Selling to seniors – the missable opportunity

Back in June last year we reported that OFCOM’s Consumer Panel had challenged the mobile business to raise its game to meet the needs of those who are “becoming disconnected from the communications revolution”.

Well, the good news is that there is some evidence that the industry is making progress, at least as far as the elderly are concerned.

David Craik looks at the market – and compares some approaches to the older user of mobiles.

When Vodafone launched its Simply range back in May 2005, it marked a serious attempt by the network to tap into the older consumer market.

At the time the company described it as “a new departure for us and the market in general”. Tim Yates, Chief Marketing Officer of Vodafone UK, said: “It’s an easy to use yet stylish phone that concentrates on the most regularly used features – voice and text.”

It’s a simple concept, says Ben Taylor from Vodafone’s PR office. “The majority of older consumers do not want the wide functionality of phones attractive to the young. They don’t want the iconography.”
Or as Tim Yates put it: “It’s ideal for people who have not grown up with mobiles.

“We’ve undertaken extensive research across a number of countries and a large number of our customers have told us that they want a simple handset that does the basic functions well, so they can stay in touch with family and friends and organise their lives.”

Vodafone’s Taylor confirms that the research covered “1,200 people aged 35 and over” (more about that surprisingly low Third-Age age later).

So the phone boasts wider spaces between buttons and screens 33% larger than on other Vodafone products. The research also revealed that many older consumers found mobile phones “embarrassing” when they went off in public; and such users may struggle to understand how to switch a phone to silent or vibrate or even to lock it.

Marketing method
“Their solution was to switch their phone off – which is not in our best interests,” says Taylor. So with Simply there is a switch on the side of the phone to make locking and unlocking much easier. “This phone is more the way older people imagine a phone to be.”

The marketing imperative is a powerful force: “we have a wide range of customers and look to provide phones and services suitable for all of them,” said Tim Yates. In this case that appears to be working: sales of the Simply phone have been above target.

“There is no precise data but we are selling especially well to the over-50s,” explains Taylor. “In this sector we are seeing a low return rate of 67%, five minutes more usage, voice mail penetration up 30%, revenue up 29% on prepay and 6% on contract.”

Why such a large catchment for the research? After all, ‘over 50’ includes a lot of people who certainly wouldn’t regard themselves as ‘elderly’. Here’s Taylor’s explanation: “We recognise that over 35 is a loose segment with those aged between 35 and 45 bleeding into the purchase of existing phones. But in general we felt that the older you get the more similar characteristics you find. This is our first expedition into the older market and there is clearly a vibrant market out there.”

Chris Lofthouse, outreach manager at the independent research charity for older and disabled consumers Ricability, is not surprised that Vodafone did not target its research at those aged 60 or above.

He believes that it is indicative of the way the elderly are viewed by the mobile phone industry. “This is a fast-moving market where manufacturers are rushing out too many devices too quickly. They are not sitting back and assessing what customers really want. They are too concerned about the youth market. They have to realise that the demographic of this country is changing. Our population is getting older and we need phones designed in a way to be more inclusive for everyone.”
Lofthouse is pleased that Vodafone Simply is proving that there is a business argument for designing and marketing mobile phones to the elderly.

What kind of market?
But how big a market is it? What are its characteristics? What products and services do the elderly want from their mobile phones?
According to the most recent research from OFTEL (2003), 70% of people aged between 55 and 64 had a mobile phone. That was an increase of 11% on 2001 figures. In the 65-74 age category 53% of people had a mobile phone compared to 41% in 2001 and 24% in the category 75+ had a mobile compared to 13% in 2001.

Age group    Penetration
2001              2003
55-64             59%    70%
65-74             41%    53%
75+                 24%    13%
Source: OFTEL

Research by marketing information firm J.D. Power & Associates adds to the picture of a mobile phone savvy sector:

  • Three quarters of customers over 45 years of age are prepay users
  • Their average spend is £13.50 a month
  • A third have been with their provider for five years or more
  • Over 80% would recommend their current provider
  • Interest in new non-core services such as internet browsing, photo facilities, and email facilities on their phones is very low, ranging from 4% to 7%.

 

 

 

Real differences
And according to Help The Aged, older people really are looking for different facilities from their mobile phones.

“Our major beef is accessibility,” says a spokesperson. “Phones that are accessible for older people with poorer eyesight or lack of hearing or dexterity for texting need to be more commonplace. Vodafone received lots of publicity with Simply; but in truth this ought to be the norm rather than a novelty.”

Help The Aged believes the business argument is compelling. “There is a major growth area for making phones accessible to the over 75s,” the spokesperson continues. “We know that many older people embrace new technology and when it’s made accessible to them it impacts greatly on their quality of life.”

