High School drop-outs are at an all-time high. Historically, half of this population has been able to scratch out a living in manufacturing and industrial jobs and maintain a middle class lifestyle buying cars, homes, TVs and other consumer goods and services. However, in the past 20 years industry has gone from 21% to 9% of our domestic economy, and the collapse of the U.S, auto industry, offshore manufacturing, NAFTA, etc. promises to keep this number shrinking. As it shrinks, the middle class disappears.
“Since a large, stable middle class is the underpinning of our consumer based economy we are in trouble. The shrinkage of credit for this same population only exacerbates the problem. Net, fewer middle class consumers with less spending capability. The classic middle class will continue shrinking toward extinction, something I began writing about in earnest quite a few years ago. This means that duplicative businesses serving the middle class – like mid range retail and restaurants – will be battling over a shrinking customer base by discounting and sacrificing margins, and there will be more losers than winners.” says marketing Guru Dan Kennedy in his weekly private fax that I received on August 18th, 2009.
Says Kennedy, “Of lesser long-term impact, but short-term, at some point sooner rather than later, double digit inflation is unavoidable. I still see unemployment exceeding 16% before going in the other direction consistently. And it is very possible that double digit unemployment, inflation and high interest rates will coincide. As a practical matter, people are already beset with divergent living cost increases. States are raising income, sales, property and assorted taxes, to an estimated $30 billion additional consumption of individuals’ incomes in 2010. Targeted taxes are likely to increase – a carton of cigarettes is now, I think, over $45.00. Tax increases on sugar heavy food, alcoholic beverages, and gas are being promoted, and a tax on e-commerce inevitable. Bottom line: there will be less money spent on everything but essentials by middle class, mass affluents and even by affluents in the near term for at least 3+ years.”
As a business owner or sales person what does all of this mean to you? Again Kennedy:
“In many businesses, effective selling by humans actually talking with, meeting with, going on the road to speak to customers has been pushed further and further back behind marketing-by-media or even set aside altogether and the sales able to be created without it have been satisfactory. I believe those days are gone for most businesses and that person-to-person selling must again move to the forefront. Everything we do with direct marketing and with offline and online media remains important, but more so for the attraction of a prospect, less and less so for the making of a sale. You will need superior selling skills and people trained in selling, able to sell, willing to sell and able to CLOSE and willing to close, with your prospects moved to them sooner, earlier in a scenario. This can protect you from commoditization and price suppression, and you need to avoid the “race to cheap” born of fear, desperation, poor quality customers and, frankly, an unwillingness to work.”