By 2017, their spending power will be greater than $200 billion annually. This translates to roughly $10 trillion throughout the lifetime of their generation. In fact, research predicts that by 2017, Millennials will eclipse Baby Boomers in spending influence. Not a surprise considering the U.S. Baby Boomer demographic is a mere 77 million. So how are brands winning over the hearts and minds of Millennial consumers?
Before we delve into success stories, let’s look at some insights from a Goldman Sachs study that connects the dots between Millennials and the companies that want to reach them. Over the next five years, Millennial spending should increase by 15%, while Baby Boomer spending will decrease by 10%.
Millennials are the “connected generation,” with 80% owning mobile phones and over 75% having social media profiles. Even the oldest Millennials — at 35 — have had technology exposure since high school. Millennials are three times more likely to talk about a brand over social media than Baby Boomers or Gen Xers. They are 10 times more likely to blog about products they like and twice as likely than older consumers to post peer reviews on products. It is this tech overlay that is unique to the Millennial generation, causing older consumers to look to them for answers to questions like: What kind of device should I use? What kind of consumption behavior do I need to engage in?
Millennials are busting the “right product, right price, right time” rule because they are a generation of researchers, more likely to make price comparisons in store before making a purchase. So brands understand that they need to be visible and connect with consumers on social media.
According to Goldman Sachs’ Lindsay Drucker Mann: “This is a generation that’s grown up connected. So companies understand that they really need to engage their consumers in ways they hadn’t before. Millennials will have a profound effect on the consumer economy going forward.”
Knowing what motivates a group of 92 million is key to engaging with it. Here’s what we know: Millennials are motivated by three key values: the need for a feeling of connectedness through personal relationships and community; social proof that they can make the world a better place; and a demand for authenticity, seeing things as they truly are.
They are the first generation to view life and interact with it through the lens of technology. On this point, it is important to note that the Internet is flooded with information on brands. It is difficult to sift through the claims and uncover the truth. This has made Millennials more conscious of accountability. To become a “loved” brand, corporate and social responsibility is a must-have for this group. This knowledge opens up a new frontier of marketing possibilities for brands.
But looking at Millennials as one monolithic group is a mistake. They may share some common motivators, but there are key segments that respond to different online media cues and different messaging.
The Boston Consulting Group and The Barkley Service Management Group collaborated on researching Millennials. Part of the research included segmentation, identifying six distinct segments. The survey looked at how the members of this generation shop for apparel and groceries, where they eat out, how they travel, and their favorite brands relative to non-Millennials. Here’s how they define the six segments:
• Hip Millennial (29%): We’ll call them “Hip-ennials.” They are the largest segment of the demographic and live by a common mantra: “I can make the world a better place.” This is a cautious consumer, one who is globally aware, interested in charitable pursuits, and information-hungry. This subgroup is the greatest user of social media but does not push or contribute content. Hip-ennials are female-dominated and below average on the employment scale. Many are students and homemakers.
• Millennial mom (22%): “I love to work out, travel, and pamper my baby.” This is a wealthy, family-oriented segment. They are digitally savvy and avid users of social media. This group responds well to relationship-building on the part of brands, as they can feel isolated from others by daily routine.
• Anti-Millennial (16%): “I am too busy taking care of my business and family to worry about anything else.” These are conservative types who are unlikely to spend a premium price for green products and services. They prize comfort and familiarity over excitement or change. This group skews female and is more likely to be Hispanic from the western U.S.
• Gadget guru (13%): “It’s a great day to be me!” So describes the mind-set of this successful, wired group. They are free-spirited and believe “now” is their best decade. A male-dominated segment, this predominantly single guy group enjoys above-average incomes. They are tech savvy and are the largest purchasers of digital devices.
• Clean and green Millennial (10%): “I take care of myself and the world around me.” Impressionable, cause-driven, and mostly male, this group is the greatest contributor of online content, mostly cause related. Passionate about “green” initiatives and mostly Hispanic, they are often full-time students.
• Old-school Millennial (10%): “Connecting on Facebook is too impersonal; let’s meet up for coffee instead.” This is the unwired segment of the Millennial generation. They are cautious consumers, independent, and self-directed. They spend the least amount of time online, are older, prefer reading, and are more likely to be Hispanic.
