Your How To Source: Issues of Value, Ethics, Human Needs and Deeds Edited by Heinz Dinter, PhD
Older consumers flex their muscle (and
Any child knows that good things happen when grandparents reach for their wallets. Internet executives are starting to remember the feeling.
Older shoppers, who generally sat out the Internet’s first big commercial push, are helping to feed the surging Web economy. Many of them now have a few years of Internet surfing behind them — enough to give them enough confidence to click the “buy” button. And because this group has far more disposable cash than any other, executives who have not already begun tweaking their strategies to reach them will probably do so soon, online analysts and executives say.
“This group has been kind of overlooked until now,” said Heather Dougherty, an analyst with Nielsen/NetRatings, an online consultancy. “But the older boomers are far from newbies at this point. We’re not talking about people who are 100 years old and haven’t seen a computer.”
Ms. Dougherty said a recent Nielsen survey found that 27.4 million people age 55 and older bought something online in the last six months, compared with about 26 million a year ago. By contrast, the number of adults who bought something online in the last year actually dropped, to 107.4 million from 112 million.
Ms. Dougherty said that since last June, senior citizens have bought clothing, shoes, flowers and gifts at a faster rate than the population in general.
Sites in other categories have also been buoyed by this group. Take Travelocity.com, the online travel agency. In October 2004, Travelocity, owned by Sabre Holdings, became one of the first big Internet companies to woo the members of AARP, which caters to people age 50 and older. The agency created a version of its site specifically for the organization, AARP Passport (at www.Travelocity.com/AARP).
Philip Charles-Pierre, a Travelocity executive who helps distribute the company’s content on other sites, like Yahoo and AmericanExpress.com, said the AARP Passport initiative had helped the company tap an increasingly affluent market. “I was at an AARP conference and someone mentioned what the boomers were about to receive in terms of inheritance, and it’s mind-boggling,” he said.
Travelocity offers exclusive perquisites to AARP members on the site, like discounts on flights and hotels, cruise-ship cocktail receptions and AARP assistants dedicated to helping members during their cruises.
The initiative has been “extraordinarily successful” on a number of fronts, Mr. Charles-Pierre said. Sales rose 300 percent in the first quarter of 2006 from the same period a year earlier, and visitors to the site book travel at a rate that is “significantly higher” than other sites where Travelocity offers bookings, he said.
The deal has also helped AARP, which receives an undisclosed share of the revenue from each booking on the site. But Howard Byck, vice president of business development for AARP Services, which helps generate income for the organization through things like business partnerships, said AARP was not sprinting into similar deals with other companies — at least not yet.
“We want to play a role in helping members adopt e-commerce,” Mr. Byck said. “But we also want to make sure they don’t fall victim to scams.”
To that end, Mr. Byck said, the AARP is concentrating more on teaching members how to use the Web safely. Last month, for instance, it helped introduce the “Get Net Safe” tour, in which representatives from AARP, Microsoft and others plan to conduct seminars in nine cities about how to avoid online fraud.
In the future, though, Mr. Byck said, he envisions other e-commerce partnerships similar to the one with Travelocity, because such deals provide tangible benefits to AARP’s 36 million members.
In pursuing these partnerships, AARP has a compelling case. Mr. Byck cited figures from the United States Census Bureau that showed while 40 percent of the United States population was 50 or older, this group held 75 percent of the nation’s financial assets and did 55 percent of all consumer spending. “Without sounding overly harsh, in many ways marketers have taken the 50-plus market for granted,” Mr. Byck said. “The reality is that you can’t do that anymore.”
Ms. Dougherty of Nielsen said one reason businesses had overlooked older consumers was that they were fixated on the 18-to-34-year-old market. Both online and off, the younger group has been heavily pursued by companies who think people’s buying preferences are sealed during this span.
“To assume someone at 35 has made all their decisions about brands for the rest of their lives is utterly ridiculous,” Ms. Dougherty said. “A lot of companies have an antiquated way of looking at older people, which makes little sense when you look at how much more disposable income they have now.”
Still, it is not easy to design advertising aimed at senior citizens without making them feel like relics. Mr. Charles-Pierre, of Travelocity, said the company’s approach for AARP Passport involved showing those “who are above 50, 70, 80 doing things they may not have had the chance, or the money, to do when they were younger.”
The result is marketing imagery in which cribbage gives way to kayaking, and shuffleboard is dropped in favor of snorkeling.
As adventurous as senior citizens might be, they are not exactly hassle-free online customers. Because many of them still approach new technology with some trepidation, executives said, they tend to rely on customer service more than their younger counterparts.
David A. Joseph, vice president of corporate communications and strategy for Audible, which sells audio books, among other things, online, said the majority of people who called the site’s customer-service lines were age 35 and older. “And I bet a lot of that is heavily loaded toward the older ages,” he said.
Those customers are apparently worth the trouble, though. “Once they get beyond the technological barrier and get into the groove, they tend to be some of our most passionate members,” Mr. Joseph said. “The lifetime value of that customer is pretty significant.”
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