Why Read this Article
Millennials’ purchasing power will soon exceed that of every other generation, yet the key factors that influence their purchasing decisions are sometimes a mystery to merchants. Selling to Millennial consumers requires knowing these factors – and acting upon them. This article will help explain these factors and provide valuable actionable tips to help you succeed in converting Millennials to loyal customers.
The Millennial Consumer Boom
Millennials, those born between the years 1981 and 1997, are made up of technologically savvy, yet often financially cautious, folks. At 25%, they currently form the single largest generational cohort in the U.S. and account for $170 billion in purchases each year, making them one of the most powerful buying groups in today’s consumer market. And yet, Millennials are a tricky demographic for merchants to categorize given their high student-loan debt and healthy dose of financial skepticism.
Businesses wanting to convert Millennial shoppers should understand these five factors that influence their purchasing behavior:
1. Reviews from Friends or Peers Carry a Lot of Weight
I’m writing this article on a MacBook Air. Say what you will about shiny toys, but I can tell you that most of my close friends also type on Mac products. And although I won’t say I made my choice purely based on my friend’s decisions, I can say they had a large impact. A positive review from a friend or someone like me is a powerful thing. Relatability is huge for Millennials.
When brands or companies create online communities where like-minded consumers can share thoughts about the company’s products or services, Millennials are more likely to become fans (and also share their opinions with friends).
- Foster genuine conversations among your customers and encourage public reviews of your products and services.
- Make it easy for Millennials to share with their friends when they choose your brand.
- Support and encourage external reviews on other sites, whether by bloggers or anonymous forum users.
2. Budgeting Is a Way of Life
The sting of student loan debt (the average now hovers around $28,000) paired with graduating into a soft job market has shaped how Millennials approach their purchasing, particularly with how they utilize credit. A Bankrate studyrevealed that over 65% of Millennials don’t even have a credit card because they fear getting into debt they might not be able to pay off. Millennials are less likely to reach for plastic when purchasing, instead saving up for purchases until they can pay with cash or debit.
This doesn’t mean that Millennials are not buying. They are exploring new ways to purchase the items they want in a financially responsible way. Some are choosing new financing options (like Affirm) that allow them to buy an item now and spread out their payments over several months, all while avoiding compounding interest and hidden fees. Millennials are trying these new financing innovations they believe help them maintain greater control over their financial health.
- Acknowledge the budget-minded approach of Millennial customers in your marketing messages and other customer communications.
- Offer Millennials different payment methods and financial tools like Affirm that empower them to be smarter with their finances while also giving them flexibility.
3. Values Mean Everything
Millennials weigh the integrity of a business model against their own set of values. As such, brands that align with a social cause are big attractors. A great example is Toms Shoes, a footwear company that donates a pair of shoes for every pair of shoes purchased by a consumer. Of course, this type of commitment has to be sincere to have a positive effect.
The opposite is also true. If Millennials think a company is coming from a questionable background, they’re more likely to avoid purchasing. For instance, companies who utilize sweatshops are more likely to be rejected by Millennials.
- Identify which of your company values resonate with Millennials and align your products with them.
- Look for ways to support the common good – either in your community or around the world – in a way that comes authentically from your own values.
- Allow customers to engage with these efforts and solicit feedback from them.
4. Constant Exposure to Social Media
From posting new purchases on Facebook, to Instagramming Sunday brunches, to tweeting product reviews, Millennials are accustomed to publicly sharing online. Research shows that a whopping 81% of Millennials are on Facebook, with an average of 250 friends. They also check their mobile devices 43 times a day on average. And while Facebook and Instagram may be some of the most well-known social sharing platforms, other platforms are also catching up. Videos, visuals, mobile sharing – these increasingly dictate how Millennials seek new information.
One example is the “Unboxing” trend on YouTube, where an individual films the process of unpacking a new purchase, giving watchers a way to get a feel for what they can expect from a new purchase. Then of course, there’s Twitter, which gives Millennials a stage to share their satisfaction or dissatisfaction with a company or product. Even Snapchat, an app created to share temporary picture messages, has become the third most popular way for Millennial consumers to engage with one another.
- Don’t use social media without first identifying the goals it can help you achieve.
- As with all communications channels, be authentic and encourage conversations on social media.
- Be willing to try new forms of social media (like Snapchat) if it fits your company’s audience and goals.
5. Innovation With Purpose
“Cutting edge” is pretty status quo within hubs of technology where many Millennial influencers are hunkering down. However, while Millennials may be more willing to try something new, they will not become loyal consumers unless the item provides incremental value.
Companies that launch new products for the sake of innovation are missing the point; they need to make sure that the innovation actually makes Millennials’ lives easier or creates more customer delight. Only in those cases will it help them gain loyalty from Millennials.
- Before investing in an innovative new feature or product, ask whether it adds value to your customer experience.
- Whenever possible, use innovation to make your customers’ lives easier and make the purchase process smoother, not just to have something flashy to talk about.
What You Should Do as a Merchant
Understanding just what makes a Millennial buyer more likely to purchase is a complicated task. Most Millennials take pride in their individuality and are quick to point out that they don’t always fit within stereotypes. However, these tips will help you influence their buying decisions in your favor:
- Make it easy for Millennials to share your products and services. Foster genuine conversations among your customers and encourage public reviews.
- Address the needs of budget-minded Millennial customers by offering new payment methods and financial tools. Find payment methods like Affirm to show Millennials that you understand finances are tight and that you can help.
- Look for ways to show your company’s values and support of social issues. And get your customers to be engaged in these efforts.
- Invest in the right social media channels. Utilize those platforms that your Millennial consumers prefer to engage in authentic discussions with them.
- Make smart decisions on innovations that address Millennials’ needs. New products and services should create a solution for a genuine consumer pain point or opportunity.