Understanding the Millennial Mindset
It seems like only a few years ago Generational Marketing and the coming of the millennial segment was all the buzz in the financial services industry. Boomers are steadily entering into retirement. Generation X is assessing how to retire debt, downsize and monitor their investments. Gen Y – the Millennials—are now flexing their financial muscles. Is your institution attracting and retaining this valuable generational segment? Do you have the analytics and strategies in place necessary to communicate and create the right experience?
The Millennial generation is a large and influential segment. Their size and long term spending power create a large opportunity for the financial services industry. However, there is a challenge. A Financial Brand survey found that 71% of Millennials indicated they would rather visit the dentist than go to a bank.
In order to reach this segment, financial institutions need to leverage business analytics and develop a digital strategy to communicate. Also, research indicates that half of Gen X behaves like Gen Y, embracing technology while the other half behaves more like the Boomer segment. With this generational overlap, the need to focus attention on Gen Y is even greater. This is not to say financial institutions should ignore Senior, Boomer and Gen X segments. A solid retention strategy needs to be in place for allgenerational segments
There Are Three Keys to Understanding Gen Y’s Behaviors:
1) They are digital and they love technology. For the most part, Gen Y has grown up digital. They have high expectations about the digital experiences they have with financial institutions. A bad experience can mean the difference between a long term profitable relationship and an unhappy former customer. This segment wants instantaneous satisfaction. When they reach a buy decision they want to act. Smartphones, laptops and tablets are the preferred methods of Gen Y and it’s likely that they’ll use one of these devices when engaging with financial institutions.
As this segment embraces digital over brick and mortar, financial institutions need to understand their channel behavior – preferred channel, frequency and so on. Leveraging business analytics, a financial institution is able to target specific offers at these channels.
2) Millennials want information and recommendations. They have a higher level of service expectations than other segments. Gen Y takes time to research products and services to better understand their options. So, with the branch taking a back seat to electronic channels, financial institutions need to be sure to create an engaging user experience, provide information and options and allow the user to move directly to account originations.
This segment does not like to be sold to. They prefer information and advice no matter which channel they select. They also reach out to parents (generally young Boomers or Gen X) for guidance. Reaching the parents of young Gen Y and Z can help to drive awareness of your institution with your targeted audience.
3) Millennials are the largest segment using electronic banking channels. Not surprising when you consider their affinity for technology and adoption of the smart phone. Financial institutions need to offer user-friendly, engaging electronic channels that allows Gen Y to interact with them. A consistent experience across all channels is a must. They are not particularly brand loyal and will find an institution that provides the interaction they are looking for..
So what’s next? As you are working through your Gen Y strategy here are a few things to keep in mind:
- Business analytics are necessary to understand, develop products and services, target and communicate with Gen Y. It will also help enhance channel interactions with tailored messages. Analytics can help reinforce relationships with Gen X and Boomers as well.
- You need to develop strategies to acquire new Gen Y relationships as well as retaining those you already have. Consider programs to build the relationship and become the primary financial institution. Gen Y seems to respond to reward programs. Additionally educational seminars, in branch or online, resonate with this audience. Consider covering topics like: Purchasing Your First Home, Planning for Retirement, Tips on Home Renovations
- Millennials may not like to be sold to, but keep the communications coming. Provide information, not advertising, because Gen Y likes to be in the know. They’ll do considerable research when interested. And get personal – while Gen Y’s primary contact with you might be nontraditional electronic channels, they do like to get personalized communications and traditional mail.
Hopefully these tips will help move your Generational Marketing in the right direction. Once you have a solid strategy in place for Gen Y, there’s no time to relax! Gen Z will be making themselves known soon. In a few years, they’ll be shopping for financial institutions. While they are distinctly different from the senior cohorts in Gen Y, you will be able to leverage investments in business analytics and digital channels with this tech savvy generation.
If there’s one big takeaway, it’s that analytics can help you reach your target audience effectively and efficiently.
Posted on Friday, October 27, 2017 at 8:30 AM
by Baker Hill