10th Oct 2016
UK businesses are missing out on £27bn of revenue by prioritising the millennial market over baby boomers, new research from The Institute of Customer Service shows.
The study, entitled The Service Generation, reveals a huge disparity between millennials’ and baby boomers’ preferred methods of communication when contacting organisations. For example, while 41% of millennials (those aged 18-34) would rather contact a firm via social media, just 8% of baby boomers (those aged 55+) favour the same method.
Yet despite the fact that, in a number of sectors, the expected average spend over the coming year is greater for baby boomers than it is for their offspring, nearly two thirds of business leaders focus their efforts on the younger demographic. This bias means firms are potentially missing out on a large proportion of the ‘silver pound’ economy, which is worth a total of £43bn in annual spending.
“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,” explains Jo Causon, The Institute’s chief executive. “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.”
Asked about the factors that influence their spending, both millennials and baby boomers are driven by trust (53% and 55%, respectively). They are also equally likely to purchase based on recommendation (both 27%).
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% citing this as the most important factor influencing their spend, compared to 24% of millennials.
“Baby boomers are sending out a clear message to British boardrooms,” says Causon. “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.”