Marketers: Listen closely, because there's an alarm sounding, and it will change how you target customers. It's warning you that you can no longer take brand loyalty among older consumers for granted. In fact, older customers, according to some studies, are frequently less loyal than younger ones.
But are they really, or is this just a false alarm?
If your marketing strategy has followed the traditional method of chasing younger consumers, while assuming that the brand habits of older consumers are largely set in stone, this warning is for you. And if you also believe that a simple shift in media spending is the solution, then you need to completely rethink your marketing plans.
A recent study sponsored by AARP Publications and conducted by Roper ASW warns that companies can no longer take brand loyalty among older consumers for granted. According to AARP's Roper survey, brand loyalty among older consumers is hardly as prevalent as marketers might believe. The survey also reports that older consumers are quite open to trying new brands and are receptive to marketing initiatives -- including, of course, advertising in publications such as those produced by AARP.
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These findings are completely the reverse of the conventional wisdom about marketing to seniors: that seniors dislike change and won't try new brands.
The study underscores an excellent point. For some time, media dollars have disproportionately chased younger demographic audiences. According to a May 13, 2002, article in Advertising Age, about 38% of Americans are now 50 years old or older. Yet in dramatic contrast, only an estimated 8% of advertisers' TV ad spending is directed toward this older age group. Seniors, it follows, are largely under-targeted by advertisers.
To prove its point, the AARP survey focused on the percentages of consumers within age segments who reported a preference for only one brand. That may appear logical, at least at first glance. Many assume that brand preference is a reasonable approximation for "loyalty"; those who prefer one brand are thus deemed "loyal."
As the study reports, there are some surprises. For example, 34% of younger (aged 18-44) consumers expressed a preference for one single stereo brand. However, consumers aged 65 or older exhibited single-brand preferences that were actually weaker, rather than stronger. When it came to stereos, older consumers had only 17% reported brand preference, which would make them only about half as loyal as their younger counterparts.
Similar counterintuitive trends were noted for car rental companies. Just over one-fifth (21%) of the younger group was defined as being loyal, while only 12% of the older consumers indicated a single-brand preference. Even for categories such as airlines and bath soaps, which seniors use more often than other categories (such as athletic footwear and DVD players), there was no appreciably greater brand loyalty among seniors than among the younger age segments.
Thus, AARP contends that seniors, who have abundant brand experience, are not appreciably more loyal to specific brands than young adults entering the marketplace and making purchase decisions for the first time. In fact, for several product categories, the study finds that seniors are actually less loyal.
Interesting. Provocative. But is it true?
Missing the point: brand engagement, not brand preference
While brand preference is a simple, easily administered measure of a customer's relationship with a brand, Gallup Organization researchers have found that preference is an incomplete and even misleading measure. Preference measures don't plumb or reveal the real depth of a customer's relationship with a brand. These measures overlook a critical emotional dimension: a customer's enduring bond to the branded products and services they use.
In short, preference does not assess loyalty.
A more complete brand-relationship measure, one that assesses a customer's level of emotional engagement with a brand, reveals a very different picture. This customer engagement measure also underscores the need for very different marketing activities for any company that wants to enhance its brand relationships.
Across six different product and service categories ranging from automobiles and airlines to banking and online retailing, Gallup found that customer engagement was almost universally higher among those aged 55 or older than among the 18-24 or 25-34 year-old age groups.
Older consumers are not less emotionally attached to the brands they trust and rely on. In most cases, they are markedly more attached to the brands they use. For example, in the 55+ age group, 31% of auto owners were "fully engaged" -- Gallup's definition of an emotionally engaged customer. In contrast, only 23% and 16% of consumers in the 17-24 and 25-34 year-old age groups were fully engaged (respectively). Among those who shopped at mass merchandisers, 34% of those 55+ years of age were fully engaged. In clear contrast, only 9% of the 17-24 and 25-34 year-old shoppers were fully engaged with the stores where they shop -- less than a third of the engagement levels noted among the older consumers.
And these patterns of engagement aren't limited to the highly established and familiar auto and mass merchandiser markets. A majority of those aged 55+ (52%) using online services were fully engaged with the Web site marketers they relied on, while only 9% of the youngest users (18-24) showed evidence of being fully engaged.
Unlike the AARP/Roper survey, Gallup scientists found a significant linear trend. In five of six categories, Gallup found that the older the customers, the higher their level of engagement with the brands they use.
Delivering versus promising
Many seniors, in almost every product category, are still open to changing brands, in spite of their relatively high engagement levels. In most categories Gallup has studied, even though seniors are more highly engaged with the brands they use, only a minority are fully engaged with their current brands. But when it comes to attracting these older consumers, don't assume that creating provocative and intriguing ads is the answer.
To build brand engagement among senior consumers, companies don't need to make stronger brand promises or make them more often and in more media. Rather, companies must focus on delivering on their brand promises -- especially to an audience that undoubtedly has experienced disappointment with unkept marketing promises.
The path to enduring customer relationships requires excellent performance at the two key touchpoints that most affect customer engagement: the people and the products that are called upon to consistently fulfill the promises made by the company. Advertising is not the solution.
Thus, as AARP suggests, companies can and should market to seniors. There is a growing population of older consumers whose loyalty cannot be taken for granted. But the senior market won't be captured just through communication or by refocusing a company's media spending. The real challenge with seniors, as with all age groups, is to deliver consistently and continually at every important point of customer contact.
The ultimate benefit to the marketer is compelling. Companies can establish enduring and profitable brand relationships, and Gallup has shown that these emotional connections do not disappear as consumers age. To create great brand relationships, companies need to shift their focus from merely generating brand preference to building customer engagement. This new focus represents a formidable challenge to the would-be brand builder, but companies that build engagement build brand relationships that have been proven to last.