By Kevin Zimmerman
Tapping into the purchasing power of the Millennial generation – roughly defined to include everyone born between 1980 and 2000 – has been a challenge for many retailers. Precisely what attracts the roughly 75 million members of what is also known as Generation Y can be difficult to pinpoint and to profitably exploit … leaving many sellers asking not so much “Generation Why?” but “Generation How?”
Asking “how?” is an even bigger concern for retailers in the near-term: Multinational consulting firm Accenture estimates that by 2020, Millennials’ spending in the U.S. will grow to $1.4 trillion annually and represent 30 percent of total retail sales.
Clearly there is ample fruit here for retailers to pick – but how low-hanging is this fruit? Making broad generalizations about 75 million people is a fool’s game, as evidenced by a plethora of Gen Y studies that offer theories that conflict with each other, and sometimes conflict with themselves. Still, there are some key conclusions that can be made to help define this group.
Immediate, if not Sooner
First, while it is true that Millennials tend to want things immediately if not sooner, and thus rely heavily on online and mobile channels, they do not use these channels exclusively. “Millennials are certainly very savvy online customers, but that doesn’t mean they’ve stopped frequenting brick-and-mortar venues …. many members of the digital generation actually prefer visiting stores to shopping online,” reports Accenture. Even more surprising news arrived in June of 2015, when AdAge reported the results of a survey finding that Walmart was the favorite retailer among millennials age 24 and under, and the second-favorite (after Target) of millennials age 25-34 – results that even Walmart CMO said “shocks a lot of people, including inside the company.”
Not so for the folks at independent ad agency Moosylvania (moosylvania.com) – and really, is there anything more millennial than using a Bullwinkle reference as your name? – where its Fall 2015 “Favorite Millennial Brands” survey of 3,500-plus consumers found Walmart and Target nestled comfortably in the top 10 alongside such more expected names as Apple (#1), Microsoft (#5) and Amazon (#7). Conclusion? Attractively-priced merchandise – including but not limited to clothing, electronics, groceries, and the other multiple categories – is what Gen Y is looking to buy, whether at a big box store or at an indie retailer.
Another misconception about Millennials revolves around customer loyalty. While there is a grain of truth in the stereotype that Gen Y holds lowest prices over all other considerations, Accenture finds that the group can prove to be fiercely loyal customers if they feel they are being treated right. And “right” is defined here as being made to feel welcome in a brick-and-mortar store, and/or receiving targeted promotions and discounts via email or text; small wonder then that so many companies now push loyalty-rewarding programs patterned after the airlines’ “frequent flier” discount offerings.
Similar to what happened during the dot-com boom of 1997-2000, when businesses en masse began launching websites – often without thoughtful justification beyond “everyone else has a website”: – is today’s social media-heavy landscape. Most merchants maintain a presence on Facebook, Twitter and the like, but many times those efforts fall short as relevant posts are infrequent, or are simply not appealing to the social media-savvy Millennial.
Entrepreneur magazine recently offered several suggestions for how storeowners can use social media, Facebook in particular, more wisely. These included carefully calibrating one’s messages to your clientele. This includes relentless focus “on your customers – select and share things they care about with the goal of helping or inspiring them, and respond directly when they comment on or share your content” as well as targeting messages/deals to specific, small, audience pools instead of trying to be all things to all people. The message Millennials appreciate most is that you are genuinely interested in them as an individual. Prove that, and you better your chances for cultivating a loyal customer base for your store.
These points were underscored by “The Millennial Consumer,” (http://millennialbranding.com/2015/millennial-consumer-study/) a study published in January 2015 by research and consulting firm Millennial Branding, which among other conclusions found that “62% of millennials say that if a brand engages with them on social networks, they are more likely to become a loyal customer.” Facebook is still the overwhelmingly favorite social platform for Gen Y, followed at some distance by Instagram and Pinterest.
Remembering the “social” in “social media” is critical. Not only do Millennials expect to have a dialog with merchants, they also rely on customer reviews of both the product at hand and the shopping experience in general. Including a review or feedback page on one’s website – and encouraging folks to post there – will help you become more legitimate in Gen Y’s eyes.
Tapping into today and tomorrow’s largest consumer base requires work, but not an undue amount. Some key points to keep in mind:
• Encourage and maintain two-way communications. Facebook is a must, and keep your ears open for any other social media services that may be particularly appealing to your target customer. Efficiently answer customer queries, and address all comments left on your site … especially the negative ones (in a positive manner, of course).
• Experiment with personalizing a customer loyalty program or other discount/coupon offers. Simply putting a “10% off your next purchase” banner on your homepage may draw some traffic, but everyone prefers what at least appears to be a personalized message (“Dear Kevin…”) in an email or text; again, this can help build the conversation and loyalty you are after.
• Consider adding new payment methods. The Visas and AmExes may never go away, but as you could probably guess, many Millennials can be drawn in by alternative, newer payment options. While many merchants already offer PayPal, there is a plethora of others out there: Apple Pay, Amazon Payments, and Google Wallet, just to name a few.