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Dick Stroud is the founder of 20plus30, a marketing strategy consultancy specialising in the 50 plus market. He is the UK’s leading expert on using interactive channels to communicate with the over-50s market.

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50-Plus Marketing

News, views and opinions about the most powerful group of consumers - the 50-plus market.

Tuesday, September 29, 2009

Elderhostel makes a fascinating marketing case study

Elderhostel is a US travel and educational organisation for older adults – you might have guessed the travel part from the name.

The organisation is going through a massive upheaval, caused by falling numbers of customers. As the graphics shows, numbers of people signing up for courses have been falling and the average age of travellers has been rising, It is now 73 years old up from 68 a decade ago.

What has Elderhostel been doing wrong? I have no idea about the quality of its courses and holidays but these would not seem to be the problem since it appears to have a very loyal customer base, which ironically might be part of the problem.

My guess is that problem results from the company pursuing a strategy of age-cohort marketing. What I mean by this is that it retained the basic proposition that appealed to its initial customers and maintained that, pretty much unchanged, as the age cohort aged. Of course the world has changed and the new cohort of customers has very different values and emotional drivers.

The same problem exists in the UK with Saga that was totally appropriate for the 50-plus of two decades ago but finds itself grasping for relevance with today’s older consumer. I suspect it has done a better job than Elderhostel of adapting.

So what is Elderhostel doing?

Changing its name to Exploritas, a word created by brand consultants to combine "explore" and "veritas” - the Latin for truth. No many people know that!

Remove its age restriction. No longer do you have to be at least 60, now anyone 21 or older will be able to participate.

Adopting digital stuff. The group’s Web site will include social networking to help travellers better connect before and after trips.

Elderhostel ended its 2008 fiscal year with a loss of almost $9 million.

What lessons can we learn?

1. Companies always put off making the hard decisions. The longer they put them off the harder they become. I bet the guys at Elderhostel have been talking about this age-cohort issue for years, but never got around to doing anything about it.

2. Crisis forces change at the very worst time to create and adopt a new strategy.

3. Balancing the transition is going to be incredibly difficult. On one hand you have the unknown, of how the new market positioning will work, on the other; you have the known that a lot of your existing customers will be incredibly annoyed.

Will it work? It all comes down to timing. Will the new strategy produce benefits before the results of abandoning the old one takes them down?

My guess, knowing none of the details, is that the chances of success are very slim. Dick Stroud

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