Meet the Millennials: Getting to know your next big customer
Here they come—all 80 million-plus of them.
Technically savvy—to the point of being technically dependent—they’re ultra-connected to their peers by a constant stream of texts and tweets from ever-present electronic devices. Loving their mobility, they’ve replaced land lines with “app”-filled smart phones. Many have college diplomas but are job hunting. If they are working, they don’t stay at one employer for long—this group job hops.
Most have little savings; tuition debt makes them penny-pinchers. More often renters than homeowners, you’ll find them in the city, their preferred habitat. Having little trust in big corporations, they shrink from sales pitches, yet feel affection for certain iconic brands. Raised by kid-centric, indulgent parents, they sometimes think the world revolves around them. They generally get along with their parents and aren’t in a hurry to marry. A social conscience often guides their choices: Google’s principle “you can make money without doing evil” speaks to them.
Meet your next generation of customers: the Millennials.
Different names, many faces
We’ll call them Millennials but, depending on the demographer, this generation has various labels—Gen Y, Echo Boomers, Generation Next, Net Generation, the Next Boomers—and birth dates. Typically, Millennials are defined as being born between 1980 and 1994, though some demographers extend the date to 2005. William Strauss and Bill Howe, authors of Millennials Rising: The Next Great Generation, use the birth dates 1982 to 2001.
Depending on the birth-date parameters, Millennials number between 80 million and 86 million. A 2010 Met Life study says they represent 25% of the U.S. population. Even at 80 million, this generation is enormous, topping the culture-shaping baby boomers, which number 76 million.
Millennials don’t just embrace multiculturism, they are multicultural. The Pew Research Center, a Washington, D.C.-based nonpartisan research organization that tracks issues, attitudes and trends shaping the United States, describes this generation as more culturally diverse than any previous group: 61% white, 19% Hispanic, 14% black, 5% Asian and 1% other.
Shaping a generation
Several major events—some tragic, some financially challenging and some technologically inventive—have molded the Millennials.
“9/11 is their defining event,” says Edward Boches, chief innovation officer at the Boston-based Mullen advertising agency. “It made them feel vulnerable, less confident in their future security.”
The recent Great Recession is another influencer. Boches puts it bluntly: “They feel screwed.”
Carol Phillips, president of Brand Amplitude, a market research firm based in Stevensville, Mich., agrees that the terrorist attacks on the United States on Sept. 11, 2001, were a defining event for Millennials, but also points to mass shootings at Columbine High School (1999) and Virginia Tech (2007), as well as Hurricane Katrina’s hit to the U.S. Gulf Coast in 2005, as seminal events. And, she reminds us, Millennials “can’t remember life prior to the Internet.”
B.J. Birtwell, president of the Armory Ad Agency & Production Co. in Dana Point, Calif., emphasizes how peer influence defines this group.
“We must not forget how peer-to-peer sharing, social media and products like the iPhone have shaped their definition of what ‘immediate’ or ‘consumption’ means,” Birtwell says. “Beyond events, trends and products, the most influential shaping comes from their peers. This is often overlooked.”
Bleak employment prospects impact every aspect of Millennial lives: marriage, housing, buying power, world view. A 2010 Pew study found that “fully 37% of 18- to 29-year-olds are unemployed or out of the work force, the highest share among this age group in more than three decades.”
Phillips calls them “almost a recession generation.”
Despite the tough economy and perhaps because of their relative youth, Millennials remain optimistic about their futures. And they have their share of success stories: Facebook founder Mark Zuckerberg (age 27), Mozilla software developer Blake Ross (age 26), basketball star LeBron James (age 27) and entertainer Miley Cyrus (a mere 19), to name a few. Millennial entrepreneurs and developers, often working in accelerator groups in technology hot spots, are founding fast-growing digital and e-commerce companies.
What sets them apart
The Millennials are the most connected generation in history. The Pew Research Center calls them “history’s first ‘always-connected’ generation, treating their multitasking, handheld devices ‘almost like a body part.’ ”
Millennials are great at working in teams but may not be strong leaders. Boches defines them as “collaborative, digitally savvy, entrepreneurial, open-minded and inclusive.” Phillips’ research finds them to be more adaptive than previous generations.
