Ronco Johnson knows financial planning. But when it comes to planning how to reach a critical set of potential customers, he mostly knows that he needs a new plan. That group is the Millennial Generation. Also known as Generation Y, this 80-million-strong legion of Americans born between 1982 and 2000 already exceeds the baby boomers in size and influence — and someday will rival them in affluence. It's a market no small business can afford to ignore.
Johnson, president and chief executive officer of L.R. Johnson & Associates, an insurance and financial services provider in Marietta, Ga., realized awhile back that his marketing tools and strategies would need an overhaul if he was going to have any hope of successfully reaching this huge market. "There is a big difference marketing financial services to Millennials," he said.
For one thing, the pace of interactions is sped up until it resembles a cartoon chase. "They want their information now
," Johnson said. A series of 2-hour meetings in his office to discuss financial planning needs — de rigueur with older clients — is a nonstarter with Millennials.
Businesses that can't keep pace with Millennials are missing out on a huge market, according to Tina Wells, CEO and founder of Philadelphia-based Buzz Marketing Group and author of Chasing Youth Culture and Getting It Right (Wiley, 2011). "They definitely have money to spend," she said. Even preteen Millennials each spend $11 weekly on average, or $43 billion a year. Twenty-somethings spend thousands a month, Wells added, and the younger they are, the more disposable their income.
In addition to throwing around their own cash, Millennials wield powerful influence over older consumers' buying decisions.
"Millennials get along extraordinarily well with their parents," said Morley Winograd, a senior fellow at the University of Southern California's Annenberg Center on Communication Leadership and Policy and co-author of Millennial Momentum (Rutgers University Press, 2011). "Half of them talk to their mother every day, even if only by text. As a result, they have enormous influence on family purchasing decisions, especially for technology, cars, and other durable goods." Ultimately, Winograd said, Millennial families decide by consensus, considering opinions of children as well as adults about where to live and what to own.
Meet the Millennials
Millennials differ from other generations in several significant ways, making them a more challenging market to understand and target. Technology use is the most noticeable departure point. "They've grown up with devices in their hands, so they're much better at multitasking and using digital media in more flexible and innovative ways," said Peter Matthews, founder and CEO of Nucleus, a marketing consulting firm in Surrey, England.
The difference is especially apparent with mobile technology, Matthews said. "We study the stats very carefully, and we can see with certain brands, particularly with luxury brands, mobile browsing of the Web has grown from 3 or 4 percent in 2010 to 10 percent now," he said. "And some brands are heading toward 20 percent being accessed by mobile." He believes that trend is led by Millennials' use of the Web on the go.
Technology hasn't just changed how Millennials access information, it's actually changed the way they think. "Technology has altered cognitive functioning for everybody, but nobody more so than youth," said Kit Yarrow, a business professor and chair of the psychology department at Golden Gate University and author of Gen BuY (Jossey-Bass, 2009). "Our brains are forming when we're young, and because they're so immersed in technology, their brains are literally different than other people's."
What does this mean to small businesses trying to market to Millennials? They have shorter attention spans, are better at multitasking, and get bored more easily. The lifelong technology bath has changed how they want to receive information — something Johnson has experienced with his own financial-planning clients. While Millennials wouldn't dream of coming into his office for multiple face-to-face meetings, they are happy to sit down in front of their computers and go over the same information in the form of a remote videoconference.
Constantly keeping in touch with each other via text messages, Twitter, and Facebook has made Millennials feel more powerful, Yarrow added. "They know they can get people to support a brand they love, and they know they can really damage a retailer they hate," Yarrow said. "All this is relevant to marketers."
The brands Millennials love the most tend to support the causes they care about. "More than 85 percent of Millennials link commitment to a cause to their purchasing decisions and their willingness to recommend a company's brand to others," Winograd said. Millennials are likely to switch brands of equal price and quality if one is tied to a good cause. "Environmental causes are of particular interest," he said. "Eighty-six percent of Millennials want to learn about environmental issues from brands when they are shopping."
