UK plc missing out on £27 billion baby boomer spend

3rd Oct 2016

New stats reveal UK businesses are missing out on up to £27billion of revenue by prioritising the ‘millennial’ market over ‘baby boomers.’

‘The Service Generation’, a research project undertaken by The Institute of Customer Service, discovered that nearly two thirds (63%) 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 (£12.2 billion vs £7.9 billion), in the travel sector where the difference is £2.2 billion (£10.6 billion vs £8.4 billion), and in the insurance market (£6.8 billion vs £6 billion).

Yet British business has a long way to go to meet the needs of Baby Boomers.  Just 7% believe that customer service is ‘geared towards people of my age’, almost half (49%) 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 (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 (30%) 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.

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, Baby Boomers expect to be able to contact companies through telephone (84%) or face to face contact (55%), with little expectation to make contact through apps (6%) and social media (8%). Millenials favour a multi-channel approach, with significant proportions expecting contact to be possible through all modes of communication.

However, 30% of business leaders have not considered providing different styles of customer service to different ages. Even though 51% of business leaders are planning on increasing customer service spend and 30% invest in customer service as a priority, only 7% 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.  View an infographic summarising the data here.

Ends 

Notes to editors
* £27billion figure based on total expenditure of the Baby Boomer age bracket (£42,954,297,319), multiplied by the percentage of businesses prioritising Millennials (62.8%).
  £43billion figure based on the total across all categories for average spend per consumer multiplied by ONS data of the population by single year of age.

Millennial average spend

Millennial total spend

Baby boomer average spend

Baby boomer total spend

Insurance

£408

£5,975,024,475

£478

£6,752,523,492.34

Utilities

£544

£7,964,560,014

£867

£12,256,843,518.82

Health and Fitness

£199

£2,905,874,926

£85

£1,199,529,642.16

Large Home Appliances

£250

£3,660,402,067

£199

£2,818,551,087.05

Small Home Appliances

£195

£2,858,636,297

£93

£1,319,549,395.33

Computers

£246

£3,598,498,001

£144

£2,029,836,089.63

Mobile Phone

£285

£4,175,002,270

£116

£1,645,958,823.29

Television

£210

£3,068,501,756

£156

£2,199,685,337.58

Gardening

£152

£2,223,214,282

£56

£788,826,634.80

Holiday

£571

£8,357,530,310

£749

£10,585,160,735.88

Home Services

£155

£2,260,839,232

£96

£1,357,832,562.75

Average

£387

£5,662,859,931

£556

£7,857,693,908.00

Total

£47,048,083,630

£42,954,297,319


For further information please contact:
Ellie Scott, Bethan Davies or Rebecca Stevenson
E: [email protected]
T: 0207 010 0831 (Ellie Scott), 0207 010 851 (Bethan Davies), 020 7010 0810 (Rebecca Stevenson) 

About The Institute of Customer Service
The Institute of Customer Service is the professional body for customer service delivering tangible benefit to organisations and individuals so that our customers can improve their customers’ experience and their own business performance.  The Institute is a membership body with a community of over 500 organisational members – from the private, public and third sectors – and over 4,000 individual memberships.  For more information about the Institute of Customer Service go to www.instituteofcustomerservice.com.

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