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A trust gap exists between customers and companies because organisations do not understand the important issues in their customers' lives. Jennifer Kirkby explains how firms need to look at lifestage, value and lifestyles if they are to really know their customers.
By Jennifer Kirkby, consulting editor
Pigeonholing consumers into lifestage is a pretty reasonable gauge for needs: Shakespeare’s ‘seven ages of man' still elicits wry smiles, whatever our age. But today’s ‘lover sighing like furnace’ is more likely to check his mistresses views on climate change before texting his ballad. Each generation has life shaping values, and astute companies monitor these contextual factors to guide their value propositions.
As the world enters a new economic stage, now is a pertinent time to evaluate how trends in values are playing out with different generational lifestages. To start, we should differentiate between lifestage, values and lifestyle – all of which drive customer behaviour.
1. Lifestage – is based on demographics (age, and family situation). Young families naturally have different needs to young singles, empty nesters from older families.
2. Values – are what people aspire to and spring from two sources, upbringing and culture. Generational values are laid down in formative years and shape our life view, even as cultural values shift. For instance, how does the 60s generation react to the green values of today’s culture, and does this differ to the 80s generation?
3. Lifestyle – the way people actually behave given their environment.
So let’s take three of the major generational lifestages today with spending power:
- Spring greens (16-19 years).
- Generation Y (20-33).
- Baby boomers (50-70 years).
And look at how they are affected by three key cultural value trends:
- Customer power.
- Tribal success.
- Return to ‘arts and crafts’.
Cultural value trends
Cultural trends tend to have overlapping threads and thus are not mutually exclusive – but each one is a major force in differentiating customer requirements.
1. Customer power
Journalists fear it, the EU wants to control it and companies are still looking for the value, but online social networking is another sign of the emergence of customer power: a cultural value trend that will see off mass messaging and standardisation, and open the door to customisation and conversations for mutual benefit.
As an aspirational value, customer power leads to lifestyles that are lived ‘on the go’, where mobile delivery is paramount, and ‘word of mouth’ becomes a powerful force for decision making in self-determined communities.
- The threads that drive this value trend include:
- The wane of the nuclear family and the rise of singles needing networks.
- Technology that lowers market entry barriers and allows for knowledge/content sharing.
- Global markets and abundance of supply.
- Cynicism towards politicians and companies, and confidence in peers and ‘people like us’.
The Future Foundation recently looked at this trend in the Royal Mail’s ‘The Recommendation Generation’, a report for retailing. It found that 33% of adults over 18 in the UK now have a personal profile on a social network, and that peer recommendations for purchase decisions was much more important to social networkers than non-social networkers. A trend reflected in B2B markets, particularly technology.
However, recommending is a two way street, and a growing number of customers also like to give their views and share content, as a means to self-worth and status – which is why there is a growth in software that can identify these influencers and reward them (see New Technologies Every Marketing Manager Should Know About).
2. Tribal success
Much has been said about the move to ‘different ways of living’ and the rise of the ‘tribe’. Is being single a lifestage or a lifestyle? In this melee of social restructuring where do people find the meaning, skills and status that lead to self-fulfilment?
As an aspirational value, ‘tribal success’ leads to widely differing lifestyles. There are, for example, the ‘new puritans’ who think that pregnant women smoking in public should be reprimanded by the police. New puritans clash with the ‘new cavaliers’ whose lives revolve around celebrity endorsed products, and who aspire to what Trendwatching calls ‘premiumisation’ - ordinary goods turned into branded luxuries (e.g. a run-of-the-mill Guerlain lipstick in a gold and diamond case marked up from £18 to £30,000).
The threads that drive this trend are often dichotomous and include:
- Flexible living.
- New ‘moral’ standards driven by fears: the new religion.
- Maturity in western markets and a move against consumerism.
- In eastern markets, the rise of the middle classes.
Amongst the different tribes, two of the more ubiquitous measures of social status are ‘busyness’ and ‘experiences’. People’s claim to be busy is actually a boast of their social worth. Research, again by Future Foundation, shows that this busyness is more to do with leisure than work: although the boundary between work and leisure is blurring, with more home offices and weekend working.
In this state of busyness, people desire a portfolio of leisure experiences that show off their skills and interests. It is the list of experiences that you aspire too that makes you different. Even within normal activity, time given to experiences is deemed of higher worth; the weekend family ‘full works’ breakfast cooked from locally sourced products, the supper with friends where ‘theatrical care’ is taken with laying the table and setting the scene.
The fact that these experiences are not possible all the time with such ‘busy’ lives puts them at a premium. To make room for them, more of the work deemed tedious and not on the ‘aspiration list’ is outsourced - e.g. cleaning, gardening or eating out when you cannot be bothered to cook. This presents companies with two opportunities: how do you help people meet their experience aspirations, and how do you help them outsource their tedium and free up their time?