“They want to participate, get engaged” in the world around them, she says.
Given the current economic reality, it’s no surprise that Millennials aren’t particularly acquisitive consumers—except, perhaps, for those electronic devices that are viewed as necessities.
“While they aspire to be successful, they don’t aspire to live in mansions. They don’t want a house full of stuff,” Phillips says. “Gen Ys make things last and don’t buy top-of-the-line products. They live small.”
“Living small” is often dictated by the size of their living spaces. Spurning the suburbs, they’re drawn to urban settings. City apartments with tiny square footage mean belongings must be pared down to bare essentials.
Lightweight, portable, multiuse furnishings have high appeal for this group.
Consider price points, too. As Phillips notes, “The economy has forced them to be thrifty. They’re in search of the best value, the best deal.”
Cautious shoppers, Millennials use the Internet and social media to search for and compare products and to get peer recommendations. Given this, successful manufacturers must craft and implement a digital marketing and sales strategy to capture their attention. Though confident in purchasing online, Millennials remain wary of making a bad buying decision. Most still go to brick-and-mortar retailers for big-ticket purchases. Experts say mattress manufacturers would be wise to develop branding strategies that build confidence and drive online shoppers to retail outlets.
Millennials expect immediate payback on their expenditures.
“We don’t think long term. How can your product improve our lives now?” asks Jason Ryan Dorsey, chief strategy officer at the Austin, Texas-based Center for Generational Kinetics. Dorsey—also known as “The Gen Y Guy”—describes his generation as “robo shoppers.”
“We research online, buy offline in the store,” he says. Keeping this “now” orientation in mind, mattress manufacturers might do best to focus on the immediate payoffs of a new mattress, such as improved sleep and better back health, or how the next step in life, such as moving into a new place, can prompt a mattress purchase.
Marriage, often a trigger for a new mattress, isn’t a high priority for Millennials right now. Research from Pew shows that many in this generation are postponing getting hitched. Only 22% of Millennials are married. By comparison, 33% of Gen Xers, 40% of boomers and 50% of the Silent Generation were married at the same age. Millennials also are postponing having children. For the third straight year, U.S. birth rates dropped in 2010. Experts attribute the decline to the weak economy.
Timothy Smith—a five-year financial services industry “veteran” and, at age 28, a Millennial himself—writes and publishes Echo Boom Bomb, a blog that focuses on his generation from an economic and financial perspective.
Smith says Millennials have “light wallets” and a different perspective on homeownership.
“They don’t appear ready to buy homes and may not want homes,” he says. “The rental housing market is getting younger—the top amenity they want is Wi-Fi.”
If they do want to buy, they’re hard-pressed to swing the purchase. Smith quotes one Millennial as saying, “I want to buy a home in the next five years or so, but honestly man, I don’t know how I’m going to do it. I just don’t make that much money.”
How they shop & what they buy
Peer recommendations and positive online reviews from product users and owners strongly influence Millennials’ purchases. Winning the stamp of approval of the group makes the sale.
“They really want to know how the product or brand will bring a sense of belonging,” Birtwell says. “What social benefit can your product or brand offer that can deliver on that key psychological driver? Although price and features are important, they’re not nearly as important as providing social benefit.”
“Clearly price is an important attribute, but so are human and social values,” he says. “I think many want brands that aren’t ‘selfish’ and for-profit only, but that are for a purpose.”
While Millennials favor environmentally friendly products, Phillips says they are “not willing to pay more for organic.”
“Value is important—they’re tight,” she says.
But they do make exceptions for cool, must-have products and will spend significant dollars on luxury brands that they deem necessities.
“Gen Y is price sensitive, however, consider that the iPhone is priced at the top of its class and still remains the No. 1 seller,” Birtwell says. “We would never recommend anchoring Gen Y strategy on price.”
Millennials are recrafting the shopping experience. This generation depends less on what you tell them about your products and more on what independent research and peer recommendations tell them.
“They don’t care about brands unless you give them a reason to care,” Birtwell says.
“Their purchase process is very deliberate. By the time they’re ready to make a purchase, they know exactly what they want and know what they’re willing to spend,” Phillips adds.
When considering a purchase, Boches says, “Millennials use Google search, Facebook and other social media, plus word-of-mouth. Advertising may still work, but less than on any previous generation.
