Confidence. It is the aphrodisiac of business.
It is the reason so many economists' forecasts are so wrong, so often. Bland statistics, economic modelling, historical records and trend lines do not recognise, respect or factor in the inherently important role and impact of confidence in the buying, investment and developmental decision making of the overall marketplace.
Economists need to study and better understand the emotional drives of key stakeholders rather than simply the mechanisms of the marketplace. To do so, may well be a Nobel pursuit.
Confidence is the focus, outcome and essential that is deficient in a huge majority of current advertising and business dealings. Emphases on product, price and finance no longer stimulate and sustain significant increments in demand, revenue, margins, profit, and above all, consumer and client confidence!
What happened to identifying needs, fulfilling them, projecting a compelling ambience and featuring a great, positive buying and transaction experience? Are we so devoid of creativity, energy, enthusiasm and pride? Is the art of selling a lost skill set, replaced by the single dimension declaration, “we wont to be beaten on price”.
Animals, domestic pets in particular, can detect confidence, or a lack of it. That, seemingly, is a sixth sense which is possessed and exercised by contemporary consumers and clients.
Interestingly, the typical instinctive response to hesitancy by prospective buyers of offering a lower price actually stimulates a loss or lowering of confidence.
Many consumers are seeking advice and recommendations about alternatives rather than cheaper prices. That is the underlying rationale of asking questions, many of which sales and service people do not hear, comprehend or respond to.
The internet has been the instrument and inspiration for many changes in lifestyles, expectations, education, communication, commerce and confidence.
Ready access to information has empowered consumers and clients at large. They are discerning, demanding and sadly, in many instances, possess better product knowledge than sales and service providers.
Confidence in a company brand, product, service and person can and will plummet in such circumstances.
Confidence can be and is influenced substantially by the media and the 24 hour news cycle. Headlines regularly are the catalysts for demand surges for retail petrol on the “news” that prices are going up imminently. Likewise, bookings for airline tickets can and do dry up with media reports about safety issues.
Media releases about the pending launch of a new model motor vehicle impacts on sales enquiries, regardless of consequence of the impact on confidence, for people wanting to make the best possible decisions, avoid making a wrong decision and pursuit of a sense of “peace-of-mind”.
“Peace-of-mind” is a term which is interchangeable with the word confidence. All people in business, financial planners, developers and home builders in particular, need to truly embrace the role of being a “confidence builder”.
High levels of confidence provide for and facilitate longer term horizons in the typical buying cycle. They are also an effective insulation against the volatility of market forces, which typify a lack of confidence.
One key and fundamental consequence is stability in cash flows. That then enables better planning for and the deployment of resources, including staff, inventory and communications. Individually and collectively, these contribute to greater efficiency, effectiveness and profitability.
MULTI LAYERED CONFIDENCE
Consumer and client perceptions, images and motivations are not single dimensions. Each is complex and often integrated with numerous variables.
A good example is that of Telstra, the Australian telecommunications company. The Board of Directors has been forthright in maintaining and projecting adherence to an annual dividend payment total to shareholders of 28 cents. That is reassuring to those shareholders whose primary investment criterium is dividend receipts.
However, for those seeking capital growth or a positive mix of stable dividends and capital growth have a pronounced reluctance to invest in Telstra. From a list price of $7.40 per share at the time of the third tranche of Telstra shares the current value languishes at around $2.75.
Hence, confidence is a complicated master or a slave which is difficult to master. Nonetheless, it is an important ingredient in the mix of success factors in any or all businesses, products and services.