3. Return to arts and crafts
As an answer to mass production and industrial drudgery the Victorian ‘arts and crafts’ movement championed ‘authenticity’ - crafted goods, design and harmony in production. The answer to mass consumption and communication is the same – a return to the authentic. Only this time authentic means real, green and ethical.
This aspirational cultural value leads to lifestyles that pursue wellbeing, be that for individuals, societies or the planet. Like its 19th century counterpart, it is ‘best friends’ with corporate and personal social responsibility. The issues being, how do you pursue wellbeing and be more in harmony with your environment? How do you make stylish products that are eco-friendly?
The threads of this trend include:
- The concerns over manmade climate change.
- The business of business being social rather than shareholder value.
- Concerns over population size and resources and how this links to consumerism.
- The rise of China and India, amongst others, as trading nations.
Jumping on this cultural bandwagon is easy, but a lack of authenticity will be sussed – ‘greenwashing’ has now entered the vocabulary. There will also be a diversity of opinion on ‘wellbeing’, and one man’s responsibility is another man’s assault on freedom. Most people don’t mind recycling; renting, borrowing and buying second hand is becoming a lifestyle choice. But manmade climate change has become a political hot potato, and there are people that have grown suspicious of its existence, as some interest groups have tried to turn it into a quasi religion.
For business, this cultural value means understanding what really is authentic and important to target customers and the ideal way is through co-creation (see Plugging into co-creation’s potential and Why CSR is sexy).
Generational lifestages
These cultural trends affect the generational lifestages in different ways.
1. Spring greens
This generation are the advance guard for an environmental movement that will find new answers to industrial age problems. A small group in adult terms at the moment, they were born between 1989 and 1992, so are now teenagers. Demonised by the media as undisciplined delinquents, they are more socially aware than they are credited for – claiming that it is press coverage that encourages bad behaviour. In a recent research report for UK National Lottery providers Camelot, 59% of them thought being a good citizen meant helping others, and on average they spend a whole working week a year doing just that. However, they are much more likely to demand their citizen rights (76%), than believe in responsibilities (66%).
Unlike the baby boomers, less than half of them care about society, but nearly half of them say online social communities are very important to them. They are likely therefore, to be even more tribal than generation Y. They worry about their safety in public places, but their greatest concern is for their ‘green credentials’, with 20% being hardcore environmentalists and 25% saying they choose their friends based on green attitudes and values.
2. Generation Y
Generation Y are the children of the latter baby boomers. The first to have felt the ramifications of divorced parents, they now face breakdown in their own ‘partnerships’. Born between 1976 and the late 1980s with mobile in hand and computer games on tap, they are completely at home with digital culture, and very brand-status conscious. This generation are now in the young partnership/family forming lifestages. (They follow generation X, born from 1962-1975, economically one of the most unlucky generational groups.)
This lifestage aspires to consumer power because its lifestyle demands customised, status products, and services delivered wherever they happen to be. They will happily find the funds to buy personalised name-emblazoned Nike trainers, and have a range of mobile digital devices for service access. With delayed families and two adult earning households they have high incomes and high costs, with many hit by tuition fees.
This group are social with peers but strive for individuality and it is this that makes them a generation of a myriad of small tribes. They are socially aware, but are not driving the agenda as the Spring Greens are – for generation Y it’s more to do with tribal status; wearing your ‘make poverty history’ wristband’ to show you care.
3. Baby boomers
The baby boomers have become known as the ‘sandwich generation’ of late, as in their empty nester/retirement lifestages they have to support both aging parents and offspring who need help with education and housing. Born between 1946 and 1962, they reached maturity in a regenerating post WW II world where radical economic and social ideas offered new answers: they thus became great champions of personal freedoms.
Throughout their lives they have redefined their lifestage and retirement will be no different – they refuse to get old. They now aspire to busyness and experiences as social status symbols, and their average number of leisure activities has grown from 11 to 20 over the last 25 years. This means that personal well being is very important: a wise move given their retirement date is receding into their late 60s. However, they are less prepared financially for a busy retirement. Children of television and mass media, they are latecomers to the social networking party. But are happy to show their vast consumer power and challenge slack service and corporate responsibility.
Bottom line
In 2007, a McKinsey study berated managers for not understanding the important issues in their customers’ lives. Too many, they said, did narrow product research without understanding the context of lifestage, values and lifestyle. The result was a trust gap between companies and customers: consumers felt companies had poor CSR credentials and were more willing to take them to task about it.
An example of this could be found in the US, where executives thought data protection was a more important issue than it was in reality, but were underestimating healthcare and retirement concerns, because they didn’t understand the baby boomers. With the business of business becoming more social, generational value research must have greater prominence. You may think you know today’s customers, but if your demographics don’t change will you know who they are tomorrow?
Further reading
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