Recovering from a recession, and perhaps even a depression, always involves something of a Catch-22. Jump-starting an economy requires consumer confidence. But consumers only feel confident to start spending when broad economic markers are improving—or at least that's how it appears on the surface.
Many people are wondering how long the current recession—which some believe is a depression—will last. When will a recovery begin? As with so much else about this time we're living through, this is a new challenge. Previous recent recessions don't provide a complete guide.
The COVID-19 pandemic has ushered in the fastest, most sweeping behavioral changes in modern history. Suddenly, it seems there's a new set of rules for just about everything. And that applies to the economy as well.
Amid the COVID-19 crisis, consumer confidence has tanked worldwide, OECD figures show.
In the U.S., consumer confidence underwent a similar "free-fall." May trends showed a tiny, just barely discernible uptick.
In an effort to turn things around, some political and business leaders are hoping that telling people to feel confident or highlighting economic markers (like a slight improvement in the all too high unemployment rate), will miraculously convince people with money to start spending again.
Unfortunately, this is unlikely to achieve much. That's because spending decisions, and the confidence that drives them, aren't based on rational arguments. They take place in the subconscious.
Harvard Business School professor Gerald Zaltman determined that 95 percent of consumer decisions are made in the subconscious. In Knowledge@Wharton, marketing and neuroscience professor Dr. Michael Platt and I unveiled our findings about what lies inside the subconscious shortcuts that people use to make those decisions. We call these shortcuts "Brand Connectomes."
Each Connectome is a hidden matrix of memories and associations that consumers have with a brand. These Connectomes change over time. When a brand's positive associations overwhelm its negative associations and overwhelm the Connectomes of its competitors, consumers choose that brand. They generally don't realize why they've made the switch.
By using the right cues—whether visual or auditory—in marketing efforts, brands can grow their connectomes.
But it isn't just products that have connectomes. Issues, political candidates, and events have them. COVID-19 has one too.
My team at Triggers recently conducted research to uncover the COVID Connectome—the collection of associations and memories that people subconsciously associate with the pandemic. We found a vast network that looms large in consumers' subconscious minds, driving their instinctive behaviors.
Like a massive tree, the COVID Connectome trunk separates into two major clusters—preservation and perseverance. The two forces are fighting for dominance in consumers' brains.
The preservation cluster is driven by survival instincts, and based on fear. The perseverance cluster is fueled by the instinct to move ahead, be risk takers and make progress.
For now, preservation is winning. People who have money to spend—those who remain employed and still have disposable income—are hunkering down, saving for an uncertain future, and wary of making many expenditures. No wonder the Consumer Confidence Index is so low. Our research indicates that people will only feel confident spending again at levels closer to pre-COVID rates when the perseverance cluster grows significantly larger than the preservation one.
To help make this happen, government and business leaders need to communicate messages that inspire people to strengthen themselves and their families, better themselves, learn, explore, and improve their lives. With the right cues, they can grow the perseverance cluster.
This does not mean ignoring the preservation side. In fact, by assuaging fears, leaders can help to reduce the worries that fuel this part of the Connectome. But again, rational statements and promises don't work. Consumers need to feel instinctively that it's safe to shop in person and that the nation is not on the verge of an even worse depression.
For businesses, this means over-delivering on safety. Appoint Chief Safety Officers. Bring to life consumers' ideal safety scenarios in order to help them achieve a feeling of being as safe as possible.
For government leaders in the U.S. and around the world, it means providing a sense of competence and understanding of all the factors at play, and making clear that scientific experts and public officials are aligned with one, joint strategy. This does not have to be at the federal level—it can be done at the state and city levels as well.
It's a matter of critical mass. The more governments and companies take the right steps to help stop the spread of COVID-19 and inspire trust, the more they will rebuild the instinctive drivers of confidence and spending. Only then will we have the robust recovery we need.
Leslie Zane is president and founder of Triggers Growth Strategy.
The views expressed in this article are the author's own.
