By Michael Chase
Chief Marketing Officer, St. Joseph Communications
A study by Boston Consulting Group (BCG) shows that Milllennials, who account for $1.3 trillion in direct annual spending, engage more extensively with brands than do older consumers and expect a two-way marketing relationship. The Millennial generation not only represents the consumer market of the future, they are also transforming the way in which companies must market their products both online and offline in order to be successful.
The BCG study, titled “The Reciprocity Principle: How Millennials Are Changing the Face of Marketing Forever,” says that Millennials — the generation of people now 18 to 34 years old — engage with brands far more extensively and personally than do older generations, and they expect their values to be reflected in the brands they purchase. Because Millennials are heavy users of social media and mobile devices, the impact of their brand choices and feedback is greatly amplified and accelerated. BCG’s global research suggests that the findings about Millennials and their impact on marketing reflect similar trends among Millennials in other developed countries.
“The conventional linear and rational approach to marketing has been a process in which companies defined their brands and pushed brand and marketing messages at consumers. But this doesn’t work well with Millennials,” said Christine Barton, a BCG partner and the lead author of the report. “Millennials want and expect a two-way, reciprocal relationship with companies and their brands. As a result, modern marketing has become an ecosystem driven by interactions among marketers, customers, and potential customers, who help define brands and influence their success.”
The report is based on findings from surveys in 2013 conducted by BCG’s Center for Consumer and Customer Insight involving nearly 4,000 U.S. Millennials and non-Millennials. The surveys covered behavior, values, brand engagement, marketing tactics, and other topics. Millennials already account for an estimated $1.3 trillion in direct annual spending, of which at least $430 billion is estimated to be discretionary, nonessential spending. These estimates do not include substantial Millennial-influenced spending, such as by parents and grandparents. And this sum will grow dramatically as more Millennials reach peak earning and buying power. By 2030, the projected 78 million Millennials in the U.S. will outnumber the projected 56 million baby boomers (ages 50 to 69).
Millennials are driving a transformation of consumer marketing across five elements: reach, relevance, reputation, relation, and referral. Several findings from the BCG surveys illustrate these points:
Relevance. The purchasing decisions of U.S. Millennials are influenced by more people — and different types of people — than are the choices of older generations. Less than half of Millennials said that they trust expert advisors such as doctors or financial advisors, for example, compared with 61 percent of non-Millennials. Instead, Millennials reported that they are most influenced by family, friends, and strangers. Millennials were also twice as likely as Gen-Xers (ages 35 to 49) to say that they were influenced by celebrities and four times more likely than boomers.
Reputation. Millennials identify with brands more personally. Fifty percent of U.S. Millennials ages 18 to 24 and 38 percent of those ages 25 to 34 agreed that brands “say something about who I am, my values, and where I fit in.” Forty-eight percent of young Millennials reported that they “try to use brands of companies that are active in supporting social causes.”
Relation. To cultivate a relationship with Millennials and sustain brand loyalty, companies must establish a dialogue with them individually and in small groups. Nearly twice as many Millennials as boomers cited “availability 24/7” as the most important thing that brands can do to engage them.
Referral. Engaging with Millennials is also important because they are more eager than other generations to share their opinions with friends and on social networks. More than half of U.S. Millennials said that they are willing to share their brand preferences on social media, for example, compared with 31 percent of baby boomers. More than half also said that people seek them out for their knowledge and opinions of brands, compared with only 35 percent of boomers.
The report suggests several actions companies should take if they haven’t done so already. First, they should set clear, measurable goals for marketing to Millennials. Companies must also transform their organizations by breaking down silos that separate different marketing and media functions, building the new capabilities required to compete in a reciprocal ecosystem, and devoting greater investment to more innovative media and tools that can measure short- and long-term returns from marketing.
“The imperative to engage and win over the Millennial generation represents an entirely new set of challenges and tactics for marketers in developed economies,” said Lara Koslow, a BCG partner who is global co-leader of the firm’s marketing topic area. “This generation is ushering in the end of consumer marketing as companies have long known it.”
The report advises that companies reach out to Millennials wherever they are with a cross-media, cross-channel, cross-device brand presence. Brands should reinforce their authentic reputations and brand soul with the relevant values, personality traits, and communications. They should relate to Millennials by moving from push communications to two-way, open dialogue. And they should cultivate referrals among Millennial customers and employees.
This column was reprinted with permission from the Digital Screenmedia Association and originally appeared here.
Image via Tom Fishburne’s Marketing blog