May 09, 2013

Are Customers Moving Into Your Target Demographic?

The topic comes up nearly every week.
  • "We're excited, because our core customer is 60 years old, and the last half of the Baby Boomer generation is moving into our target demographic!!"
You know what?  You might be 100% right!

How do you know if you are right?  Follow these three steps:
  1. Find out the average age of your 12-month buyer, back in 2008.
  2. Find out the average age of your 12-month buyer, today, in 2013.
  3. Calculate (2) - (1) = Age Change.
What value do you get for "Age Change"?

An example.

Five years ago, your customer was 57 years old.  Today, your customer is 60 years old.  Age Change, therefore, is calculated as 60 - 57 = 3.  In the past five years, your core customer file aged three years.

When "Age Change" = 0, you are 100% right, demographics are working in your favor.  You serve a need at a point in a customer's life.  On average, this is a good situation to be in.

When "Age Change" = 3, you have a different situation to resolve.  You are not serving the needs of a customer at a point in life.  Instead, you are following a demographic cohort into retirement.  This isn't good or bad, it's just different.

Most catalogers today live in the "Age Change = 3" situation, for two reasons.
  1. A strict adherence to a multi-channel philosophy, where the online experience must be driven by the catalog, not grown organically via online marketing tactics.
  2. An unquenchable thirst for new names, sourced via catalogs, obtained from the co-ops.
When you tether website traffic to a combination of catalogs mailed to housefile buyers, and catalogs mailed to co-op prospects, you accelerate the age of your average customer.  

I observe this problem every single day.  It's getting tiring!

Don't believe me?  Ask Experian or Epsilon to perform the average age analysis listed above.

I have several clients who manage a business with an "Age Change = 0".  In these cases, the client has a very strong online marketing team, and/or possesses a merchant/creative team that finds (and presents) new products that appeal to customers 1-3 years younger than today's core audience.  The majority of catalogers I've worked with, in comparison to retail/e-commerce brands, have weaker online marketing teams, given the obsession with driving e-commerce through catalogs.

The key, folks, is to focus on acquiring customers 1-3 years younger than today's core audience.  Keep that metric in mind.  Not 25 years younger.  1-3 years younger.  You can build a bridge to the future doing this.  Look at the merchandise slightly younger customers purchase, and factor that information into your product development strategy.

Most importantly, do the analysis!  It's simple, it's cheap, and it's critical to the strategic direction of your business.