UK plc missing out on £27billion baby boomer spend

A research project discovered that nearly two thirds of business leaders focus their efforts on the younger demographic. This bias means that organisations are potentially missing out on a large proportion of the ‘silver pound’ economy – shown to be worth up to £43 billion in annual spending.

The study by the Institute of Customer Service reveals that a greater focus on the older market would be more lucrative for organisations across a number of business sectors. This is shown most overtly in the utilities market, where baby boomers outspend millennials by £4.3 billion each year, in the travel sector where the difference is £2.2 billion, and in the insurance market.

Yet British business has a long way to go to meet the needs of baby boomers.  Just 7 per cent believe that customer service is ‘geared towards people of my age’, almost half claim they have stopped buying products or services because of bad service and 1 in 5 baby boomers also lament the fact that ‘employees lack the skills to meet my needs’.
Jo Causon, CEO of The Institute of Customer Service, commented: “Of course it makes business sense to target the millennial market to build relationships that establish lifelong loyalty, but repeat purchase from the younger generation is by no means a guarantee of better business performance.  By revealing that there is too much focus on one demographic, our research highlights a massive opportunity for UK plc to maximise profits by targeting both sections of the UK population. If business can identify core values that both sets of customers are aligned with, it could transform their bottom line.”

Asked about the factors that influence their spending, both millennials and baby boomers are driven by trust.  They are also equally likely to purchase based on recommendation at 27 per cent.

Both place high importance on clear and effective communication from staff and good complaint handling, and equal emphasis on courteousness and respect for customers. Equal proportions of each demographic also expect to receive a personalised service.

However, baby boomer spending is significantly swayed by excellent service, with 48 per cent citing this as the most important factor influencing their spend, compared to 24 per cent of millennials.

Jo Causon continued: “Businesses may think that millennials and Baby Boomers value different things, but the reality is that they share similar desires; the difference is that they want them delivered in different ways. This is where investment from businesses must come – ensuring both Baby Boomers and millennials receive excellent service in the channels that they want. If businesses needed to focus resource on one mode of communication, web based interaction is an expectation for both demographics.”

Whilst both generations place greatest emphasis on email as a preferred mode of communication to contact businesses, 84 per cent of baby boomers expect to be able to contact companies through telephone or face to face contact at 55 per cent, with little expectation to make contact through apps at a mere 6 per cent and social media at 8 per cent. Millenials favour a multi-channel approach, with significant proportions expecting contact to be possible through all modes of communication.

However, 30 per cent of business leaders have not considered providing different styles of customer service to different ages. Even though 51 per cent of business leaders are planning on increasing customer service spend and 30 per cent invest in customer service as a priority, only 7 per cent see it as integral to the growth of their business and economy.

Jo Causon concludes: “Baby boomers are sending out a clear message to British boardrooms. They will spend money if service standards are improved and if they believe that they matter to an organisation.  It means that focusing on skills development to ensure excellent communication and a personalised service will help secure the loyalty and business of both demographics. Ensuring service is up to scratch across all channels will reap the rewards of the added silver pound.”

The research was conducted to coincide with National Customer Service Week which takes place between 3 and 7 October 2016.