Sales and Marketing are Impacted by Generational Flow
Well, since I wrote my last post on Generational Differences I have been doing some additional research on the topic. At first I felt this was only a managerial issue with some impact upon the hiring of qualified talent for mid-level management. Now, I see that Sales and Marketing strategies can be heavily impacted by the population waves of the generations. Depending upon your industry and who you sell your products and services, there can be a positive or negative impact.
Today, I’m only introducing the concepts regarding the relationships between the generational population waves and your business model. Let me begin by saying as a leader, you must research this important data if you want to insure the success of your company. I’m talking serious strategic impact and being unaware or ignore to this important data could cause a major failure in your industry.
So here are the areas that can be impacted by the generational waves or demographics to the sales and marketing crowd…
- Total Number of Potential Customers – as the waves flow through time the prime age groups for your specific products and services (or that of your major customers in B2B) can seriously decline in one year or substantially increase. All depending upon the generational waves.
- Prime Customers with high Disposal Income and spending patterns – Again, the total number of potential customers in a given demographic age group can increase or decease in any given year. This shows in unexpected sales growth or decline depending upon the movement of the age group – up or down.
- Health Insurance issues – No withstanding the current debates on health care in Congress, there is a critical lack of numbers in the age groups that usually create the greatest profit and cash flow for the insurance companies. Due to this lack of numbers, more cash has to be raised to cover the expenses of the older group that is currently using the health-care services the most.
- Social Security System – Here life gets interesting since Social Security has not been stock piling the surplus revenues it has received over the years. Since Social Security is run very similar to a Ponzi Scheme – taking current revenue and using it to pay off the older customer group – has worked for a number of years. This is due to an excess of workers paying into the system relative to the ones getting payments. When the system was started the ratio was something over 20 contributors for each person withdrawing, therefore, no problem. Today, the ratio is 8 contributors for every three taking payments and this will begin to change rapidly as the baby boomers continue to reach retirement age – it is happening now. This will continue until the system is totally broke and fails during the retirement ages of the baby boomers.
- Housing Situation – Seems the housing bubble was only exposed by the sub-prime lenders problems, the real issue is again the movement of the age groups in and out of important spending demographics. It appears that the boomers who have been buying progressively larger homes have a problem today. As the empty nesters realize they have excessive space for two people, they began to place these large “castle type” homes on the market and surprise – there are not enough Gen Xers available to purchase the excessive inventory. And, the X Generation are not as willing to buy these larger homes due to the upkeep and property taxes on these larger homes. Again trouble due to plain old Supply and Demand.
- Tax Collection – Here the Cities and States will be hard hit since they depend on several tax sources – sales taxes, property taxes and income taxes. The middle and higher income people are beginning to decline in numbers so there are not as many people to tax or to pay the taxes necessary to run governments without major change. The federal government will have an even bigger issue due to the high setting deficient spending during this economic downturn. Higher taxes will hit the recovery, yet, a lack of revenue creates a higher deficient. At some point in the future, someone will have to contribute to the government to pay down the debt or the USA will have major issues.
- Sales and Marketing Trends – The projected numbers for top lines revenues will be hit be changing demographics and the number of available customers for certain industries. Examples include the housing industry mentioned above, the motorcycle industry, the airline industry, the automobile industry (yes, there is a logical reason for the demise of the big three automakers) even the liquor industry has been hit by this demographic thing.
- Finally, the Number of Qualified Workers in the US – This one is harder for people to see currently due to the economic impact of the layoffs. Yet, the low numbers of the Gen X will be offset by the coming huge number of Gen Y workers. There will be more qualified workers in the future, yet, today organizations should begin thinking about how to keep their older Boomers employed. This is the key to your long term success – keep the current talent as long as you can since you will have a shortage of qualified managers and leaders during the next decade due to the lower population numbers of the Gen X group.
I will plan on sharing some additional information about the Generational Advantages and Disadvantages we will be asked to deal with over the coming decades. This issue should be at the top of the list for Strategic Leadership during the coming years as the flow of demographics will continue – there is no stopping it, changing direction or modifying the numbers – as the numbers are fixed in time.
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Tags: healthcare insurance, housing problem, Impact of Generations upon all areas of life and business, Potential Customers, Sales and Marketing, Social Security problems, Spending patterns, Tax Collections, Voss Graham