Selling To Gen Y
The latest wobbles in investment markets mean for the first time in a long time marketeers in financial services are having to look beyond the baby boomers to younger generations of savers to shore up future growth.
The first port of call for more cash has been Generation X – loosely defined as those born between 1960 and 1976.
But the problem for the financial services industry with marketing to Generation X is that by definition many of them reject the idea of success of the baby boomers and – more specifically they tend to reject the idea of working to grow wealthy.
For many Gen Xers, wealth is more of an accident than a design. This means that the funds management and banking industries, are starting to turn their attention to Gen Y, loosely defined as those born between 1977 and 1992.
For the past few years at CoreData we have been conducting research on Gen Y’s as part of regular omnibus research conducted on housing, interest rates and investing and have some inkling as to the way they behave.
For a start we know they are the most educated generation; some 77% of them get to year 12 and more than half of those who get to year 12 carry on to some form of tertiary education, we know that they search and absorb a variety of information before they purchase anything and that they are the most information rich group in history.
That doesn’t just mean research– yes 97% of them have access to and frequently use the internet, but it goes beyond that – with access to instant messaging, chat, facebook and other social networking sites they share information faster than any other generation in history – information about everything and that also means financial services.
In an interesting leap of logic, this is leading industry marketeers to conclude that because they spend a lot of time on line – Gen Y will be the first truly ‘direct generation’ and will be the first group of consumers who will buy financial services direct and over the Internet.
To be honest – we thought so too – until we started to do the research.
The reality is much less exciting and much more subtle than we first thought and it all comes back to the way in which people in Gen Y describe utility – that is how they ascribe value in the things that they buy.
Big Shock Number 1
For the past three years the media has been reporting on slack Gen Ys are – how they live at home with their parents (interpreted as slack and that asset price inflation means they have been priced out of the market), how they can’t save and are choosing lifestyle and instant gratification over long-term planning.
All of these are true – but in a recent qualitative piece of research CoreData conducted on Gen Y Australians we discovered something quite curious. Gen Y want to get rich – seriously rich and they are actually pretty good at saving their money.
They see living at home not as – well living at home – but as sharing their house with their parents.
The talk wasn’t of curfews and being told who to bring home and who not to bring home, and when to have friends over to dinner and when not to – it seems that baby boomer parents are much more laid back than their depression generation parents and that the Gen Ys share their house with their parents rather than live at home.
Many like living at home – they don’t feel the need to get away and can clearly articulate that they are saving their money.
Previous generations needed to get independence by moving out into flats or into squats or even to other towns – now that’s no longer necessary – it seems you can live the life you want to live at home.
If you are Gen Y, then it seems its OK to have interests the same as your parents – after all mum and dad like surfing, ski-ing fast cars, video games – these are no longer the symbols of rebellion but something you can share.
Big Shock Number 2
The bad news is that once you know this – you still have to find a way to talk to Gen Y consumers – because if you are in financial services – Gen Y consumers have been educated, mainly by the media, not to trustpeople selling financial services.
This appears to mean two things – the first is that when they come in to buy a service from you (they are it appears no more or less likely to buy direct than any other group – those that are strongly self directed will, those that aren’t won’t) they will have done their research – so if you are selling them something – get your offer right.
They are interested, more than any other group so far perhaps in price, rather than relationship.
While baby boomers can find strength and peace in a relationship with their financial planner or their accountant or broker – Gen Y appear to want it less – what they want is to understand the value of what they are getting from you and why it is special, different and better.
It would be wrong to suggest that no one in financial services is getting this right – the AAMI under-written Just Car business appeals very strongly to them – because they understand the value – as does the Suncorp Family discount insurance offer made earlier this year.
But the brand which we all thought they would love – the irreverent and funny Billy Connolly tracked quite poorly – as someoneone in one of the last focus groups put it:
“I cringe when ever I see that add – I’ve got my cash with ING – but that ad gives me the shits – so much so – I’m thinking of moving it to the Bank West one – the Telenet thing.”
Big Shock Number 3
They are deadly, deadly serious about money. They don’t necessarily buy into the whole ‘get-rich gangster lifestyle’ – but they want to be rich – certainly richer than their parents.
“I want to be able to travel, have a nice house and a nice car – and I’d guess a beach house. By the time I am 40 I want to be on at least a half a million a year.”
“I’m in the public service now – but my eyes are focussed on banking – I want two to three years experience in the states and then I want a career here somewhere in the corporate side.”
Being deadly serious about money means that perhaps more than any other generation they are focussed on saving it, storing it and gaining value from it – which means that financial institutions are going to have to work a bit harder to get their money – if not their love.
“I don’t like any bank brands – why would I – it’s not like a car or a shoe – what does a bank say about you – nothing – they don’t describe me or who I am.”
arf says:
Some may well see the Y’s as being the best educated generation but as an employer I would have to say that only applies in so far as they have a piece of paper which says that they have a degree in XYZ. The reality is that the majority of “degreed” people we see would have failed the first year of any university degree 20 years ago. I realise that this a sweeping generalisation but we have interviewed people with business degrees for receptionist/office manager positions and they have no real skills.
They can whiz around on software and put numbers all over the place but have no idea of the big picture, cannot spell or express themselves in an understandable manner, want to start as the boss because it’s “easy” and commit themselves to a maximum 3 years in the role.
As an employer who has to retrain these graduates to have functional skills, to learn that spelling and grammar do make a great deal of difference to the meaning of a document, that spell check only tells you the word is spelled correctly not that it is the right word, that people skills (as in being able to converse and relate to people) are important, I am afraid that 3 years is about when the Y’s become an asset and not a liability to my business.
I would prefer to employ people who have done the 3 years in somebody else’s business, or a non Y, to grow my business.
What the hell they actually do at University beggars belief.