Not very effectively. When marketing to Millennials, most brands simply create Facebook and LinkedIn pages and a Twitter account. But the typical Millennial switches between digital platforms an average of 27 times per hour.
In order to build relationships and avoid being seen as a “fake friend,” brands must create a more active and social experience for their followers. Companies that succeed make it easy for Millennials to share content. They also respond to Millennial suggestions and feedback. They know that this is a group who wants their opinions to be heard. In fact, social opinions are valued so highly by Millennials that they routinely share information and experiences with strangers on blogs and social forums before making a purchase decision.
Creating positive buzz around your brand and inviting consumers to engage freely with feedback can help you capture the long-term loyalty of Millennials.
Responding to a 2013 Global Consumer Sentiment Survey, 43% of U.S. Millennials who reported that they check for coupons or promotions on their smartphones while they are in a store represent a dramatic increase from the 24% who responded similarly in 2012. As connected consumers, therefore, Millennials can — and do — engage with brands everywhere they go.
In fact, Millennials consider their favorite brands an extension of their own personalities. Favorite brands are ranked with religion and ethnicity as a top personal identifier online. With this kind of potential for brand loyalty (70% claim they will always come back to brands they love), companies have an opportunity to capture a share of the most fiercely loyal customer base ever.
It just takes an understanding of the personas within this demographic and how to engage them. Keep in mind, social media is not a stand-alone channel; Millennials also respond well to traditional marketing tactics from retail brands, such as direct mail (92% influenced) and email blasts (78% influenced).
• Pacific Foods: Pacific Foods soups netted significant advantage over cans with their shelf-stable cartons that feature engaging graphics, a lightweight feel, re-close ability, easy storage, and ease of recycling. They were able to drive the perception that the product is healthier and fresher. By tapping into the consumer desire for authenticity and health, Pacific Foods is beginning to turn around a 10-year decline in soup purchases among consumers 25 and under.
• Trader Joe’s: Here is a brand that targets Millennials’ demand for diverse tastes and healthy ingredients. Trader Joe’s has begun to mark all of their products with clear indicators guaranteeing the absence of artificial preservatives, gluten, or trans fat.
• Whole Foods: Whole Foods has taken advantage of the Pinterest explosion by regularly updating over 60 pin boards with recipes, kitchen design, and gardening options.
• Starbucks: Starbucks is meeting the Millennial consumer’s desire for social activism with a new campaign that calls for “acting locally to create impact globally.” This is a smart move considering nearly one-third of Millennials’ purchasing decisions are based on a brand’s corporate values.
• Pepsi: Pepsi harnessed the power of innovation to develop a 100% plant-based plastic bottle, which has the potential to become a game-changer in the ongoing “cola wars” for Millennials.
• Vitaminwater: With the goal of building excitement, this popular brand created the “Vitaminwater Flavorcreator,” in which consumers can collaboratively create the next big flavor. This has netted the brand a 100% increase in Facebook fans.
• Diet Coke: With more product variety than ever before, marketing soft drinks is a big challenge for brands. However, Diet Coke is still the leading choice for Millennials, proving that this group often goes back to “what they know.”
• Jones Soda: Jones Soda is strategic about offering their products where Millennials tend to gather, like surf and skateboard shops. In addition to boosting sales, this strategy also draws a positive correlation between the product and the emotional mind-set for this segment of Millennials.
Which brands are still not getting it right? Luxury brands. Because they are experience-driven and in search of meaning, Millennials tend to ignore the marketing allure of luxury brands. Younger consumers remain skeptical of the benefits of purchasing a high-ticket item and are more likely to view these brands as overpriced.
Know your segment, where they congregate, and what motivates them.
We’ll leave you with this quote from Forbes on the subject of engaging with Millennials: “There is a lot at stake. Simply put, this is a massive generation with a population size of over 90 million, surpassing even Baby Boomers. Not understanding them, not finding ways to be relevant or engaging to them, not adapting to their new expectations — it’s the easiest way for a brand to fail. Brands need to stop waiting for Millennials to grow up and fall in line with what past generations have done. A lot of them already have; it just looks different than it did in the past. Brands and marketers need to shift and adapt to this reality, instead of waiting for one that won’t come true.”
This article on Millennials was originally published on CMO.com
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