Gen Y Bank Customers Less Receptive to Marketing Messages
Deloitte asks some intriguing questions about Generation Y consumers in a new report, Catalysts for Change: The Implications of Gen Y Consumers for Banks: “Who is Generation Y and does this new group of consumers really matter to banks? Are they a unique customer segment that requires different market focus and investment, or will they ultimately acquire the behaviors and buying patterns of their parents?”
The report starts by outlining the economic importance of those born between 1983 and 1994: “Gen Y is strong in numbers and affluence. The group has more than 75 million members, second in population only to the 80 million Baby Boomers, and boasts a collective income of approximately $1.89 trillion. Further, Gen Y-ers are positioned to become the wealthiest generation to date.
In addition to the growing inter-family wealth transfer, their cumulative earnings are projected to increase by 85% within the next 10 years, surpassing those of their Baby-Boomer parents by as much as $500 billion.
The survey found that all generations prefer to conduct their own research before making bank purchases, and value recommendations from family. Gen Y-ers, however, were more than twice as likely as other generations to report that family counsel was the most influential factor in making these choices.”
Interestingly, this openness to suggestion does not carry over to being easily influenced by marketing campaigns: “While these tendencies provide banks with a significant marketing opportunity to reach Gen Y consumers, the survey results indicated that this group was less responsive to purchase suggestions from their primary bank, as well as to associated product campaigns and special offers.”
The survey validates some of the more positive stereotypes of the age group: “Gen Y has been recognized as a civic-minded generation, with a propensity to combine belief with action. This is noteworthy, particularly considering the group’s youth and financial position. Gen Y-ers’ active use of the Internet, and especially social networking sites, may be driving an increased awareness of corporate practices and their broader effects.”
The report ends with three main suggestions:
Channels (Integrate, don’t separate) – Gen Y-ers are comfortable with new technologies and value the ability to switch among channels based on their needs. Banks should make their channels easy to navigate, provide a consistent customer experience, and integrate seamlessly to attract these tech-savvy, pragmatic consumers.
Marketing (Educate, don’t tell) – As ‘financial freshmen,” they need guidance on how to begin their financial lives – providing practical information can be a winning strategy to build relationships. They are skeptical of traditional advertising and rely far more on the advice of family and friends when purchasing products or services. Banks will need to reach out to these Gen Y networks, or create new ones, to communicate effectively with these new customers.
Products (Simplify, don’t complicate) – They prefer simple, practical, and affordable banking services that reflect the fact they are just beginning their financial lives and their comfort with technology. Gen Y values simple and practical products a competitive prices. Socially mindful, their interest can be stimulated through product offerings that have social and environmental benefits.
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