In yet another departure from preceding generations, Yarrow said Millennials have been more thoroughly doted upon by their parents than any generation in history. So perhaps it's no coincidence that Matthews describes them as uncompromisingly demanding when it comes to products and services. "They have very high expectations, possibly unrealistic expectations," he said.
Marketing the Millennial Way
Those high expectations also spill into their reactions to marketing. Millennials don't share baby boomers' wary attitude toward marketing messages, but they respect only those that involve them in the discussion. "They're turning marketing efforts upside down because they've created two-way marketing," Wells said. "It's no longer just companies putting out a message."
Instead of passively absorbing ads, Millennials demand to tell companies what they want, and they get a response. On the plus side, if they like you, they'll eagerly take part in the marketing effort by passing on referrals and reviews.
Businesses are willing to turn themselves on their heads for this generation because marketers see them as powerful tastemakers and big spenders, according to Yarrow. Indeed, Millennials' spending rebounded more quickly than other groups' after the last recession, she said. "They spend what they have freely," she added. "And as they age, they'll have more money, and that mentality will remain with them."
5 Things That Work
Clearly, reaching Millennials requires a revamped marketing approach. "You have to learn new tricks," Yarrow said. "It's the future of your business. If you don't, you're going to expire when the older generations expire."
These five principles can get you started:
1. Use innovative technology in effective ways. Matthews points to a Nucleus campaign that used interactive videos to support the launch of a new luxury hotel in London. The technology, from Los Angeles-based ClikThrough, allows companies to tag videos so viewers can get more information by clicking or hovering over objects and places in the video.
"Using this ClikThrough video, we were able to not just show the location, but show what you could do within five minutes of the hotel on foot," Matthews said. "Every restaurant, every shop is actually tagged within the video so you can hover over the video and get more information."
2. Be interactive. That means more than letting users click on videos. It means listening to customers and involving them in everything from product design to marketing. It's especially effective in building recommendation generators that turn consumers into marketers so companies don't have to churn out one-way messages. Yarrow points to a Kleenex promotion that allowed consumers to go to a website and Facebook page to request a free sample of tissue to be delivered to someone else. "That's brilliant," she said.
3. Move fast and hit hard. Millennials want their information now and their products just as soon, and they want to be intensely entertained and engaged. One way to grab attention and create an impression of speed and urgency, Yarrow said, is to promote limited-time offers, such as discount coupons that must be redeemed that day.
4. Find and engage influencers. Even the smallest company can recruit Millennial ambassadors, Wells said. "If you're a pizza place, figure out who's important in the community and give them free coupons to bring in their friends," she said. "It doesn't have to be a huge, over-the-top campaign. And it's never been easier or cheaper to do than now."
5. Make cause-related marketing mean something. Millennials are unimpressed with superficial support of causes, Winograd said. They want commitment to the cause to permeate your entire company. One good example is TOMS Shoes, a 5-year-old Santa Monica, Calif., company that has sold more than a million pairs of shoes on the premise that for every pair a customer buys, it will donate a pair to a child in need.
What Doesn't Work
When marketing to Millennials, it's just as important to know what not to do. First, don't just tell Millennials you're special, Yarrow said. Instead, show them how special you are, and let them tell others. Rather than sending out product samples, try setting up a Facebook page that allows visitors to send your product samples to their friends. Or show how your company has helped out the local community or a favorite charity.
Next, don't make things difficult for them. Millennials dislike complexity and lengthy instructions. Take a cue from Apple and be visual. If it can't be figured out at a glance, Millennials aren't likely to flock to it.
When Wells was writing her book about youth culture, she anticipated including a "doomsday" chapter covering the turmoil new generations were bringing to marketing. Instead, she concluded Millennials were more admirable than objectionable. "They know where technology sits in their life," she said. "They know what it does and doesn't do, and we are the ones who need to learn from that."
Entrepreneur Johnson compares Millennials to their forebears who lived through the Great Depression. "Because they're living in difficult times, I think they're going to become much more savvy investors and businesspeople, because the unthinkables are happening when they're young," he said. "And that's significant."
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