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01/10/2018
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Demographic Drift, and what it means to your business

 

Baby Boomers are retiring, Generation X is moving into executive management roles, and Millennials are taking their places in the market. As the United States, once again, experiences the chaos of demographic shift, many business owners have been left asking where their customers went!

"Demographic shift" (sometimes called "Demographic drift") is a term marketers use to describe the expected change in a population due to aging. Knowing how, and the rate at which your audience transitions, offers a number of powerful insights, and can be the difference between positive sales growth, and closing your doors, for good.

To better understand the concept, let's use the example of "Sally's Campus Cookies", a pretend business that offers late-night cookie deliveries to the local university campus area. The owner, Sally, is currently 40, and her sales records show that more than 50% of her orders are placed by people aged 19 - 24.


Sales Down - cartoon

For the last 10 years, she has marketed to that demographic successfully. Now, in 2018, her sales are down 23% and despite re-doubling her marketing efforts, she just can't bring those numbers back up. If that sounds familiar, it's because you aren't alone. In 2017, 98% of all client consultations we performed listed flagging sales as their #1 challenge. The reason the situation exists is because the population of each demographic gets older and changes. Meanwhile, the demographic appeal of their product remains the same.

For Sally, while her service certainly appeals to every age demographic that likes cookies, her business model was designed to offer services to college students. Her business model and her sales receipts show that the age group her business appeals to will always be 19-24. We should also be aware that Sally is nearing the end of what we call "Owner / Demographic synchronicity", which is a term that describes how closely the business owner can identify with their target audience by being a member, themselves.
Growth Spurt - Design splat comic

Since opening, Sally has marketed her cookies to people who were similar to her. Because of this, when she was starting out, she inherently knew the words to use, and the offers to present that would have the most appeal because she was marketing to clients who were just like her. Now however, by applying the "5-year rule" to her age, we see that Sally, in general, will have "Owner / Demographic synchronicity with with clients aged 35-45, rather than the 19-24 year-olds her business depends on.

If you're like Sally, you should be asking yourself the following questions as we continue:

  • What age group does my product ACTUALLY appeal to?
  • What demographics have my target customers already gone through?
  • What age group am I / is my sales director in?
  • Have I, or my historic clients "aged out" of the demographic my business is targeting?
  • What is the overall trend for demographic changes?
  • Are the age demographics split down generation lines?


Since the census covers more age groups than we use in marketing, we compiled the data into the age groups used in marketing, and compared 2007-2011 with 2012-2016.


Comparing 2007-2011 and 2012-2016 data for US population, by marketing age demographicData is correct and current as of 1/2018, according to the U.S. Census Bureau

With this report, a number of actionable insights become available!

  • The 0-18 age group has shown an decrease in population.
    • Sally's audience is likely to decrease as people age into the 19-24 age group
    • Sally may want to consider diversifying her offering now, to be prepared for the upcoming shift!
  • Despite flagging sales, the population of Sally's target audience has increased.
    • This suggests the target audience is using a platform, tool, or means of communication Sally isn't aware of
  • Given the birth years for these age groups, this indicates a "generational shift".
    • Despite what was previously believed, Sally's clients are currently Millennials, not Generation X
    • Generation X has made the transition out of Sally's target demographic.
    • Sally's target audience will be members of "Generation Z" in 5-10 years.

While this might look like a big problem, it's actually an expected part of a company's life cycle.
The real challenge is finding out where Sally's target audience is, what platforms they're using, and what offers resonate the most with that generation's ideals. The good news for Sally, is that with this research now completed, she can start building her strategy with a focused direction, now that she better understands the cause of her decreased sales!


Bookmark this page! In our next blog, we'll use these insights as a starting point for audience analysis, and as a tool in exploring ways to increase appeal, and boost sales!

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