consumer need to pay less than full price.

Daily deals companies like Groupon and LivingSocial have capitalized on this trend, essentially forcing companies to deeply discount their products and services in order to sell to the mass markets. There are sites like RetailMeNot, where consumers share discount codes with one another.

And now, even if you do make a sale at full price, you have not cleared the discount hurdle. The availability of discount coupons online often make a customer who has already made a purchase call back and ask for a discount to be applied retroactively. And it’s getting tougher and tougher to have a strict refund or discount policy in customer service departments, because one wrong move can lead to a consumer with a lot of clout spreading a bad review around the web.

Companies are walking a fine line, feeling the pressure to satisfy each and every customer – even when the request is unreasonable – in order to avoid some future disaster.

Should companies fight back against this shift in power to consumers? Is there any way to do this in the digital age? These are questions I ask myself, and some that I would love to hear your thoughts on as well.

Introducing the "Paying Pirate"

The following is a guest post by Kevin Pruett. Kevin Pruett is a NYC-based entrepreneur, specializing in the effective and seamless integration between business, technology, design, and culture.

I’m so bullish on the state of digital economics right now.

For the past decade or so, we’ve been cultivating a new completely new generation of consumers.  Consumers who are used to having everything at their disposal.  A generation who saw the maturation of the .mp3 and who waited 20 minutes to download a 4 minute song on Napster.  We’ve bred a generation who watches millions of hours of free video on YouTube and utilize platforms like Skype to make voice (and video) calls to family across the country at no charge.  Essentially, it’s a generation who feels entitled to most everything and expects to pay nothing for it.

So why would I be so amped about the current state we are in, and why should anyone in the digital distribution space be excited about this time?

It takes a while for a disruption to reach a balanced state.  In our case, with the introduction of digital content on the web, we’ve seen the most chaotic periods in the early 2000′s and an evolving ecosystem being implemented to control it.  It’s taken about a decade for the mass market to consider digital goods and online commerce “legit.”

With legitimacy comes infrastructure.  And that is exactly what we are seeing today.  A sophisticated infrastructure and maturing economic model that has been laid down to make sense of the technological disruption that has occurred over the past decade.

I spoke of a generation who “feels entitled to most everything and expects to pay nothing for it,” just a moment ago.  This generation, like the infrastructure beneath it, is maturing.  Introducing the Paying Pirate.

Most all consumers today are pirates.  There’s no doubt about that.  We are accustomed to gathering content on the web for nothing.  Despite this truth, we will begin to see a massive movement in the payment for digital goods.  The two biggest catalysts in this surge are:

1. Connected Devices:

Smart devices, or devices that have connection capabilities, are becoming the norm.  Leading the charge in connected devices are smartphones, which essential puts a computer into each of our pockets.  In addition, we are seeing more form factors like the iPad transform traditional computing and eReading devices like Amazon’s Kindle change the way we consume books.

Why is this significant? Many of us are willing to pay for content on these devices.  With platforms like Apple’s iOS and Amazon’s Marketplace, this often means shelling out dough to accomplish this.  And for the convenience, many of us are happy to do it.

2. Cloud-Based Services

Enough cannot be said about the transformation that “the cloud” has brought to our digital experiences.  Instead of loading up software, songs, music, and movies onto our hard drives, we are ditching physical space on our computers for the more convenient virtual servers.

Why is this significant? Without direct access to the files, content, or software that’s stored on the cloud, service providers have a unique control over their consumers.  In order to maintain a subscription to the cloud service, a charge, often nominal, is instituted.  It’s pretty difficult to pirate a service in the cloud.  It isn’t as hard to pirate a piece of software that costs hundreds on the shelves.

The bottom line is that the platform(s) have finally caught up to the technology.  What this means for consumers is a more seamless and efficient offering.  It just so happens that many consumers are willing to pay for this convenience.

My advice to anyone that’s skeptical about the state of digital economics is to study these services and to learn from those who are leading the movement.  Understand your consumers and understand the environment because this is just the beginning.

Want to guest post on this blog? Let me know here.