For companies seeking customers for life, there's a simple axiom: The earlier you earn a customer's loyalty, the more money you can generate.
That's a big part of why more companies are trying to focus on teens and even younger children. But doing business with kids involves a lot of complications, and finding ways to open up your business to kids without sparking huge controversies is a major challenge for many industries.
Tapping the online market
Online retailers have done a good job attracting business from adults. With the convenience of free delivery from many retailers as well as sales-tax savings, buying online has gotten increasingly popular in the past decade.
But the shift to online retail has largely failed for teens. The obvious reason why is that teen-friendly electronic payment methods are only starting to appear. A recent SmartMoney article cited figures from SurveyU.com that only 6% of teens have credit cards. Moreover, prepaid cards and other alternatives are only beginning to gain traction and sometimes carry high fees and other undesirable traits, making them less attractive.
As a result, if teens want to buy online, they typically have to use an adult's credit card. It's true that many banks offer checking accounts to teens -- Bank of America
The same issues apply to other websites. The Children's Online Privacy Protection Act, or COPPA, requires a list of actions for websites collecting information about children under 13, including parental consent and access to all information their children provide.
Opening the doors
Increasingly, online companies are trying to engage children and teens directly. In an interview with the Wall Street Journal, an executive at eBay
The company acknowledges that not all purchases would be appropriate for minors, so it's looking to come up with ways to lock them out of adult-specific areas of the website. But with eBay starting to focus again on its core marketplace, it's pulling out all the stops in its search for growth.
The smarter approach
In the WSJ article, online retail leader Amazon.com
If teens spent less of their money on shopping and set even the smallest amount aside for long-term investments, putting time on their side would make a huge difference in their finances over the long haul. Steer your kids toward a smarter investing life by reading the Fool's latest special report on long-term investing, which reveals some useful tips for smarter stock strategies, along with three stocks to help you retire rich. Get your free copy today while it lasts!
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