Millennials have been the hot buzzword in business for a few years now. But is your small business making a mistake by marketing to this trendy group? A new report, Marketing to Millennials? Not So Fast, has some insights that could change the way you approach this huge demographic.
Here are some surprising findings about marketing to Millennials.
1. They earn — and spend — less than you think. While some marketers are rubbing their hands in glee at the vision of the Millennials as a replacement for the affluent Baby Boomer generation, this younger demographic does not yet have the disposable income Boomers do. The oldest Millennials are in their mid-30s, but the youngest are still in high school, college, or in their first, entry-level jobs. In fact, more than one-third aren’t working at all, and almost half of those who do have jobs make less than $50K (the average Millennial income is about $34K). Add to that the staggering burden of college debt that many Millennials bear, and it’s easy to see why the Millennials are still on a budget. The report predicts that the majority won't enter their peak spending years until 2020-2030.
Takeaway: Do Millennials care enough about what you’re selling to spend their limited income on it?
2. They’re delaying major life-stage choices. Once upon a time, 20-somethings got married, bought homes, and started having children. Today, however, Millennials are postponing marriage, children, and home buying. In fact, some are even postponing apartment rental in favor of living with their parents. That means they aren't making the primary purchasing decisions in their own households when it comes to things like home decor, maintenance, furnishings and repair, or even buying groceries.
Takeaway: You can't market to Millennials based upon yesterday's definitions of life stages.
3. They’re complicated. Millennials have grown up in an era of technology, and the way they shop and spend is evolving along with that technology. For example, Millennials are more influenced by word-of-mouth than by traditional advertising, unlike older demographics. They also expect transparency and authenticity from businesses, along with 24/7 service and the ability to customize products and services.
Takeaway: How good are you at encouraging and cultivating positive word-of-mouth about your business on social media and online review sites?
4. They’re more into sharing than owning. Millennials are comfortable with a world in which they rent, share or borrow just about everything — from cloud storage space for their photos and music, to cars and clothing. They'd rather spend their limited disposable income on experiences, such as travel or concerts, rather than “things,” such as luxury goods. No wonder services, such as home-sharing service Airbnb and formalwear-rental company Rent the Runway, are thriving.
Takeaway: Can you develop a sharing/rental aspect to your business, or heighten the experience involved to make it more appealing to Millennials?
5. They lack brand loyalty. According to the report, Millennials are more likely than their parents to purchase store brand products. Because their incomes are lower, they’re price-sensitive rather than brand-loyal. In addition, recommendations from friends can easily sway them to switch brands. You may think that by targeting Millennials today, despite their lack of spending power, you’ll be earning their loyalty into the future. While it’s possible this could happen, it’s not really probable — the report points out all generations are becoming less brand-loyal (although Millennials lead the pack).
Takeaway: Your business needs to continually earn Millennials' loyalty, not count on keeping it.
Of course, I'm not suggesting that you should ignore Millennial consumers — that would be foolish given this group’s sheer size. However, all the excitement over a new generation has blinded some marketers to the reality of how Millennials live and buy. Make Millennials part of your marketing plan, sure — but not at the expense of other demographic groups, such as Generation X and the Baby Boomers, who have more money to spend on what you sell.
Need help developing a marketing plan to target any demographic group? Contact the experts at SCORE and get matched with your own business mentor and get free consulting and advice.