It is a truism to say that companies able to win millennials’ business will experience economic growth for years to come. Millennials have overtaken Gen-X and Baby-Boomers in many countries, as the most populous generation, and significant numbers of companies solely focused on the older generations, especially baby boomers, are struggling. Because millennials are critical to future business, it is vital that this segment is understood, and business strategies are shaped accordingly.
Research shows that millennials, like other generations, are a complex cohort with diverse preferences. These preferences include universal segments such as brand followers, value seekers, first movers, etc. However, the size of each segment is distinct, and each segment behaves markedly differently from other generations.
Despite lower incomes and concerns about their financial future, millennials as a whole spend money. Research shows that millennials are willing to pay premium prices for both goods and services. A survey by McKinsey showed that even for value seeking millennials on a budget, a third admit that they spend more than they should, compared with 29 percent for Gen Xers and 14 percent for baby boomers.
The survey goes on to reveal how this willingness to pay for quality extends across multiple product categories, especially food and drink to be consumed at home, where half of millennials report that they always or often pay premium prices. Other categories where we see greater willingness than other generations to pay a premium include tech, clothing and experiences such as restaurants, gyms and cinemas.
Millennials do a lot more research than other cohorts before making a purchase and are less persuaded than older generations by brand- directed marketing. They are more likely to rely on brand and product recommendations obtained via word of mouth, online reviews, and social media. Nearly half get most of their clothing inspiration from social media (versus 28 percent for Gen Xers and 7 percent for baby boomers). Millennials are also far more likely to share their opinions of products and brands, both on- and offline.
How then can companies successfully target millennial consumers? A thorough understanding of millennials’ needs and behaviours in the relevant sector is critical.
Companies will also need to acknowledge that they often have little or no control over the information the customer relies on to make a purchasing decision. This lack of control is also allied with the fact that millennials largely react badly to brands being pushed on social media.
Companies are having to learn how to build relationships with potential customers based around their proposition and values.
This not only has an impact on marketing strategies. A company can very quickly find that its prices, environmental impact, corporate social responsibility, quality of service, etc are being discussed and commented upon online. Companies therefore, must ensure that all aspects of their business model are optimised to appeal to millennial consumers.
