October 25, 2011

Death Spiral: Customer Age

Pay really close attention to the average age of your customer.

I mean this!

By and large, most businesses have a customer base that ages as time passes, it's just the way life works.  In other words, if you had a 45 year old customer in 2001, you probably have a 48 year old customer in 2011.

Businesses locked in a Death Spiral often have a rapidly aging customer base.  The 45 year old customer in 2001 becomes a 53 year old customer in 2011, and will become a 61 year old customer in 2021.

This is a simple metric that everybody can track, with a simple demographic overlay.  Spend a few pennies, and see if your customer base is aging at a disproportionate rate.  If it is, you know you may have a business that has future potential to be locked into a Death Spiral.