In a recent article on Forbes.com, Ken Dychtwald and I describe three common mistakes marketers make with respect to retirees and other older consumers. The first is ignoring them in favor of chasing the youth market – when in fact the growing number of older Americans account for a disproportionate amount of wealth and consumer spending. The second is assuming that retirees are in decline and slowing down – when in fact most are taking advantage of the freedoms of retirement and enjoying life more than ever. And the third is assuming that older Americans are one homogenous group – when in fact they run the gamut of interests, preferences, and even ambitions. All three mistakes, and especially the third, need to be avoided in consumer marketing analytics.
The combination of population growth, increased longevity, and the aging of the outsized Baby Boom generation is swelling the ranks of older Americans dramatically. In 1950, there were 12 million Americans over the age of 65, comprising 8% of the population. In 2000, it was 35 million and 12%. Today it’s 52 million and 17%. In another 20 years, it will be 65 million and 22% - more than one American in five.
Older Americans’ economic clout is enormous and growing. Those over 65 may be 17% of the population, but they hold 38% of household wealth. Using a broader band (given a lack of granularity in much of the consumer spending data), Americans 50 and older comprise 44% of adults but hold 76% of net worth and account for 56% of consumer spending. They spend in categories you’d assume – healthcare, pharmaceuticals, travel and leisure, charitable contributions. But they also account for more than half of all spending on major appliances, cars and trucks, home renovations, and jewelry.
Ageist stereotypes hold that older Americans don’t spend their money, they’re brand loyal, and they’re interested in a limited number of products, services, and experiences. Those stereotypes are rooted in some of the behaviors of the generations preceding the Boomers, who lived through the Great Depression and then the formative years of mass consumer marketing. The Boomers, in contrast, are carrying into retirement their willingness to experiment, break a few rules, and change things.
They’ve watched their grandparents and parents retire in predictable and conservative fashion, and they want to do things differently. They want more active and adventurous “leisure.” They’re more willing to relocate. They’re more interested in working part-time in retirement (both for the money and for the mental and social stimulation). They want to take charge of their health and don’t trust the healthcare system to take care of them. Many are looking for ways to give back through “encore” careers, mentoring, or volunteering.
Boomer retirees have been actively marketed to their entire lives, and they – especially Boomer women – are savvy consumers. They see through the stereotypes of age and are put-off, often alienated. They don’t want to be painted with the same brush. Brands need to be talking to them authentically and, insofar as possible, individually. Cursory attempts to reach the older market, and to reach it en masse, are guaranteed to fail.
About half the Boomers are already retired, and more are retiring at the rate of about 10,000 a day. The practice we call “retirement” is transforming, and marketers need to take a fresh look at the people doing it.
Unfortunately, a lot of marketing organizations lack experience researching and engaging older Americans. Marketing tends to be a young person’s game, and often there’s nobody in the room representing the experience, needs, and preferences of older consumers. That’s especially true of creative agencies they employ – the average agency employee is 34. Pursuit of the “sought-after youth market” becomes a mindset. We call that ageism by omission. The antidote is to have more age diversity across the board: on product and service development teams, marketing teams, and focus and test-market groups. Older consumers may be much more interested in your offerings than you imagine, and new offerings aimed at them can drive business growth.
For marketing analytics, there’s a big opportunity to open people’s eyes to the market potential of retirees and other older Americans. But to succeed, you’ve got to make sure that ageism – explicit or unwitting – does not creep into your analyses. Here are four basic counter-measures:
Don’t use age as a key variable or indicator unless its relevance is direct (for example, most Americans become eligible for Medicare at age 65) or has been tested and proven.
Study and analyze older consumers with at least the same rigor and granularity that you apply to younger ones. That includes having older people in focus and market study groups to gain their feedback.
Conduct ageism audits of the assumptions behind models and then their performance, similar to how you would audit them for ethical biases or lapses.
Consider that you may need more personas to represent older consumers than younger ones. People in their 30s and 40s have many common constraints around work and family. People in their 60s and 70s enjoy more freedom and may well exhibit more variety.
Bob Morison serves as IIA’s Lead Faculty. He is coauthor of the newly published What Retirees Want: A Holistic View of Life’s Third Age and Analytics at Work: Smarter Decisions, Better Results.