Understanding Millennials, the Future of PropTech
by Barret Newberry, CEO Leasera
Que the groans and complaints…. right about now. When you think of millennials, a picture of immature kids posting selfies of their feet, summoned by their next insta-worthy moment may spring to mind. Don’t worry, you’re not alone. Read most consumer forecasts however, and it says you’re in for a big lesson. The truth is, this generation is now in their 30s, wildly influential and in their peak spending years. In fact, Millennials are now our principal consumer demographic and it’s critical to understand their mindset and habits to provide them with the solutions they’re seeking. Real-estate solutions being a focal point along with services to support ever expanding needs and demands.
Shaped by world events while growing up
Like every generation, the state of the world while Millennials were growing up has largely dictated how they think today, and to be honest, it wasn’t so great. During their lifetimes so far, Millennials have experienced some harsh realities including parents being fired from their long held jobs, the tragedy of 9/11, the Great Recession, the crash of the housing market, further political polarization, mounting student debt and seemingly never-ending global conflicts. Because of this, many Millennials seem to have a different perspective on what’s important than that of previous generations.
One thing Millennials report valuing is experiences over ownership. In fact, Millennial consumer trends show that at least 50% of them choose to spend their money on experiences over material things. As a result, a recent Washington Post article said that a meager 4% of Millennials say they’ll buy a home in next year while at least 30% plan to wait at least five years. In short, buying a house is just not as important to them or tangible as it has been historically.
This affects all of us in the property industry because it means the majority of our consumers are planning to rent rather than buying, and… this mobile first consumer is questioning what value they can demand as renters. This will cause an upheaval of change. Soon, the rental market simply won’t be your parent’s rental market.
Connected, digitally savvy, and changing consumer behavior
The millennial generation went through a transition from analog to digital. They grew up with the internet, so they’re connected, and the widespread use of smartphones, easy to use finance apps like Acorns, and multiple social media accounts provides them immediate access to information, communication and flexibility. Generation Z are considered “mobile natives”, having a full expectation of connectedness and access to information on demand, regardless of industry or interest. These savvy consumers seek optionality, flexibility, transparency and cost-effective purchasing. And, if they can find additional benefits to go with their savvy purchases, you bet they’ll opt for that as well. They are growing accustomed to being able to find these benefits in most other industries they engage in so those value add items naturally become expectation. The alternative for properties is to pass it off these learned moments as symptoms of entitlement that won’t really impact you or your business. The growing issue with this is that value is being created where the current business model you operate from does not; through understanding and respecting the consumer. The only other option is to suffer the race to the bottom, offering more concessions like free months of rent, further tearing into already suffering margins.
According to an expert at Goldman-Sachs, we need to look to the Millennial generation for what behaviors they exhibit, as well as what technology and types of engagement we should be adopting. Her discussion highlighted three important takeaways:
- Millennials are avid researchers and make price comparisons before buying
- They are twice as likely to seek and consider peer reviews before deciding on a purchase
- They’re 3xs as likely to talk about a brand or product over social media, and 10xs as likely to blog about it than Baby Boomers
This tech overlay is an absolute catalyst for change. Not only is it convenient, it’s now the norm, and consumers are used to broad flexibility and optionality, as well as loyalty rewards like those provided by other industries.
Understanding Millennial trends is key to prop-tech industry solutions
The behavioral changes exhibited by millennials have also resulted in changing marketing strategies to appeal to them.
Here’s a list of what Millennials want most, along with some preliminary ideas about how the property management industry can give them what they want:
- Convenience — Whenever possible, they prefer to use an all-in-one platform (think amazon.com) that provides them with choices and flexibility within a single network so their options and information aren’t fragmented over many different websites.
- Choices — Millennials want to dictate their own experience including creating their own settings and preferred search terms, making choices from multiple options, comparing prices, and sharing their preferences and experiences with their peers. To meet these expanding needs, apartments, homes and hotels are all being purpose built for different duration, amenities and experiences. It’s possible to create a single source where renters can choose from a wide variety of property types depending on their rental and travel needs, and use that same platform to apply for rental spaces, pay their rent, manage their lease terms, engage in services right from their home and communicate online.
- Experiences (vs. material things) — Although ownership of things like houses and cars have traditionally been considered milestones of an acceptable standard of living, that’s not the case for Millennials. They’ve grown up in a state of constant evolution and change. This reality opens up opportunities for property operators to create benefits and for renters to enjoy a longer or permanent renter lifestyle.
- Budget-friendliness — Since many Millennials are contending with paying off huge student loans, they don’t have as much money to burn. Paying credit check fees for every rental they apply for is a hardship. They’re then asked for big deposits with first and last month’s rent just to begin. What if they could live anywhere within a vast rental network, for any duration they choose, while realizing all of the benefits of a strong consumer? And then, what if they could earn rewards for being loyal customers including travel, earning back their deposit, supplementing rent or investing back into themselves or others? These are both budget-friendly measures this demographic would and does embrace.
- Belonging — Because they’re more accustomed to group participation, many Millennials enjoy being part of a network. They also listen and share ideas better and faster than previous generations. As a result, they frequently rely on reviews by peers via social networks and online to help them decide which products and services are best for them. Provided you treat members of your network with respect and reward them for their loyalty, this free word-of-mouth advertising can be a huge boost for any rental-related business.
- Recognition — Digital platforms that enable personalization also allow service providers to recognize consumers for desired behaviors like customer loyalty. In the prop-tech sector, we can help renters earn points towards vacations and recoup their security deposit so they can spend the money rather than have it tied up and untouchable. Recognition and rewards like this help ensure customer retention and loyalty.
We must understand Millennials better to serve them better. It’s up to us to find new and innovative ways to give them what they want.
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LEASERA is the only renters loyalty service offering a connected accommodations leasing platform that serves the renter demographic with benefits and options across a variety of property types. By serving our client partnerships including property management companies, hotels, travel rentals, investment groups and more, LEASERA drives incredible change. LEASERA offers our clients value and customer-loyalty with an intelligent leasing-as-a-service platform which also includes an ecosystem of supportive tools and service providers. Consumers gain flexibility, accommodation and duration optionality with rewards and benefits for all renters. LEASERA was recently named on CREtech’s Hot List as one of the “Top Companies to Discover in Real Estate” and as a “Leading tech site to discover”.