We used to kowtow to corporations. Now they’re starting to kneel down to us
United Airlines is a giant company. It earns billions every year, operates more than 4,500 flights every day, and shuttled upwards of 143 million people through the air in 2016.
But it only took one customer and a video that raced across the internet to send the company into turmoil. The footage of a security officer violently dragging passenger David Dao from his seat on an overbooked flight quickly shaved $1 billion from United’s market value and prompted CEO Oscar Munoz to adopt numerous policy changes on how the company deals with customers and overbooked flights.
With work, United has since bounced back, but the incident illustrates a vital point corporations everywhere would do well to keep in mind. The balance of power between companies and their customers is rapidly shifting in favor of the customers. As A.T. Kearney, a global consulting firm, explains in a new report, brands no longer have the same control they used to over the flow of information, which means they no longer get to dictate how, when, and sometimes even where customers buy whatever it is they’re selling. At the same time, customers are increasingly buying based on values—not just value—and their trust in corporations is eroding.
For its new report, titled “America’s Next Commercial Revolution: Influence vs. Affluence,” A.T. Kearney examined demographic, economic, and technological trends to predict how US buying behavior will change over the next 10 years. (The firm also released a global version based on surveys with more than 7,000 consumers across seven countries.) The main finding was that a “perfect storm of demographic shifts, changing values, and hyper-connectivity” is permanently altering how we spend our money.
“The destabilization goes deeper than anyone really appreciates,” says Greg Portell, lead partner in the retail practice of A.T. Kearney and one of the report’s authors.
The marketplace of decades past had companies at the center. For the most part, information and influence flowed outward from brands to the consumer. A.T. Kearney calls this the “Affluence” model, since brands spent huge sums convincing consumers that their self-worth was based on what and how much they owned.
But the internet and social media have dramatically altered this, amplifying consumers’ voices to the same volume as the brands’, as new, online communities coalesced around shared beliefs. A.T. Kearney calls this the “Influence” model.
Read more at Quartz.