WINNING WITH MILLENNIALS IN THE DIGITAL ECONOMY
The pace of change in the next five years will exceed that of the last fifteen. The growth of businesses from this point onwards is contingent on their willingness to disrupt the conventions of their category; those who do not disrupt will be disrupted.
The proliferation of connected devices has given rise to the digital economy, in which consumer interactions with brands are increasingly complex. The most complex of these consumers are millennials; the holy grail audience for retailers across a wide range of categories, millennials have always been a particularly challenging group with which to “get it right”.
In order to crack the millennial code, we have applied our proprietary Retail DNA segmentation to this audience as a means of answering the following questions:
- What do millennials expect from brands?
- Where do they get their influences?
- How can we prepare for their every digital demand in the future?
“The Digital Economy”
The digital economy is the buzz phrase of the moment, referring to the system by which goods and services are exchanged by means of connected devices and digital technologies.
Digital-first brands are disrupting established categories and consumers now have impossibly high expectations of products and brands. 50% of the top 100 advertisers today are not growing at all or going backwards*, yet businesses that have adapted to the digital economy have grown by 30% in the past five years’. The digital economy is turning traditional business models and ways of working on their head.
To deliver growth and profitability in this environment brands must re-examine existing ways of working in a digital context.
The digital economy has stimulated three fundamental shifts within the retail landscape
- The proliferation of tech and data
- Emergence of new consumer behaviours
- Creation of new business models
We explore each in turn and assess the role they play in the purchasing behaviour of millennials.
The proliferation of tech and data
Hyper-connectivity is the backbone of the digital economy. Disruptive technological innovations are emerging at a rapid pace and they are accelerating the pace of convergence within retail. From virtual reality to wearables and shoppable brand commerce, millennials are first in line to adopt them into their routine. We have defined five key ways that brands can harness these technological innovations to create compelling and commercially rewarding interactions with millennials:
- Visual and voice search give consumers access to information at an unprecedented speed
- LooLive which enables young fashionistas to snap a photo of the screen as they watch their favourite shows and shop their celebrity style icon’s outfit in just one click.
- eBay’s app has integrated image-recognition software, enabling shoppers snap any object in the real world and be led directly to a relevant auction for the same product.
- Ted Baker prompted shoppers to say key phrases that appeared in their window displays into their phone’s microphone to unlock thousands of incentives and unique products in-store.
- Artificial Intelligence makes brand interactions truly responsive
- Chatbots on Facebook Messenger can now take payment via PayPal. Sephora has used this to allow their customers to share their beauty preferences with a Chatbot and receive recommendations on products that will help them to achieve their desired look.
- Starbucks uses AI technology at their drive-thrus to make food and drink suggestions based on the weather, the customers’ buying history, and the choices that others with similar preferences have made.
- Hyatt Hotels uses AI technology to make the process of booking a room more convenient for their on-the-go business travel audience
- Virtual reality delivers immersive experiences that educate and excite
- Tommy Hilfiger, which used in-store Samsung GearVR headsets to give its customers a 360-degree view of their A/W 2015 fashion show from the front row.
- The North Face also used VR-tech to put young thrill-seekers at the centre of an adventure, making them feel like they were climbing to new heights at Yosemite national park.
- Coca-Cola drove sales amongst its heartland millennial audience by making it possible to fashion origami-style virtual reality glasses out of its packaging, into which customers could slip their smartphones.
- Facial recognition makes payment more seamless and secure
- Mastercard’s ‘pay by selfie’ enables consumers to conduct transactions solely by snapping a picture of themselves.
- Nike has harnessed the power of facial recognition technology by inviting consumers to ‘work out’ their faces in front of a screen in-store and, in doing so, control the movement of the Nike free shoe, known for its flexible sole.
- Wearable technology makes impulse shopping quicker and easier than ever before
- The ASOS Apple watch app helps customers to add desired products to their wishlists and receive notifications when the item comes back in stock or drops in price. the app also delivers personalised product recommendations based on customers’ purchasing and saving behaviour.