“We’re turned off by the hard sell. We want a conversation, not a pitch,” Dorsey says. “Most manufacturers use ‘push’ marketing. With Gen Y, it should be more about the users.”
Millennials are skeptical, even cynical shoppers.
“When you’re selling, make it clear you’re selling,” Boches says. “Understand who they are and what matters.
Build a following and create advocates so that peer-to-peer marketing emerges.”
Because Millennials don’t want to make a purchasing mistake, Dorsey recommends lowering the perceived risk. Comfort returns may appeal to this generation, as would opportunities to improve a purchased mattress with customizing accessories like toppers.
“In some ways, we’re more educated, but need to be guided through the process,” Dorsey says. Put videos in your dealers’ stores or on your website that show Millennials exactly how your mattresses are made and what components, particularly environmentally friendly ones, are included in the constructions.
Boches suggests giving Millennials plenty of tools that help them make decisions, including mobile-optimized websites that allow them to research your products while on the go—or in the store.
The Millennial opportunity
At fully one-quarter of the population, Millennials represent a rich opportunity for mattress manufacturers.
Tricky to sell to, they must be approached on their own terms. Manufacturer transparency earns points with this
group. Be honest and open about your products and look for ways to connect with this always-connected generation. Often in debt and facing high unemployment rates, Millennials seek both a good deal and value. If the product is cool, even better.
Because purchase decisions are strongly influenced by peer recommendations, building a strong social media presence is key for any company wanting to sell to this group. This generation must like a brand before buying. Provide them plenty of information about your products, along with tips on buying the right mattress for them, and you’ll convert Millennials from researchers to purchasers to brand loyalists.
Rules of engagement: Selling to Millennials
- Create a conversation Millennials care more about what their peers tell them than what marketers tell them. And they’re in constant communication via texting, instant messaging, Facebook, YouTube, etc. Your goal—and challenge—is getting your products endorsed by the group. Use “pull” advertising techniques rather than “push.”
- Craft a new media strategy Selective print and broadcast campaigns still belong in a comprehensive advertising program, but digital media must take a starring role when trying to reach this generation. Your efforts should include websites (particularly mobile-enabled sites), social media (especially Facebook and YouTube), online advertising and search engine marketing.
- Be transparent and engaging What’s the story behind your brand? What’s unique about your company history? Engage buyers with a video showing how your products are made or the evolution of mattresses through the ages. Create online quizzes or, as Jason Ryan Dorsey, chief strategy officer at the Austin, Texas-based Center for Generational Kinetics, suggests, sponsor an online contest asking, for example, “If you could send a new bed to anyone in the world, who would it be?” Promote it heavily on your website and through social media.
- Name that tune Millennials love music—both live and downloaded. Consider marrying your brand to a memorable tune. Focus on lyrics that demonstrate a user benefit or capture a sense nostalgia—many of this generation actually like their parents’ music. Sponsor a music festival or concert.
- Reward loyalty More than three-quarters (77%) of Millennials participate in corporate or retailer loyalty or reward programs, according to a survey conducted by Harris Interactive on behalf of Montreal-based loyalty management firm Aimia. But, cautions Aimia’s Rick Ferguson, “They expect reward programs to be free, easy and fast.” In exchange for rewards, 44% of Millennials will promote products through social media, the survey found.
How the generations compare
Population 42 million
Defining moments Great Depression, World War II
New advertising medium TV
Key characteristics Conformers, hard workers, technologically challenged, retirees
Population 78 million
Defining moments Assassination of President John F. Kennedy, Vietnam, Watergate
New advertising medium FM radio
Key characteristics Idealistic, collaborative, experimental, rebellious
Population 50 million
Defining moments Challenger shuttle explosion, fall of the Berlin Wall
New advertising medium Internet
Key characteristics Latchkey kids, skeptical, self-reliant, media- and technologically literate
Population 80 million
Defining moments Columbine High School and Virginia Tech shootings, Sept. 11 terrorist attacks
New advertising medium Social media
Key characteristics Goal-oriented, team players, technology masters loyal to family
Source: U.S. Census Bureau, Law Practice Today, Fairleigh Dickson University, American Marketing Assn.