The Rise of the Millennial Spender
Ah, the millennials. A generation that has sparked diverse opinions and controversial debate for the past decade.
“They’re entitled and impatient.”
“They’re smart and educated.”
“They don’t believe in the traditions of hard work and company loyalty.”
“They’re breaking the barriers of societal norms and traditional thinking.”
“They’re obsessed with technology and are downright narcissistic.”
“They are driven by a sense of purpose with a desire to make a difference.”
Whatever your view may be on this notorious generation, you can no longer deny the rise of their power and influence in shaping today’s modern world.
Millennials, or Generation Y as they’re also called, were born between the years 1982 and 2000, and are currently between the ages of 19 and 37 [source: US Census Bureau]. Millennials are already the largest segment of the workforce, outnumbering Generation X, and by 2020 they will make up 50% of the world’s working class [source: US Census Bureau].
That’s massive. This means that they will hold 50% of the world’s discretionary income and by 2030, that number will go up to 75%. If that’s not enough for you, it is estimated that millennials as a group currently spend $600 billion in the United States alone [source: Lexington Law].
I’ll just let that sink in.
So what does this mean for businesses? It means that it is no longer okay to ignore the millennial generation and what they want or expect from you. And as we all know, their expectations are completely different to those of Generation X or its predecessors. I should know, I am a millennial.
They are the present and they are the future. You have to acknowledge, understand and adapt in order to survive in a market that, whether you like it or not, is becoming dominated by the notorious Generation Y.
To help you out, I have shared the top 3 things from my perspective that you have to understand about millennials in order to adapt your business.
1. Millennials are all about experiences
The days of materialism are slowly fading with the new generation moving away from accumulation or ownership, and placing a lot more value on experiences. And this trend is moving beyond millennials with an overwhelming 74% of the western world stating that they prefer having experiences over buying material items [Source: Forbes].
This phenomenon is being referred to as the ‘rise in the experience economy’. With the emergence of massive players such as Uber and AirBnb who are leading the trend, traditional companies are now faced with the challenge of taking their previously object-based business model and adapting it to be more experiential.
As I’ll talk about later, millennials have different values and see life in a very different way to previous generations. They are driven by the desire to find happiness and purpose, and so they prefer to have experiences, create memories and share these with their friends [Source: Forbes].
The message is clear: if you can transform your business to become more experience-focused, you will succeed in today’s evolving world.
2. Millennials trust word of mouth over brand promises
Millennials are educated, in fact, it is claimed that they are the most studied generation in history. This means that, to a certain degree, they are able to see through propaganda and traditional marketing tools or campaigns.
Instead, this generation is influenced by user-generated content, reviews and recommendations from their friends or family. A whopping 89% of millennials actually [Source: Kissmetrics].
This means that the focus now has to be on ensuring that every single customer that walks through your door has the best experience possible. Otherwise, you face poor reviews and recommendations which could deter millennial spenders.
There are various ways available to measure your customers’ experience and ensure you’re continuously improving elements of that experience. The most common measure is a satisfaction survey sent to the customer after their experience. While this feedback can still be valuable, it can also be a little too late. You need to be proactive in getting this feedback before the customer has their experience with you, and one of the most effective ways to achieve this is through mystery shopping.
3. Millennials have a set of values that influence their spending
The new generation are increasingly mindful of what happens in the world and their role in it. A recent survey conducted found that 61% of millennials are concerned about the state of the world and feel personally responsible to make a difference [Source: Huffington Post].
While this is pretty exciting on many levels, it does mean that these values and beliefs influence their spending decisions and so business are yet again faced with the challenge of needing to adapt.
Millennials will support businesses that are socially responsible, ethical, environmentally-friendly and charitable. Hence the rise in goods that are free-range, organic, free-trade and so on. And price isn’t necessarily a detractor, as 66% of people have stated that they are willing to pay more for sustainable goods [Source: Financial Times].
In order to adapt, you need to find ways to reposition your brand as one that practices ethical business and is committed to making an impact on the wider society or environment. Also, be sure to involve your customers in the process.
The era of millennials is upon us. They are growing up and taking over today’s market. We can choose to keep our heads buried in the sand and hope they go away, or we can smell the roses and choose to evolve with them.