- The Amazon apple watch app enables customers to search for products by dictating keywords, add items to a wishlist, purchase using amazon’s patented 1-click shopping system or use ‘handoff’ to view its full details on your iPhone.
This proliferation of technology has given rise to a sea of customer data that can enable retailers to target audiences more effectively than ever before. With 60% of millennials saying that are willing to share data if it means they will receive more customised services it is an opportunity to personalise and deliver.
The emergence of new consumer behaviours
As identified in our Retail DNA report, six key behaviours have emerged as a direct result of millennials’ growing propensity to shop online. How can we adapt to meet the needs of these behaviours?
- The Stopwatch Shopper wants to speed-up smaller purchases so they can dedicate time to the more important ones.
- 60% of customers abandon online purchases because delivery speeds/costs are unsatisfactory
- 87% of consumers claim the length of time between order and delivery impacts whether they would engage with the brand again
- 66% of consumer have purchased from one retailer over another because they’ve provided delivery choices that suit them better
Brands can adapt by using tech to make everyday tasks quick and easy to complete.
- The Buying Influence shopper wants products that are promoted by trusted peers.
- 35% of consumers claim that their favourite bloggers have an influence on the products they go on to purchase
- 70% of millennials place a higher premium on recommendations from influencers that are more like their peers than from actual celebrities
- 65% of consumers claim they trust Facebook recommendations they receive about new products and services. YouTube (36%); Twitter (27%); Instagram (17%); Pinterest (16%); LinkedIn (14%).
Brands can adapt by aligning themselves to trusted advisors within the lives of their customer.
- The Wishlist Shopper wants to curate their own list of coveted products as they move along the path to purchase:
- 93% of Pinterest users plan their future purchases through the platform by creating wishlists.
- 63% of Britons say they visit property sites even though they’ve no intention of buying yet and 34% indulge in ‘property porn’ to daydream about houses they can’t afford
- 64% of online shoppers like it when a brand shares offers on products that they’ve put on their wishlist in the past.
Brands are helping consumers to document their products in one place
- The Prescriptive Perfection shopper is willing to provide personal information if it helps brands to better understand them.
- 60% of consumers prefer it when a brand sends personalised communication regarding a past purchase or their browsing history
- 56% of online shoppers are more than likely to shop with retailers whose site is personalised to them
- 40% of consumers buy more from retailers who personalise the shopping experience across all channels
Brands can use customer data to deliver more personalised experiences.
- The Editor’s Pick shopper is looking to brands to reorganise inventory and recommend only the very best items.
- 47% of fashion shoppers agree that they would be more likely to buy accessories if given recommendations on what clothes and footwear they go well with
- 57% of pet owners would be interested in purchasing pet food from a retailer that curated products suited to their pet’s needs
- 77% of consumers want brands to make the health market simpler for them by providing information on the products that work
Brands are establishing themselves as authorities within their categories and bringing the product to the customer.
The creation of new business models
The digital economy is set to dominate the social, economic and business future of the planet as it grows to an estimated $100 trillion in value by 2025.. This dominance is already transforming business models and we have seen four new business models emerging as a direct result of changing consumer behaviours.
- Subscription Models: Subscription models take the hassle out of shopping for everyday items
- Mobile-First Disruptors: Mobile-first disruptors such as Uber, Deliveroo and Atom Bank bring seamless service to consumers who are perpetually on-the-go.
- Borrow It Brands: Borrow-It Brands make it possible for consumers to have experiences they desire without the expense or changes to their lifestyle.
- Intelligent Assistance: Intelligent Assistance brands make repeat purchasing quicker and easier than it ever has been before.
Millennial audiences are shaping the future of retail and, as evidenced by Retail DNA, the task of communicating with them is infinitely more complex than a rudimentary 18-34 target audience could possibly accommodate. Winning with millennials in the digital economy requires brands to define what makes them tick and be willing to flex their propositions and communications strategies to meet their needs; if they do not, then someone else will.
This article was first published on the Carat Manchester website page.