Ignore Customer Demographics

"Frank, it's Billy Ray Cyrus on the phone.  I need your help.  Miley is pissed."

"Hang on Billy Ray.  I have a call on the other line."

"Frank, it's Miley Cyrus.  My doddering old fool of a father has been tapping into my tour fund again.  I need you to do some forensics work."

Since I have an obvious conflict of interest here, whom should I choose as a client?  How should I decide?  I could use Frank's rule of reality shows.  Root for the hot chick.  But, maybe something more scientific is appropriate.  Let's look at my choice in terms of demographics, specifically age.

Billy Ray is fifty-one.  Miley is twenty.  If men, on average, live to be seventy-two and women live to eighty-one, Miley could potentially be a client for sixty-one years, while Billy Ray could would likely only be a client for twenty-one years.  That's a pretty simplistic way to use demographics - too simplistic.

What if my average client stays with us for ten years?  In that case, either Miley or Bill Ray would likely be clients for the same number of years.  Age demographics are important, just not in terms of time until death in most cases.  There are three ways the age of your customers affects your business operations.

First, age affects your marketing methods.  Different age groups respond differently to different marketing methods.  Here is an example.

A charity receives almost all of its cash contributions from direct mail marketing.  Guess the average age of its contributors.  Fifty.  No.  Sixty.  Try again.  Seventy.  Still no dice.  The average contributor is over seventy-five.  Why?  People less than sixty don't respond to direct mail.  We just toss the two pounds of crap the mailman delivers every day.

Do you think the charity has a demographics problem?  Of course.  Their contributor base is literally dying.  Today's sixty year olds won't respond to direct mail any more in fifteen years than they do today. Their potential contributor base is deteriorating rapidly.

How are they responding?  They are exploring marketing methods to attract younger contributors.  People in their twenties, thirties, and forties want more from a charity than just a thank you note.  They want direct participation.

The National MS Society has a great and lucrative program sponsoring bike rides.  I participate in a couple every year.  Biking is participation.  How do they market the rides?  They use e-mail and Social Media.  If you want a younger customer base, use marketing methods appropriate for that group.

Second, age affects your customer communication methods.  Go to the local mall.  Watch people using cell phones.  Older people talk on their phones.  Younger people text.  Why does this matter?

Customers under forty regard phone calls as an intrusion.  It's an unscheduled interruption.  Though I'm over fifty, I agree.  The phone allows any one of seven billion morons on the planet to interrupt whatever I'm doing, usually for something less important than a good ass scratching.  E-mail let's us young folk schedule our communications.

However, if you're serving older clients, telephone communication is the norm.  Of course, I don't understand this.  What faculty typically goes as people age?  Hearing.  So older people rely on a faculty they can no longer use effectively.  Of course, my opinion here doesn't matter.

The third way age affects your business is workflow.  Our CPA firm relies heavily on automated systems.  We use a cloud based project management and client communications center that lets us automate most day to day communications tasks.  Our clients less than fifty love being able to access their tax return information from anywhere at any time.  However, our older clients are lukewarm at best in their attitudes towards the system.

Thus, we have to maintain two different workflow systems, one for the 90% of our clients who use our client center, and one for the 10% who don't.  Surprise, surprise, we have more problems and are less efficient when we can't use our normal procedures.  I don't want new clients, who won't use our system.  They are better off somewhere else, where everything is done by telephone.  We are better off, because we are more efficient and profitable with our system.  The people, who don't like our system, aren't bad people.  They just shouldn't be our clients.

So am I breaking Billy Ray's achey heat and choosing Miley?  Or, am I choosing Billy Ray since we speak the same version of the English language?  Neither.  Ditto for Lebron James.  Entertainers and professional athletes have unique tax problems in which I don't specialize.  I'll stick with small business owners.

Thanks for reading!  As always for real tax and accounting advice, visit the main S&K web site at www.skcpas.com.  Also please like the "How to Screw Up Your Small Business" Facebook page.  I post snarky advice a few times daily.