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July 24, 2018

Legacy Vs New Customers

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Age matters! How old is your company or organization? If your company or organization is older than 15 years, one of your biggest challenges might be how to honor and optimize your legacy customers (the people who brought you to the dance) while also attracting and engaging the next generation of customers.

This is a central, universal question facing every aging enterprise. It is true for restaurants and retailers, national chains and local boutiques, churches, non-profits, and even educational centers.

It used to take a full generation cycle to bump into this business obstacle and often, it would naturally take care of itself. Not any longer. Today’s fast-shifting business climate, the longer-living Baby Boomer generation, and the micro-message segmentation explosion is setting the stage for a much quicker customer focus face-off.

The Problem and Myth
I agree with Seth Godin about Tribes. To start and sustain a successful business or enterprise, you’ve got to get a sizable group of raving fans. It takes a ton of blood, sweat, and tears to create a tribe, and it’s a huge accomplishment to do so.

And then, like most organizations, you direct focus and resources to engage, satisfy, and retain that tribe. Then one day you wake up and think, My customers (tribe) represent where we have been … not where we are going. They helped us get from zero to one or even zero to five (in growth cycle semantics).

But here is the problem. Your core customer is dying off or leaking over to another company or organization. And there is a fast growing, next-generation customer base rapidly taking the reins of spending and influence. The problem? They are not in your core portfolio.

This is where the big mistake step usually happens. We buy into a strategic myth. What is it?

Our loyal legacy customers will automatically bridge to the next generation (their kids, their friends) because of their relational proximity and clout.

But it doesn’t automatically happen.

Why? Remember that axiom, “Every organization is perfectly designed to get the results it gets.” You are designed to reach and retain the legacy customer, not the next-gen customer. It’s as simple as that.

A Case Study
McDonald’s turned 63 this year and while it still is a behemoth globally (1% of the world eats at a McDonald’s on any given day), it has fallen on difficult times. Fortune magazine titled an article “Fallen Arches” describing the company’s struggles.

The Wall Street Journal was more specific, saying that the problem was that McDonald’s was losing millennials.

How could that be? Why would the millennial children of Baby Boomers (who built Ronald McDonald) not automatically be lined up in the double drive-through lane?

I knew this was a problem, even before I saw the stats. I know because I’m a Baby Boomer, and the father of three millennials who are not interested in eating at McDonald’s. The millennial generation just didn’t bite. What went wrong? One generation cannot auto-bridge the next generation to any cause or practice. McDonald’s designed for the legacy Baby Boomer and was fulfilling that design matrix at every touch point (brand, message, facility, product mix, etc.). But they were not prepared to reach the next generation customer.

Not Just McDonald’s
McDonald’s challenge is the challenge of every business and organization over 15 – 20 years old.

Walmart deals with it. So do small family-run businesses. Budweiser is dealing with the reality that almost half of 21-27 year old drinkers have never even tasted a Budweiser. How can all these companies maintain the loyalty of long-time customers while also attracting a wider section of the new market?

Non-profits face this challenge as well—from the United Way to Focus on the Family to your local church. It’s why it’s usually easier to start a new church or hip new NFP than it is to revitalize an aging church or institution—one where you have to please the old folks and attract new blood.

In other words, it doesn’t matter your industry. I do not know of a single company older than 20 not tirelessly working on this. The 19th century theologian James Freeman Clarke said, “The politician thinks of the next election. The statements, of the next generation.” I think I could amend that, “The average executive thinks of the next customer.  The elite executive thinks of the next generation of customer.”

The only exception to this problem seems to be a reverse recruiting in areas of technology. Apple seems to always design for the younger newer user and assumes the older customer will come along.

Toward a Solution
Give McDonald’s credit: it’s trying. They bought Chipotle (but then sadly later divested). They launched McCafe, a coffee-shop style store remodel, including free wi-fi (Welcome Starbucks customer on a budget; 2009), all-day breakfast (Welcome college student with a craving for a sausage burrito at midnight; 2015), chicken with no human antibiotics (Welcome concerned eater; on its way).

So what do we do if we have to honor the legacy customer AND reach and retain a new next-generation customer, patient, or follower… at the same time?

  1. You will want to beef up on your data and research.
  2. You will likely need some new blood at the senior leadership layers of the company or organization.
  3. You must be willing to invest forward ahead of the curve.
  4. You must be willing to fail and lose. Most older companies have matured and have stopped placing risky bets.
  5. You might have to run parallel programs, offerings, products, or services to capture two different customer groups at the same time. This will not always be efficient.
  6. You will have to embrace disruption and chaos again like you did in the early days.

One of the best short videos I have seen that touch this topic is by James Allen on the Founders Mentality. It is worth 15 minutes of your time, I promise.

Good luck on this very challenging dilemma.

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