Marketing to Older People: Fact and Fiction
The following article is to appear next month in BT Resources, a newsletter sent by BT to its financial services customers.
Marketing to Older People: Fact and Fiction
The population of the UK is now older than ever before. According to the Office for National Statistics, there are now more adults aged over 45 than there are under 45. This was described by a Government report last year as a ‘tipping point’ and the UK population will continue to age for the foreseeable future. According to the Economist (26.06.09), this is a ‘slow-moving but relentless development that in time will have vast economic, social and political consequences’.
For the financial services industry in particular, an ageing population provides many opportunities. However, there also challenges – not least, cutting though the many false assumptions, stereotypes and myths surrounding this important group. If these are not identified and avoided, customer relationships will inevitably suffer. To demonstrate this, let’s examine three areas of relevance to anyone working in the financial services sector: customer wealth, retirement and imagery.
Just about every time you read an article about marketing and the over-50s, you will inevitably be told that this group accounts for 80% of the UK’s wealth. Coupled with the size of this group, this ‘fact’ suggests a large, relatively untapped and lucrative target market. However, the most extensive, thorough and impressive research programme ever conducted into older people - the COI ‘Common Good’ research project (2006) - concluded that: ‘there is insufficient data available to support this apparent fact and we have been unable to find support for it.”
The reality is that this is an extremely diverse and complex group of more than 20 million people. Some people are extremely wealthy, while it is also the case that – according to Age Concern – more than 2 million older people live in poverty. The message here is that the basics of marketing – segmentation, targeting and positioning – are crucial. Do not rush into mass marketing on the assumption that most older people are extremely wealthy.
Harriet Harman - in her role as Minister for Women and Equality – recently pledged to end compulsory retirement, hence giving people the right to work beyond the state pension age (SPA) of 65 for men and 60 for women. The fact that older people are able to enjoy equality in the labour market is of course to be welcomed.
However, this is not just about personal freedom, human rights and social justice. For many people, continuing to work after the SPA is not a matter of choice but of necessity. As Andrew Harrop of Age Concern/Help the Aged recently commented (11.01.10), ‘Millions of old workers need to carry on working past state pension age to boost their savings and pension pots’. What’s more, many such jobs are likely to be low-paid and part-time – only the minority will be engaging in a ‘portfolio existence’ of consultancy projects, non-executive directorships, and golfing holidays in the Algarve.
And of course, continuing to work after the SPA assumes that one has a job in the first place. In fact, 30% of people aged between 50 and the SPA are unemployed, mostly involuntarily. As a result, this age group now exhibits the highest rate of entrepreneurial activity, with many people starting second careers in their fifties.
For these reasons, retirement should now be seen as a process, not an event, says Paul Sweeting, Professor of Actuarial Science at the University of Kent. In fact, just 17% of men and 10% of women now retire at the SPA, according to the Older Workers Employment Network.
According to press releases and publicity materials issued by many financial services companies (I will name no names), life has never been better for people entering retirement. A vivid picture is painted of a ‘generation’ which ‘according to new research’ is invariably enjoying life more than ever before. This healthy, active generation is busily riding bikes, travelling the world, bungee-jumping and generally enjoying a carefree life of freedom, unencumbered by financial concerns.
The research of one company found that people aged 52-60 are apparently ‘living a dream life that is the envy of the younger generation’ and have found ‘a form of perfect work/life balance’. Another found a ‘new generation’ of ‘GoAPs – ‘Go-getting Active Pensioners’ which ‘rips up the rule book on retirement’ and can claim that ‘we’ve never had it do good’. And one otherwise highly-respected organisation recently described people over 50 as ‘Gap Year Grannies’ – I’ll leave you to fill in the gaps here.
This group of shiny, happy people is sometimes described as the ‘baby boomer generation’ – that demographic bulge of people born between 1946 and 1965. This age group is said to confound societal expectations in terms of activities, aspirations, attitudes, behaviour and lifestyle. In reality, it is implausible that millions of people will share anything very much simply because they are the same age. Unless a range of other segmentation variables are also applied, targeting by age alone is unlikely to be effective.
Above all, it is important to note a number of studies which have found that most people approaching retirement are extremely concerned about their future finances. And with good reason – a major research study published in December 2009 by Janus Capital again confirmed the ‘alarming deficits’ in personal savings and retirement provision that bedevil the pensions industry. What’s more, the increasing number of people having to care for both their adult children and their ageing parents – the so-called ‘sandwich generation’ – are finding their savings being eroded before retirement.
The imagery used in advertising and communications materials is also often at variance with reality. There is a solid body of research which demonstrates that images of older people are either excluded altogether from advertising and communications materials, or are demeaning, patronising or stereotypical when used. According to academic researchers Carrigan and Szmigin, ‘despite all the evidence, advertisers continue to pursue youth’. And not surprisingly, older people resent this – all the research tells us that older people wish to be recognised, treated as serious consumers, and depicted in a realistic manner.
This is a large, complex and diverse age group. They are not a ‘generation’, they are not a homogenous group, and they do not wish to be defined by age. Most importantly, they do not conform to a set of pre-defined rules. I wish you well in your efforts to work with your older customers to formulate your own shared rules.