FAQ
What is the New Economic Order (NEO)?
In a nutshell, the New Economic Order is a social group comprising high-value consumers (NEOs) identified using spending propensity and psychological profiling to determine and measure the relative value of consumers.
Nine years of extensive consumer research drawing upon data from Australia, New Zealand, the USA, and the UK has defined three consumer groups –- NEOs, Evolvers, and Traditionals – that together make up all of society. This research reveals the changing fabric of society and also provides practical insights into the potential value of the different social types. It demonstrates graphically that demographics such as age, gender, and occupation are poor determinants of consumption behaviour and thus consumer value.
Traditionally, customer value is determined at the enterprise level using transactional history – how much and how frequently customers spend. The severe limitations of this approach inhibit the success of customer relationship management (CRM) in even the largest corporation. The NEO typology overcomes these limitations and provides management with a scientific measure of consumer value and potential customer profitability.
How do you identify NEOs?
NEOs are very individualistic, and although they make up 24 per cent of the population in the USA, the UK, and Australia, they do not fit traditional demographic or slice of life descriptions like Generation X, and Baby Boomers. They can be identified across all age and income groups by a range of spending, attitudinal, behavioural and psychological characteristics including a desire to be in control of their own lives, a passion for authenticity, an urge for the hand-made, a desire for change, an appetite for technology to accelerate slow-time and continuous, high-margin consumption.
The Social Intelligence Lab has developed algorithms to identify NEOs on enterprise databases, mailing lists, and to pinpoint geographic areas with a high proportion of NEOs. See NEO Consulting.
Why are NEOs important to business?
NEOs consume constantly. They will buy new technology – all those mobile phones, laptops, personal digital assistants, MP3 music devices, digital cameras and scanners – but they'll also spend their hard-won rewards on home extensions and renovations, travel, eating in and out, drinking, banking, investing and an entire range of products and services that make their lives easier, more individual and more controllable.
By now you may be drawing a picture in your mind of an upscale, elite group with more money than practical sense. That is a mistake. Remember they are far from some small niche market – they a quarter of the entire population of the developed world and have political, social and economic clout.
Why are NEOs the way of the future?
NEOs are driving the post-corporate, post-institutional, neo-modern era in which individual power replaces institutional power. By 209 half the population responsible for two-thirds of all discretionary spending exhibited NEOcharacteristics.
On any day in the great cities of the world, NEOs are actively rejecting the influence of the traditional gatekeepers of authority such as bureaucrats, bank managers and doctors. Instead, they are putting authority back in individual hands and, while this has implications for government at all levels, it is business that will be most affected by this seismic social activity.
This is the new world of business and the rules that applied in the past have to be thrown out.
Why are labels like 'Baby Boomer' and 'Generation X' a behavioural hoax?
Given society's fascination for labels or pigeonholes into which we neatly place prominent and influential groups, it came as no surprise when the terms Baby Boomer and Yuppie came into prominence in the late seventies and early eighties, only to be followed by Generation X and Generation Y in the 1990s. Some of these labels become pejoratives – the term Yuppie for example – while others, such as Generation X and Generation Y, become badges of honour; rites of passage. But all are fundamentally misleading as drivers or determinants of consumption behaviour.
Generation X and Generation Y join the Baby Boomer label as part of the greatest behavioural hoax of the past century. Let's look at the term Baby Boomer – technically anyone born between the end of World War II and the early 1960s.
Business around the world bases decisions on predictions of the needs of Baby Boomers – as if an urban 53-year-old academic will behave in ways even vaguely similar to a 57-year-old middle-ranking sales manager in a global corporation who lives only two suburbs away. Why do we imagine that the two demographically similar people would like to read the same books, see the same movies, buy the same motor vehicles, vote for the same political party, believe in the same religious doctrines and eat the same food – just because they're in a similar age group? Granted, age imposes certain common life-stage concerns like health, insurance, superannuation, and so on, but behaviours, attitudes, ambitions, tastes and aspirations will always differ across such a wide range of people. Accordingly, different Baby Boomers will buy completely different health cover, different insurance products, and will approach superannuation in vastly different ways.
Demographics, while useful, do not determine consumption behaviour. There are blue collar NEOs, young NEOs, mature NEOs, Baby Boomer NEOs, and plenty of Generation X NEOs.
What are the fundamental differences between NEOs and Traditionals?
NEOs and Traditionals are as different as field mushrooms and white truffles. Traditionals who constitute 50 per cent of the population are primarily driven by price and 'the deal.' They place the general interest ahead of individual interests, largely because they feel they can't make much of a difference on their own. They have a low locus of control and so, unlike NEOs, surrender decision-making to others and are attracted by the certainty of global brands, those reassuring symbols of the big companies they grew up with and that are reminders of the way things used to be.
Life for Traditionals is pretty much a matter of luck with life's ups and downs being readily accepted as just the way things were meant to be – and to a Traditional there's not a lot that can be done about it. While this reliance on fate may deter them from seeing a doctor when they fall ill, the flipside is that the reliance on luck takes Traditionals into the universe of gaming and bargain hunting where even small windfalls deliver large amounts of satisfaction.
In contrast to Traditionals, NEOs are driven by quality, design, experience, and service – all ahead of price. They place individuality and individual freedom ahead of all else and take personal control of their own destiny. They refuse to allow any authority to dictate to them, so they exert significant influence over the shape of the new society.
What is the Neo-Neighbourhood or new urban village?
The Neo-Neighbourhood is the new village where work, home and leisure converge. NEOs have redefined work, home and leisure and when they all come together in one new urban space, you have a Neo-Neighbourhood. NEOs always place the experience, enriched with content and information, ahead of any transaction. The Neo-Neighbourhood is the place of rich information, experience, edginess, and authenticity and is a place where NEOs are most likely to spend their hard-won dollars.
It can be a mix of physical and on-line experiences but when a Neo-Neighbourhood aligns with Neo characteristics, they revel in the perfect place to live, work and play.
There are great examples of naturally evolving Neo-Neighbourhoods in the world, but few, as yet, developed from scratch. So NEOs gravitate to the close approximations of the new and evolving village that resemble their image of a better place, free from traditional shopping centres and theme bars.