How Your Customers Will Respond to Financial Crises

Strengthen the Dynamic Positive and Negative Aspects of People's Lives

If you are like me, the tariffs Trump announced last week is causing you to worry about your finances. There’s a pit in your stomach and you choose not to look at your retirement funds. You hope that markets will stabilize and wonder what the rest of the next four years is going to look like?

(Today's headlines in the Wall Street Journal)

Since 2016 we have had one crisis after another. The impact being that many people today are numb to catastrophes, wars, and pandemics. Some hunker down. Others revert to crisis mode.

There is no doubt that this new financial crisis—which may pass quickly or endure—will change how your customers behave. Even if consumers are proponents of tariffs and welcome isolationism, their behavior during 2025 will change. And as experience strategists it’s our job to understand quickly what people are doing and adjust. If your company is going to succeed you must be able to anticipate human behavior and customize the experience to fit their new needs.

I have been arguing now for 12 years that companies need to stop putting so much emphasis on customizing for preferences and instead learn to customize for the situation that people find themselves in. To build the competency to adjust to people’s changing circumstances requires more than a flip of a switch. You have to plan for it.

Now, many companies may be in a better position to adjust to new market realities because of COVID. They may have developed capabilities to move quickly. They may have multiple channels to support customers. They may have a higher level of organizational resilience.

But tariffs and reshaping the global economy are not the same as COVID. We have not reverted back to 2020. We are in uncharted territory again.

How Consumers Behave In A Financial Crisis

In 2008 I was doing field research for the bank with the highest customer service scores in the United States: Wachovia. An amazing brand that got bought by Wells Fargo in 2009. Our team at Stone Mantel started a large ethnographic research before the crisis erupted and ended the study as Wachovia ceased to exist.

We witnessed people go through the stages of shock. As we talked to them about their money, we were able track their shift from spending mode to saving mode. We met with people who were upside down on their mortgages. We talked to people who were let go because of great recession. Every part of their lives was affected.

People dealing with a financial crisis pull back. They don’t travel as far from home. They become price sensitive and will seek the best possible deal. But they also find ways to splurge. The pressure they feel from financial uncertainty builds within them. A splurge helps them to release that pressure. A company that wants to win over such customers should to be careful to not increase the austerity pressure that they feel.

Like the pandemic, during a financial crisis people find meaning in little things. They ascribe meaning to their home activities and appreciate kind customer service more. This financial crisis is different from 2008 because it’s largely driven by one man and his political movement. In 2008 there was no ‘purpose’ behind the crisis. Trump and many of his followers believe that there is a purpose to this crisis.

Therefore, I would be very careful as a company about saying or doing anything to your customers that feels like you are shaming them or blaming their decisions for their lack of funds. In 2010 financial institutions segmented their customers into spenders and savers. That would be a very bad thing to do this time around. Likewise, if companies decide they need to raise prices to offset tariffs, be ready to demonstrate the exact amount of the increase needed. Public utilities know how to explain rate increase. Learn from them or you will face backlash. Blaming ‘inflation’ will not work and price gouging will be seen as a political statement. One you do not want to make.

A Focus on Modes and Life Systems Builds Trust

Many of you who read my posts are former Collaboratives members. You know that we’ve been talking about two topics now for years. The first is the most people spend most of their time today in modes. A mode is a mindset and set of behaviors that people get into temporarily. A mode can be positive (peak financial performance mode) or negative (no cash mode). People shift modes depending upon their situation and right now their situations are changing!

You can help your company customize experiences—thereby creating value for customer and company—by supporting modes. I’ve written a whole chapter on this topic, here.

But just as important to human behavior today is the second topic we’ve covered for many years: life systems. A life system is a set of beliefs, processes, technologies, and relationships that people establish to help them manage or balance different parts of their lives. The three most important life systems are personal health and wellbeing, family relationships, and finances. When finances are out of whack, it impacts health and wellbeing, and family relationships.

People today create life systems to keep things from getting out of whack. They want balance. And so they depend on their beliefs, their technology, and their own systems to help them handle dramatic changes. The crisis in 2008 most likely forced people to revisit their life systems (we hadn’t discovered life systems yet so we don’t know for sure). Certainly, the pandemic did. And if today’s stock market troubles turn into a long-term crisis, people will strengthen their financial life systems to resist the negative impact of the world they face.

My friends, now is the time for experience strategists to step up. You should be the ones that your companies turn to for advice on how to adjust. Things are dynamic and always will be. You need to present strategies that work for dynamic situations.

This year in our Collaboratives we will be focused on helping you build your strategy muscles. Join us. And make a bigger impact in your organization.