Dollars and Sense

This just in from the Diesel Technology Forum: Registrations of diesel cars in the U.S. are up 24%. Hybrids are up 33%. These increases represent disproportionate growth because total automobile registrations only climbed by 2.7% between 2010 and 2012.

“This consistent growth in clean diesel registrations in the last three years is particularly noteworthy since it has occurred during an economic recession, which was topped off by some of the highest diesel fuel prices in U.S. history," says Allen Schaeffer, the forum's executive director. "Even in the face of these significant challenges, diesel buyers are seeing the big picture and long-term value by investing in record numbers of clean diesel cars and SUVs.”

What? Consumers are seeing the “big picture and long-term value?” I was surprised by this statement, until I read more data in new research about the psychographics of the old-house owner commissioned by Old-House Journal magazine.

In addition to being publisher of Clem Labine's Period Homes and Clem Labine's Traditional Building magazines, I am also Old-House Journal's publisher. (All three magazines were founded by Clem Labine, who still writes prolifically for Restore Media.) On the occasion of Old-House Journal's 40th anniversary, I decided to commission research about the information needs of its readers, as well as their demographic and psychographic profiles. The readers of Old-House Journal are, in many cases, the clients of the traditional building industry professionals who read my letters and blogs.

So, I thought you might be interested to hear what we learned from our research and how Old-House Journal and Period Homes, for that matter, have anything to do with diesel fuel. The chart, below, shows you how.

Old-house owners who hire professionals to restore, renovate, design and build their room additions and period homes place a high emphasis on quality and value. In fact, according to the research, almost 70% say they “buy high-quality products even if it costs more,” while 47.5% claim they are “willing to pay more for environmentally friendly products.” But then they also tell us, “I like to be thrifty. Being economical or careful with money and avoiding excesses are important.”

That’s the connection between consumers of old-house products and services and consumers of diesel cars and hybrids. Last time I checked, diesel fuel, and the cars that use it, are more expensive. So are hybrids. This reality suggests that there was a flight to quality in the recession and continuing adherence to a conservation ethic begotten from hard times. How do we reconcile the contradiction between people who are willing to pay more for quality and the same people who want to be “thrifty?”

Value! Look at the portion of the chart showing how old-house lovers think “tradition and preserving time- honored customs are important to me.” What should we take away from this insight into the hearts and minds of old-house lovers?

One thing we learn, or are reminded of, is that the perception of value has always been a driver of consumers' purchasing behavior. But consumers have differences in the way they perceive value. Some care deeply about what you make or the service you provide, and others do not. Some make what I like to call “high intensity” purchases; others make “low intensity” purchases.

Buyers only take the time to understand the value of a product or service if they really care about it. Do your clients consider what you offer to be a high-intensity decision? Do they have the knowledge to appreciate the quality and value you provide? Or do they lack an understanding of what you do and therefore devalue it, as if it is a low-intensity decision?

A low-intensity purchase decision is based on low price. A high-intensity purchase is based on high quality and perceived value. Which decision are your clients making? Chances are, what you sell costs more but gets better mileage.

Who is most likely to put a high value on the quality you provide? It’s probably the client who says, “I buy high-quality products even if they cost more” and “I like being thrifty.” This is the client who associates quality with durability and durability with thrift.

“Seeing the big picture and long-term value” is a concept well understood, it seems, by the owners of hybrids and old houses.