Retailers have been actively targeting millennials for years, but their habits have seemingly confounded companies that took traditional customer engagement and marketing approaches.
Millennials have been unfairly blamed for a host of socioeconomic problems over the years that include being selfie-obsessed narcissists unable to disconnect from social media, to their penchant for living with their parents to save on costs. Most recently, this generational group even came under scrutiny for their laundry habits after manufacturers noticed a decline in sales of fabric softener.
While many view millennials as young adults that refuse to grow up, this line of thinking seriously undervalues what they bring to the table. The senior members of this generation are now in their mid-30s and will soon be the largest group in the workforce. Today, millennials wield $200 billion in annual purchasing power according to a report by the National Chamber Federation, that’s a lot of influence that can’t be easily dismissed.
Retailers have been actively targeting this generational group for years, but their habits have seemingly confounded companies that took traditional customer engagement and marketing approaches. While it’s taken a while to profile this generation, appealing to them really comes down to three things – speed, efficiency and personalization.
Investing in customer engagement
The rise in self-service checkout stands signal an assumption made of the millennials– that their love of online shopping means an adversity to interacting with people. However, the real motivation may be speed and uncertainty.
According to a Cisco study called Reinventing Retail, the industry is investing 37 percent of its technology budget to improving the shopping experience which includes increasing customer engagement, creating upsell opportunities, and reducing friction between online and offline sales.
Where a brick-and-mortar store may be out of a certain TV model, a large online retailer will have it perpetually in stock with the ability to ship anywhere. Physical stores are combating this line of thinking with “endless aisles” which enables them to capture sales even when they are out of stock by augmenting their online presence to ship product directly to the customer if it’s not available in store. The next step in the endless aisle approach is to offer customers a glimpse of store-by-store inventory so that they can see which store near them has the item available.
In the quick service restaurant space, long lines may be all it takes to lose a sale from a millennial. To reduce friction, companies like McDonald’s are supplementing customer service at the counter with self-service kiosks that shorten wait times. Other quick serve restaurants like Chick-fil-A and In-N-Out Burger are solving the same challenges by arming employees with tablets to take orders and process payments from drive-thru customers to speed up service during busy hours.
Retailers are also finding that millennials are willing to engage with store employees as long as it nets them a better experience. Greeting a customer by name and queuing up their usual lunch order before they even step up to the counter is something that can be achieved the old fashioned way by an attentive employee, but for most mid-size to large retailers, investing in technology that helps identify regular customers as they walk through the door can bridge the gap and achieve the same effect. In the future, the same technology can help store associates make specialized recommendations to customers.
Loyalty programs aren’t dead
It’s no secret millennials research their purchases online and shop around for the best prices. As smart consumers, they are rarely loyal if they can get better prices elsewhere. Traditional customer loyalty programs that require 10 purchases in exchange for a free pizza are no longer cutting it. Savvy retailers have transformed loyalty programs to be experiential, offering activities instead of products. For example, Sephora’s three-tier loyalty program not only provides free gifts in exchange for earned points but offers their members beauty workshops on everything from skincare to achieving the winged eyeliner look. Furthermore, Sephora encourages its customers to unlock higher levels of their loyalty program by offering free makeovers and launch party invitations at higher tiers.
A different definition of security
Not surprising of a generation that has grown up with social media, millennials’ definition of security is different from older generations, but it doesn’t mean they are always willing to dole out their information. Millennials are more likely to give personal data in a transaction when they see it exchanged for something of equal value. When making an online purchase, a member of an older generation may provide their credit card number, but will not opt to save it for security reasons. Meanwhile a member of the millennial generation will think nothing of saving their credit card information for a trusted store in which they’ll make repeat purchases if it results in a faster and smoother checkout process in the future. Likewise, this generation is quick to create login IDs for retail sites if they see a payoff, and they are more likely to embrace forward-looking payment systems like Apple Pay and Amazon Go that promise to speed up in-store purchases.
Similarly, retail apps need to prove their worth in order to stay installed on a millennial’s smartphone. Utility is important in an app which means that retailers need to make sure that their apps are constantly being refreshed with new features and updates. Millennials expect to see apps updated 4-6 times a year, associating an out-of-date app with a stale brand. Apps like those from Starbucks are leading the way offering interesting user interfaces, reward programs and new features for ordering coffee ahead of ever being in the store. The Starbucks app of today is certainly not the same app of a year ago nor the app it will be a year from now. It is in a constant state of evolution that keeps the brand relevant and fresh for millennials.
Be it launching a new mobile app, changing a social media strategy or installing smart digital signs that cater displays to appeal to the type of people in the store, there are many possible directions retailers can take to better attract millennial customers. My biggest piece of advice for our retail clients is have a strategy specifically targeted to your audience where speed, efficiency and personalization are priority mandates, then use the latest technologies as the mechanism for executing that strategy. Being current is the new currency so make the time to invest and build out your technological capabilities. It’s the best way to ensure your continuing relevance in the eyes of this generation and future ones ahead.