Customer Loyalty: Age Matters
Last month, The Economist published an article titled “The U bend of happiness” and showed that as people move towards old age they may lose things they treasure; their vitality, their mental sharpness, their good looks - but they also gain what their younger counterparts spend lifetimes pursuing: happiness.
As I was reading this fascinating piece articulating our human subtleties, I thought: could this internal feeling externalize in terms of customers’ satisfaction with the companies they transact with? My curiosity led me to link some client data some findings from The Economist. What I discovered is that there is a high correlation (0.84) between self-reported well-being and customer satisfaction.
There are many caveats to this initial exercise (I only looked at one industry sector, the data from The Economist is gathered in the US and mine in the UK, etc), but the correlation was too strong ignore and the conclusion seems perfectly intuitive.
Assuming this relationship holds true, what are the ramifications for your business? Here are some initial thoughts:
- Put more effort in satisfying younger customers: Companies should place more emphasis in satisfying their customers aged 35 through 55, as they seem to be less happy in general and have higher expectations on the companies they solicit products and services from (an explosive combination).
- Consider age differences for your loyalty scheme: A recent study from Gyro : HSR shows that people exhibit brand loyalty for different reasons at different stages of their lives. For example, while younger customers will be more driven by tangible rewards, older customers would prefer to be personally acknowledged for their custom.
- Keep in mind older customers have lower income and need to change their spending patterns: As reluctant as an older person could be to change his / her consumption habits, the truth is that these consumption habits sit in a downward income trend (at least this holds truth for the majority in the UK). This unavoidably leads older consumers to trim down their consumption habits. A recent study of consumption patterns among older consumers shows that people aged 75+ tend to spend less across a wide range of consumption categories.
The list could go on; but these are my first thoughts on the topic. Would love to hear your thoughts on this…please hit reply!