6 Truths About Millennial Buying Power

Millennials are the largest living generation with 75.4 million people falling into the category.

Millennials are beginning to take over the markets as well, as more enter the workforce every year. Still, companies are using the same tactics as they did with previous generations.

Millennial consumers, though, are not the same as their parents and grandparents. Companies need to start adjusting their strategies if they want to take advantage of Millennial buying power.

Millennial Consumer Habits

The most prominent thing that separate Millennials and previous generations are the technological advancements of our time. Millennials, on the whole, grew up with the internet and came of age during the boom of social media.

As you’d expect, the trends of Millennial spending habits have changed as well. As more and more Millennials enter the job market, it’s crucial for brands and companies to understand the differences if they want to harness the Millennial buying power.

1. Choosing Products a Different Way

Canadian Social Science published a study to determine how Millennials make their purchasing decisions - specifically when it comes to apparel. What they found, unsurprisingly, was that Millennials make decisions on what they will buy differently than any previous generation.

Millennials are similar in how they choose some brands over others, just not all. Certain elements such as a friend’s recommendation, good value, the ambiance of a particular store, and the availability all similarly affect the decision making of Millennials as they do Generation Xers and Baby Boomers.

Where Millennials begin to differ, is in the “trend” category. Generation X and Baby Boomers were heavily influenced by what their friends thought of a particular product. For Millennials, this factor is less important.

Millennials are the first generation to grow up in the age of social media. Social media allows us to expand our circle to hundreds, even thousands of people we may have never met in person. In turn, what Millennials find “trendy” my not fall in-line with the tastes of their real-life friends. For better or worse, the opinions of strangers on the internet hold more weight for Millennials than the views of their actual friends.

2. Online Purchasing Isn’t as High as You Might Think

Researching products is easier than ever because of the internet, and this has affected consumer behavior as a whole. As the most internet savvy generation, Millennials are doing more and more research before they pull the trigger on an expensive item.

Customer reviews are far more important to Millennials than any generation before them. They use the internet to check prices and find the best deal they can before making a decision.

At the same time, though, Millennials aren’t buying products online as much as you may expect. Online information informs their purchasing decision, but the websites they visit aren’t necessarily more likely to get a purchase out of them.

One theorized reason for this fact is that Millennials are used to instant access to everything. Information is at the tips of our fingers at all times, but products aren’t.

Especially among Millennial males, one of the main reasons given for why they didn’t purchase something online was because it would take too long to get it. They’d prefer to do their research, find the best price, then buy it themselves.

Of course, this is changing with programs like Amazon Prime that can give consumers 24-hour shipping. Still, Millennial buyers, like the generations before them, like to see or try something for themselves.

3. Millennials Don’t Have as Much Brand Loyalty

A study published in the Journal of Academy of Business and Economics determined the brand loyalty of Millennials. To the surprise of many of their subjects, they found that Millennials are not as brand loyal as previous generations.

The study also concluded that Millennials perceive themselves to be more brand loyal than they actually are. They like to think that they hold some loyalty to a brand they’ve always used, but their actions contradict their words.

In truth, Millennial consumers choose quality and value over a brand name most of the time, and that’s not necessarily a bad thing. They aren’t as nervous to try new things as previous generations are. Instead of riding the waves of a particular brand, Millennials will jump-ship if the quality goes down or the price goes up.

This isn’t a universal truth, however. There are certain markets where brand loyalty is still high among Millennial consumers.

Specific personal hygiene products like toothpaste, deodorant, and soap are more likely to hold the brand loyalty of a Millennial buyer. Where food and clothing brands are failing, personal hygiene products are standing firm.

The same is true for high-priced items like electronics. Millennials are more likely to stick with a brand they know when buying an expensive item, rather than taking a chance on something new.

For companies, this means that quality is more important than ever. It’s not that Millennial consumers are fickle, it’s that they are more likely to go somewhere else if their needs aren’t being met.

4. The Importance of Online Reviews

As we’ve stated above, online reviews are more critical than ever. A study in Business Horizons showed that not only are Millennials referencing these reviews at a higher rate than any other generation, but they're writing them as well.

An interesting fact that the study also found was that Millennials are actually more likely to leave a positive review for a product or service than a negative review. This fact is contrary to the perception that an adverse reaction is more likely to result in feedback than a positive one.

In reality, a negative review is far less likely than a positive review. Services and products need to be particularly bad for a website to be flooded with negative feedback.

Overstating the importance of online reviews is impossible. They influence all generations, but Millennials are particularly susceptible to what people are saying online. If the internet loves your product, more orders will come rolling in.

5. Social Engagement is Paramount

A study conducted by Forbes determined that 62% of millennials agree that they are more likely to become loyal to a brand if it engages with them on social media. Brands that don’t have a social media presence are suffering as a result.

Millennials seem to expect brands to let them be part of the conversation. The same study showed that 42% of respondents want to be involved in the process of improving and creating products with companies.

Brands like Lay’s engage with customers by producing polls where their social media following can choose the next flavor of chip they make. These campaigns may seem insignificant, but they develop a rapport with consumers that Millennials value more than previous generations.

6. Advertising is Not as Useful as it Once Was

The same Forbes study showed that advertising isn’t near as effective with millennials as it was in previous generations. According to their findings, only 1% of respondents said that advertising sways their decision in favor of a company or brand.

Forbes also reported that authenticity reigns supreme when it comes to Millennial buying power, both in news consumption and in purchasing. If Millennials don’t trust the source, chances are they aren’t going to listen to them, and won’t be buying what they’re selling.

Ads aren’t genuine - people are genuine. Millennials trust blogs, YouTube creators, and other users over something a company tells them. They’re aware of the hyperbole and upselling and are immune to it at this point.

This makes sense, too. DVR is the way most Millennials watch TV - if they watch it at all. We’re in the world of skippable YouTube advertisements and popups that are more of a hassle than an actual ad.

In fact, most internet users don’t even comprehend popup advertisements when surfing a website. They close it out before they even know what the page is trying to sell them.

Forbes also reported that authenticity reigns supreme when it comes to Millennial buying power, both in news consumption and in purchasing. If Millennials don’t trust the source, chances are they aren’t going to listen to them, and won’t be buying what they’re selling.

Brands Must Adjust to the New Normal

Millennials make up the largest population in US history, and they’re just now beginning to take control of the marketplace. Millennials are college students and recent graduates, yes, but this generation also includes people entering their mid-thirties.

The same-old customer acquisition tactics aren’t working. Millennials are increasingly pulling the plug on TV, turning to the internet, and disregarding traditional forms of advertisements. We need a new model for the new world that will take over in a matter of years.

In the end, the market will sort things out the way it always has. Companies that understand Millennial consumers will succeed, and those that will fail. Millennial buying power is more influential than it’s ever been, and it’s becoming the new normal.

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