Posted on: Thursday 25th of August 2011
Helping people make better decisions is becoming a new market in its own right: with the new tools and services, based on new types of business model, offering different types of value, and competing around different things. But just how big and important is this market?
Here are two ways of thinking about this question.
- First, what proportion of the population need/want to make better decisions, and how often? Hmmm. That looks like everybody, every day – from the most trivial decisions to the most life-changing: a pretty big market in other words. (In fact, we’re looking at the beginnings of the biggest growth industry of the 21st century. I’ll return to that later.)
- Second, how important is it that we make better decisions? Hmmm. Pretty important. In fact, in terms of ‘consumer’ and personal value it’s probably top of the pecking order, because if I can make a better decision, it will lead me to a better outcome, product or service anyway.
In that sense, the market for better decisions both trumps and pre-empts the market for better products and services: when going to market, a good decision-support service is likely to be my first port of call, winning the lion’s share of my trust, time and attention.
So, even though most organisations haven’t even recognised its existence yet, this market for decision support services is changing the ways other markets work, and has the potential to earn pole position as a source of consumer value.
It’s creating, for example, an endemic crisis in how organisations and brands go to market and do their marketing. That’s because consumers are shifting their time, trust and attention to those sources of information and service that help them more in their quest to make and implement better decisions. This is a simultaneous crisis in:
- Channels and touchpoints: where consumers go to gather information when making decisions, which translates into new dilemmas about how to reach and communicate with target audiences
- Content: as consumers seek out information which serves their decision-making purposes, traditional marketing approaches to influence and persuasion are losing traction. Communication strategies need to focus on the information needs of the individual, not the messaging priorities of the organisation.
- Process: making decisions is an iterative, interactive process where you ask questions and seek answers, which means organisations’ traditional reliance on one-way ‘push’ messages risks leaving them out on a limb
Behind this lies a deeper question about what value looks like in a world shaped by decision-support markets. The answer lies in ‘brands as information services’, which I will return to later.
An evolving market
At the same time, how organisations respond depends on how the market for decision-support services evolves. Here are some of the dynamics that are already in play.
- Integration and consolidation … and shake-out. The market for decision-support services is still in its infancy. Services like search, comparison and peer reviews are only really components of a better decision-making process, not the whole shebang. That’s why peer review sites have started offering comparisons, why comparison sites are offering peer and expert reviews, and so on.
- They are all converging on the same high point, which means market is on the verge of an almighty battle for supremacy – a period of consolidation, integration … and shake-out as key players try to win status as the consumer’s first port of call and most trusted and useful source of information when going to market.
- Channel shift. In its early days, the decision-support market was PC-based. Now it’s going mobile. That means it not only affects online purchasing: increasingly it affects all purchasing. In this sense, one important distinction between bricks and clicks is evaporating.
- Specialisation We will see increasing specialisation around buyers’ specific preferences and buying styles. A decision support service catering to the needs of somebody wanting to research something to death has to offer a different service to someone who wants a quick and easy process … which is different again to somebody with special requirements, or most concerned with reducing risk. Much greater specialisation in the design and delivery of services is inevitable.
- Transparency and trust Decision support services will be forced to become increasingly transparent about how they make their money. If it’s by biasing recommendations in favour of the seller offering the highest commission, forget it. They will also make much of the ways in which they avoid, compensate for, or turn individuals’ predictable irrationalities to their advantage. For example, if inertia is a problem, create a service that builds inertia-busting into it: “two months before your contract is due to end, we will survey the market to find the next best deal for you … without your having to remember and ask us”.
- New types of decision-support service New, more sophisticated decision-support services such as problem solving communities (which help individuals facing common problems join with experts in creating shared learning), and specification building services (which help individuals work out what it is they really want given their particular circumstances and priorities), will emerge to complement existing services.
- Expanding scope and reach As easier access (mobile) and new types of decision-support service emerge, the market will expand beyond easy-to-compare products like electrical goods into more complicated categories, and the numbers of individuals using these services (and frequency of use) will also grow.
A new win-win
As I said before, the consumer decision-support market is still in its infancy. If we were to compare it to the industrial age, we’re still pretty much in the pre-Henry Ford days. We’ve got most of the components. Search, comparison and peer reviews are akin to the internal combustion engine, the vanadium steel and the vulcanised rubber of the early motor car. But there’s no automated assembly line yet.
With his mass production assembly line, Henry Ford resolved a contradiction that had blocked the growth of markets for centuries: sellers want to sell dear; buyers want to buy cheap. When the two met in the marketplace, the relationship was fundamentally adversarial.
With mass production, Henry Ford aligned the interests of the seller to the interests of the buyer: now, you could make a lot more money selling many products, cheaper, than by selling just a few products at a high price.
Today, markets’ growth is hampered by a different adversarial contradiction. When consumers go to market, sellers want to influence their decisions in the seller’s favour, while consumers want to make better decisions. So, on this front, sellers consistently fail to meet their customers needs.
Decision-support services resolve this contradiction by unleashing rich new information about who wants what, when (Volunteered Personal Information). In this environment, sellers can make more money by accessing and using this information to reduce guesswork and waste and glean new insights than by engaging in constant persuasion trench warfare with their own customers.
In other words, the economics of this new market aren’t confined to consumer decision-making costs. They feed back into suppliers’ costs too: both sides have a vested interest in making this new market work.