A spokesperson for Age Concern England adds that the over 50s are increasingly moving into a ‘buy now, worry later mindset’ – with statistics showing that they are now the UK’s most important consumer group owning up to 80% of the nation’s wealth.

“Despite this spending power many older people are telling us that they think advertisers ignore them because of their age.” says Age Concern.

“In fact more than half of older people polled by us (59%) said they thought marketers and advertisers were ageist.

“Mobile phone companies could be missing a trick by not focusing more on the older market.”

Choices
So what does the mobile phone industry make of this? How does it view the older market? Does the mobile business take it seriously from a marketing perspective?

Taylor of Vodafone says he is amazed why a product such as Vodafone Simply hasn’t been introduced before. “Mobile phone manufacturers have been involved in an arms race trying to put as many bells and whistles on as they can. We are facing an ageing population and we need to address this sector more.”
“There will be more developments with Simply. It has been a great success for us.”

Vodafone isn’t alone in targeting the over-50s. Orange for instance has been out and about in the community teaching the elderly how to text.

According to Stewart Smith, managing director of distributor Communic8, however, the general feeling of the industry to elderly consumers is still apathetic. Communic8 is presently distributing The SilverPhone, manufactured by German based VitaPhone Mobi-Click; this is very specifically designed for an elderly user, with a keypad of just three buttons.

“We launched it in the UK last March and initially there was great difficulty in getting any network interested,” he says. “They thought if there were only three buttons their revenue would be restricted.”
After teaming up with charities such as the RNIB, however, things are changing. “With the help of the charities, the phone is proving very popular. Networks are seeing that the need is there. We researched that 40% of those over the age of 55 have a mobile phone and that there are still 8m customers in this age range who haven’t got a handset. The market is huge.”

Smith adds that even if those over 65 are sometimes technophobic, marketing to their sons and daughters is a way to break into the sector. “People in their 40s and 50s are technically astute and realise that their parents lives and their security can be helped by using Silver Phone.

“Of the orders that we have had, 90% have come from this second generation.”

He isn’t confident that the mainstream mobile business will break into this sector. “The mobile phone market is almost saturated. This is the only sector left where there is growth. However the big industry players have invested so much in technology such as 3G that they need to get that revenue back and will continue to market to the young.” 

If they do try and crack the market, Smith believes that networks should offer a tariff option of £10 a month. “We are talking to O2 about this at the moment. They can see it makes sense,” he says. “In Switzerland you can get the SilverPhone in Orange shops. Monthly revenue there is €30 per user when they thought it would only be €15.”

It seems that if you offer phones to the elderly, and if they are phones they want and can use, they will indeed use them.

Steven Day, corporate affairs director, at Virgin Mobile however believes that such phones already exist. “We already take the elderly very seriously. I don’t think the mobile phone industry is ageist. It is egalitarian at heart when it comes to age,” he says.

Day rejects the thinking behind Vodafone Simply. “I’m not sure it is the right approach. Is it patronising the elderly? I see grandparents texting to grandchildren and the idea that they cannot understand the technology is misguided. We don’t want to segment our customers.”

He adds that manufacturers already cater for elderly needs through having buttons that are easier to press and larger screens on certain models. “These elements are already out there on existing products. You don’t need to be as overt and bold as Vodafone Simply.

“As time progresses those aged 45 now will move into the over 60 bracket and they will be increasingly technologically savvy. That is a societal influence that cannot be changed.”

A Sony Ericsson spokesperson agreed that segmentation is unnecessary. “The phones that are produced now include base entry level phones with high quality speakers for those who are hard of hearing. We and the industry cater for different tastes.”

Lofthouse will not give up, though, and he is adamant that the industry will follow the lead of Vodafone. “It’s a young and fast paced industry. I believe that when it matures we will see more developments for the elderly.”

Communic8 SilverPhone
There’s no dialing with the SilverPhone. Instead three preset numbers are stored on the three large, brightly lit buttons; the numbers are changed by sending the phone a text message.

  • Weight:     78g
  • Dimensions:     116mm x 42mm x 21mm
  • Standby:     up to 200 hours
  • Talk time:     up to 160 minutes
  • Contract:     Phone from £29.99
  • (on 02 at £20 per month with
  • 1,000 free off-peak minutes)
  • Pay-as-you-go:     £139.99
  • Network:    O2

Vodafone Simply
Aka Sagem VS1. A conventional handset (e.g. SMS included) but with speakerphone, large colour screen, big buttons, simple plain-text navigation.

  • Weight:     125g
  • Dimensions:     88 x 46 x 24 mm
  • Standby:     up to 330 hours
  • Talk time:     up to up to 260 minutes
  • Contract:     Phone is free, price plans from £25 per month
  • (Anytime 125 – 125 inclusive    minutes, half-price rental for first three months)
  • Pay-as-you-go:     £50
  • Network:    Vodafone