5 Experience Predictions for Retail in 2019
In the retail industry, one that’s known for its ability to continually reinvent itself and find new ways to connect with consumers, the huge shift in consumer behavior from physical...
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A version of this article was originally published at Loyalty360 on April 1, 2016
Remember a world without the Web? Smart phones? Social media?
If you’re a Millennial, you probably can’t. As the first “digital natives,” this generation’s worldview has been radically shaped by the rapid evolution of new, game-changing technologies that provide unprecedented access to information. Academics and practitioners alike argue that this turns consumer decision-making on its head, challenging traditional marketing practices. The “Mythical Millennial Consumer” is portrayed as an elusive and unpredictable new breed of customer, shattering established conventions and leaving a trail of disruption in its wake.
But is it true? Do Millennials really diverge as consumers or make purchase decisions differently than their older counterparts? We wanted to find out. So we surveyed 1,002 Millennials and 999 Baby Boomers to understand the distinctions in what influences these two groups’ buying habits and how they react when they have a good or bad customer experience. What we discovered is that there are, indeed, generational differences.
What’s more, Millennial preferences are effectively defining the “new normal” in customer expectations, so businesses would be wise to get well-acquainted with facts about the actual Millennial consumer.
Millennials are not only the largest generation in U.S. history, they are also the most digitally connected. As the Internet came of age, so did they—progressing from playing with mobile apps and doing homework online, to friending on Facebook and connecting on LinkedIn. More than half of the Millennials responding to our survey say they are online “almost constantly.” Because they are so hyper-connected—to friends, experts, review sites, and the like—Millennials are far better equipped than previous generations to assess how well they will like a product or service before they actually buy it. The Internet is an integrated part of their lives, and online research is second nature.
According to Goldman Sachs Global Investment Research, Millennials’ “affinity for technology helps shape how they shop. They are used to instant access to price comparisons, product information, and peer reviews.”
We agree. In fact, according to our survey, three out of four Millennials do extensive research online before making a purchase decision, and 50 percent report that online reviews were the most influential factor driving their selection. Because online resources make it relatively easy to tap into the experience of other customers, Millennials look to reviews and posted commentary to inform their choices. How does this compare with Baby Boomers? Our study shows that online reviews influence Millennials’ purchase decisions almost three times as often as Boomers. While Baby Boomers also factor customer experience into their purchase decisions, they tend to rely more on their own personal experience than those shared online through social media or review sites.
Because Millennials rely so heavily on online sources to inform their behavior, they’re also more likely to share their own experiences online. Their fluency with the information economy (which works only to the extent that people contribute) sets Millennials apart from their more ambivalent elders. When Millennials have a great experience, 83 percent are likely or very likely to tell others about it. For example, when asked what they would do after an extremely positive or negative experience during a vacation stay, Millennials were twice as likely as Boomers to indicate that they would write a public review on an independent website.
Not only are Millennials more likely to share their customer experiences online, but those experiences are also likely to have a greater impact on public opinion. This is because Millennials have more extensive online networks and share their experiences more frequently. Based on our research, the average Millennial has almost three times more Facebook friends and four times more Instagram followers than the average Boomer. They’re also three times more likely to have a Yelp account and write reviews. Millennials we surveyed with a Yelp account reported on average writing approximately 24 Yelp reviews over the previous six-month period—the equivalent of one review every week.
By virtue of their online sharing patterns and broad reach, Millennials’ voices are digitally amplified. And when Millennials engage online, it begets action. For example, in a typical month, two out of three Millennials reported using referral codes or discounts shared with them by a friend via social media.
Of course, the fact that Millennials are such vocal consumers can also have a downside for some businesses. Eighty percent of Millennials say that they are likely or very likely to tell others about a terrible customer experience. And 50 percent indicate that a disappointing experience is the biggest factor influencing their decision to make a repeat purchase (more so than price or convenience). Given their online reach and digital savvy, an unhappy Millennial customer can have a big impact on a business’s public persona. It’s one thing to tell a few friends about a bad hotel stay; it’s quite another to post pictures of dirty bathrooms, cockroaches, and worn sheets on a review site viewed by travelers around the world.
Millennials don’t settle for the status quo. Futurist and market forecasting expert Anne Boysen notes that Millennial brand affinity is not easy to acquire: They tend to be “skeptical of institutions…and no generation does more research before making a purchase.” Further, that research is heavily weighted to social and online sources, as opposed to traditional print or broadcast media.
Unlike their predecessors, Millennials have grown up with the ability to google just about anything they want to know. This includes what other customers have to say about a given product or service. Armed with the transparency of today’s sharing economy, Millennials are not afraid to look for new alternatives that deliver greater value. Sixty-four percent of Millennials surveyed said that their day-to-day behavior is driven by a desire to find new and better ways of doing things. Whether it’s discovering a unique or more cost-effective place to stay when traveling or a cheaper, faster ride to the airport, Millennials are willing to try new things. Perhaps this is because they can draw on the experiences (and implicit guidance) of a multitude of other customers who are also looking for better solutions and willing to digitally share what they’ve learned as well.
Our research does not define the entire Millennial generation, nor does it provide a definitive Millennial consumer profile. But the results do surface some important distinctions and substantial changes in how Millennials make consumer decisions relative to prior generations. These changes extend well beyond buying behavior; they reflect new norms and expectations about the very experience of being a customer. Millennial customers embrace the opportunity to share their experience—both good and bad—not only with the companies that serve them, but also with a global network of fellow consumers. In return, Millennials expect even better experiences and more options. And they get them.
Whether it’s due to market forces or norms of reciprocity, customer experience in the Millennial world has become a new form of currency, trading on the Web, and influencing competitive dynamics in almost every industry. Companies that rely heavily on traditional marketing practices to attract customers are discovering that Millennials respond differently, placing a higher premium on the experience of other customers, easily accessible online, than cues like brand and positioning.
Like most currencies, however, the value of a given customer experience can change quickly as competing firms offer new experiences that customers find more attractive. Millennials are eager to try new things, which means companies need to speed their innovation cycles. More than ever before, it’s about the value of products and services, conveyed through the voice of the customer. As the largest generation in U.S. history—soon to have more spending power than any other demographic—Millennials have a commanding voice. Their influence will likely increasingly drive conventions for the rest of the buying public. And that’s no myth.