Less is the future.
Some of what’s less is structural. We are facing natural limits of critical resources including key metals and minerals, water, land proximate to economic hubs, and cheap energy supplies. Threats to climate and biodiversity add to the urgency of lessening demand for these resources.
Additionally, we may be facing economic limits. Northwestern University economist Robert Gordon argued in a 2012 paper that we are at the end of an exceptional period of innovation and productivity growth. Decades of slowing productivity returns to innovation in combination with several economic headwinds mean that the U.S. (and other developed countries) face decades of slow growth. Breakthrough innovation will continue but not with the economic impact enjoyed during decades past, which came from one-time gains and for that reason, cannot be repeated.
Gordon’s thesis set off a spirited debate about whether or not there is something more to look forward to. But what’s not at issue is that there will be less of what was important in years past, even if something more comes along in the future.
Over the near-term, at least, prospects for middle-class households portend less. Long-term unemployment is a plague on many formerly middle-class houses. Labor force participation is down dramatically. Decades of stagnant wages are likely to continue for decades more. Middle-income jobs are disappearing under relentless pressure from technology. And no matter how you look at it – income, wealth, employment – the next generation is struggling to get started.
Some in the Millennials cohort have taken an aspirational view of this daunting situation by embracing the idea that that living with less is acceptable, if not preferable. While this is by no means the majority opinion, it is an earnest view, not the sort of rebellious dropping out dabbled in by hippies and slackers in prior generations.
Less is becoming aspirational in other ways as well, particularly owning less. The sharing economy of peer-to-peer, crowdfunding, renting, barter, loaning, gifting, swapping, collaboration and open source is taking hold as music sharing services like Pandora, Spotify, Rhapsody, Last.fm and Radio Paradise proliferate, established companies like Avis and Enterprise jump into car sharing, and startups like Airbnb or NeighborGoods or Rentiod gain traction.
We now drive less. Annual miles driven peaked in the middle of the last decade. Young people, in particular, feel less connected to driving and cars, as reflected in declining percentages of those with a driver’s license.
While home square footage just hit a new high, there is now a parallel shift in the other direction of smaller families, higher density requirements for new developments and greater interest in more compact urban environments. And when we find a place, we are staying put, moving less than ever.
Whether of necessity or by choice, whether for better or for worse, less is the engine of the economy. This is sure to be a challenge, and not just because less is a hard way to grow. Less has long been seen as counter to the American spirit.
In 1890, the Census Bureau officially declared that settlement had closed the American frontier. Alarmed by this, a few years later, historian Frederick Jackson Turner delivered a landmark speech in which he argued that the moving frontier line of pioneering westward migration was the cornerstone of American democracy, innovation and character. Turner’s Frontier Thesis was immediately hailed and taken up by others for its shrewd grasp of the significance of expansive horizons in shaping the American spirit.
Calls for less have never had staying power. Former President Jimmy Carter has been much maligned through the years for his so-called “malaise” speech in 1979 in which he called on people to use less energy and focus less on materialism. Yet this speech actually bumped up his approval rating by 11 points. But it didn’t last. Carter’s call for less got twisted into a caricature, and was resoundingly rejected in his reelection defeat to Ronald Reagan who promised an end to less.
Limits of all sorts have long been controversial, often rejected outright. Less has just never been on the table. Until now.
Expectations have pivoted from more to less. Baby Boomers came of age in a marketplace of expanding horizons for all. The future looked bigger, grander, greater. Millennials today are coming of age in a marketplace of contracting horizons for everyone. The future is uncertain. Possibilities look more constrained. Success comes harder. Less seems smarter.
In a context of expanding horizons, there is no reason to settle for less. Making do with less means failure because there is plenty for the taking. Aspirations are focused on more. In that context, it’s no surprise that less never caught on.
But the context nowadays is different, and in today’s context of contracting horizons, less is reality not failure. Less is just the way things are. Aspirations must be conditioned by less, so less, not more, becomes the benchmark of success. Making it is not about making more; it’s about making more of less.
Three implications for brand marketers stand out. First, the accumulation of more is giving way to the prioritization of less. The underpinning of shopping is no longer finding more to spend. Instead, it’s figuring out how less to buy. This is not frugality. The top of the priority list remains the best to be had, not some scaled-down version. But the list of things to have and do will be more sharply bifurcated into things that make the cut and those that don’t. No longer, can brand marketers be satisfied with getting into the consideration set; they must get their brand to the top of the list, even across categories.
A good example is life insurance and GenXers. A recent study conducted by The Futures Company for New York Life found that one in five GenXers have no life insurance, well above the one in twenty in 2008. For those with insurance, the coverage gap between what they have and what they need is 24 percent higher in 2013 than in 2008. Obviously, weaker finances have put insurance lower on the priority list. Getting GenXers back into the market for life insurance is only partly about changing their views of life insurance. It will also require changing their views of life insurance relative to other priorities, and this may require going beyond insurance per se to redefine how GenXers think about other things.
Second, existing customers are the whole ballgame these days. Loyalty marketing is the only game in town.
With financial pressures and sharing options at hand, consumers want brands to do more for them. They need it. They think they deserve it. They know more, and more of what to do about it. They are ready to switch at a moment’s notice if they don’t get it.
Brand marketers know it’s harder than ever to replace lost customers, so plugging the leaks in a brand franchise is essential. Growth will come from strengthening loyalty and building more of the value for which customers will be willing to pay.
Finally, brand marketers must rethink their business models. In a sharing economy, brands are less of a product alone and more of a service. Revenue and service happen differently. Resource constraints will require that brand marketers find efficiencies in distribution and delivery, meaning new forms of engagement with consumers. Financial worries will keep value salient and ownership challenging. In today’s world, smart shopping means making more of less.