What is a Millennial and why are they important to your business?

Steve Studer, EVP/Chief Credit Officer, Scott Valley Bank

The Millennial generation is coming of age, entering the workplace and market place, and will drive consumption spending, investment, and jobs in the years to come. As the Millennial generation is reported to be the largest in history, we as business people had better figure them out and adapt our approaches and product offerings to be relevant providers of goods and services to them in the future.

First, what is a Millennial? All this talk about boomers, Gen X, Gen Y, Millennials, what does it all mean?  Well, as a finance person, I am probably the most unqualified person to be discussing this subject. However, since I have raised a Millennial, I may be as qualified as anyone to take a stab at explaining them and understanding their behavior going forward as consumers. 

In researching this topic, there appears to be no real authority on the subject establishing the definitive definition of a Millennial, so the following is what appears to be most accepted. But let’s step back and start with the Baby Boomers.

Boomers were born after World War II between 1946 and 1964. This generation, of which I belong, was brought up during fairly tough times, but entered the world as great economic progress was being made in the US. They prospered like no other generation before them.

Generation X includes people born from the mid 1960s to the early 1980s (no specific dates seem to be confirmed).  This generation grew up during significant geo political events such as Vietnam, the end of the Cold War, the fall of the Berlin Wall, and went through some economic hardships – like the S&L crisis, the inflation crisis in the early 1980s.

Generation Y was the definition for what would become the Millennials - children coming of age in the new millennium. Therefore, the general consensus and Wikipedia as to this generation’s dates runs from early 1980s to early 2000s. A specific date is not agreed upon, but it seems 1982 is the starting point, as those individuals turn 18 in the new millennium. Therefore, 1982 to 2002 seems to be a logical generation range. This generation grew up in the age of technology with information at their fingertips, during significant economic growth, but also significant economic upheaval with the recent great recession, Bernie Madoff, and a war on terror ignited by the 9/11 attacks. 

Goldman Sachs provides research that indicates Millennials this year, ages 15 to 35, will total 92 million individuals compared with 61 million Gen Xers, and 77 million boomers -clearly the largest generation in history. Financial institutions and other companies are trying to prepare themselves to serve this generation and therefore have produced numerous recent research pieces on the generation.

There is risk in making characterizations of any group of individuals, as they are just that, a group of individuals. However, research is available that describes the “tendencies and behaviors” of the Millennial age group, and since I have personal experience in raising a Millennial, I can echo some of these findings.

In general, research has found that the Millennial generation has many of the following characteristics:

  • They are the most informed and skeptical generation. Born with access to information like no other generation, the Millennial is a tech savvy group, with the ability to research the answer to any question from the best nearby restaurant, to who shot JR (sorry, boomer generation humor) with the tap of a smart phone. They rarely take anyone’s word as they can confirm an answer to any question in a matter of seconds with multiple sources of data.
  • Millennials are generally more informed and higher educated than prior generations. While many Millennials are still in high school and are not college age yet, forecasts indicate the level of college graduates will surpass that of Gen X which is 35%. Millennials score higher as a group in aptitude and scholastic achievement tests.
  • They are socially aware, and environmentally concerned. This is the most diverse group with 43% non Caucasian. Millennials have greater tolerance for other perspectives. They are concerned with the planet.
  • A higher percentage of Millennials are not forming households as early in life as did prior generations. A high percentage of Millennials live at home with their parents, a result of delays compared to prior generations’ speed to marry, become homeowners, and start families, due to both changes in perspective on the chronology of those events but also because of the financial impact of the great recession on the group. As such, Millennials are skeptical that owning homes is a smart financial move as they watched their parents' equity in housing and retirement funds evaporate. Home ownership in this group is extremely low compared to other generations at the same age.
  • Millennials are generally more economically impacted than some generations due to the great recession and its impact on their parents’ ability pay for college and to invest for their children. Many Millennials are coming out of college with big debt, low job prospects, and a slowed economy in which to get established.
  • Millennials are less politically and religiously connected than prior generations.
  • Most Millennials are health conscious. They do not only want to be healthy; they incorporate healthy decisions into their daily lives based on what they eat, how they exercise, and their impact on the environment.

Given the characteristics of the fastest growing demographic in the world, what are the best practices we should employ to engage this group of consumers? Certainly, each organization will have its own detailed approaches that need to be developed; what follows are some generalities that might help.

Make sure you provide access points to your products and services that provide flexibility to meet the Millennial at all entry points relative to technology. This group accesses their banking relationships and shopping excursions with a hand-held device. They pay for Starbucks coffee with a passport app. They communicate with each other with their thumbs. They purchase movie tickets, transfer money, and generally conduct their lives with the highest use of technology of any group. Make sure your access points provide meaningful technological solutions. 

Educate this group on how to engage your products with innovative educational techniques. The Millennial will not listen to your best boomer aged sales person making a pitch on the advantages of your products, but likely will listen to a well crafted You Tube video from a fellow Millennial explaining the differences and advantages of your products.

Telegraph the political, social and economic impacts your company is making through programs and donations your company is involved with. Millennials want to be connected to companies and products that share their vision for the future of society and the planet. If you support any clean environment, or other social impact project, ensure that is known. If your company has a particular eco-friendly process for production of whatever widget you make, be sure that message gets across.

Advertise and recruit in their demographic area. Millennials can sell other Millennials. Boomers will stand little chance in enticing this group into brand loyalty or into employment opportunities.

Millennials want their jobs to mean something and it has to be a positive outcome in their eco environments or their social strata. They want meaning in what they do. They want to have a say and be heard. They won’t buy the ‘party line’ if it is not meaningful to their life perspective.

In summary, Millennials are here, they came of age in a rare time in America with economic upheaval, the war on terror, global eco issues, and an interconnected information channel that allows them access to many opinions, information, and research. They are not taking paths to many life stages that their parents took, and they are more skeptical about lifelong solutions. They will shape our jobs, our consumption and our lives in the future due to their sheer numbers. To be relevant in the future and right now, you need to understand them and market to them at their level. Good luck.

Sources:  Wikipedia.  “Millennials and Money”, Michael Liersch, Merrill Lynch.  “Millennials coming of Age”, Goldman Sachs.  “Millennials and Money: How Banks are Missing the Mark”, Shama Hyder, Forbes, 2.25.15.  “Homeownership Rate for Millennials has Hit Bottom”, Nick Timiraos, WSJ, 7.16.14.

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