The Advice Economy: Next Big Market Disruptor
As 2020 came to an end, 71% of people indicated they would focus on learning new life skills in 2021, according to research conducted by OnePoll on behalf of Affirm.
The pandemic accelerated the emergence of D2C brands helping millennials and Gen Z upskill. Noom, Stitch Fix, Peloton, and Talkspace added a layer of advice to traditional products and services like fashion, exercise classes and therapy.
I call this new era of brands the Advice Economy. Here are four key points about this trend:
Consumers care about advice and self-improvement.Successful products are positioned as not just fulfilling a need, but enabling self-improvement. Consumers no longer care about features, but about how your product helps them become stronger, healthier or more effective.
Analyze your products, strip them of useless features, and consider layering on an advice component. For example, a running shoe manufacturer could include a free program to help customers train for a 5K. By incorporating running advice into your customers’ purchases, they will see the product through the lens of their desired achievement: running their first 5K. Further, they’ll view your brand as an important piece of their health journey.
Consumers will pay more for growth tracking.Create recurring and additional revenue through gamification. Noom offers free access to its weight loss app to log food, track weight, and record exercise. If users want to access articles, chat with a coach, and be a part of a group coaching area, they must pay a monthly fee of between $16 to $59. Noom also gamifies how it presents its articles, charting progress on a map.
It’s paying off: By July 2020, Noom had more than 50 million users, had grown its annual member base, and raised more than $100 million.
Consumers will pay more for a community component.Peloton is perhaps the best example of success in the growing subscription trend. It offers two monthly subscription options to access workout programs. Each subscription plan offers a community component where users see others’ screen names and times as they work out. Users also follow each other, just like on social media, and can track each other’s workouts.
These features make it difficult for people to leave Peloton once they’ve established connections with other users. As of late 2020, Peloton boasted more than one million connected subscribers owning Peloton equipment who each pay $39 per month, and two million subscribers who pay $12.99 per month to access Peloton’s workouts with their own equipment.
Become part of your customers’ identity.Years ago, brands like Harley Davidson became so tied into their customers’ identities that it became difficult for consumers to see themselves independent of those brands.
Despite data suggesting lower brand loyalty with younger consumers, Apple, Lululemon, and Peloton have built this type of following. A common thread: they all help consumers express themselves. Carrying a MacBook Pro says, “I’m creative.” Wearing Lululemon or having a Peloton suggests, “I’m fit and successful.”
Deepen your customer involvement by allowing them to express themselves through your products.
Control Your Future
In the Advice Economy, it’s key to match marketing to how your product helps customers improve their skills and achieve desires. Subscriptions, gamification, building authentic community elements around product, and enabling self expression are four ways Advice Economy brands successfully achieve continued loyalty, recurring revenue, and deeper connections with the younger consumers who, according to Morgan Stanley Research, will power growth moving forward.