Why Engaging Gen Z Is Key To The Future Growth Of Blue Chip Companies

When Snapchat, the messaging app popular with teens and millennials, recently announced that it was monetizing its geo-filter digital stickers, a global brand was the first to sign on: McDonald’s restaurants. Customers who visit any of the fast food chain’s U.S. locations can now add digital stickers to their Snapchat posts with cheeseburgers, fries and other brand-specific illustrations.

It shouldn’t be surprising that McDonald’s is eager to jump on the Snapchat bandwagon. The brand is attempting a giant turnaround, and to stop bleeding market share to fast-casual companies like Chipotle and Panera, it needs to resonate with Gen Z customers. Given Snapchat’s popularity with teens, advertising on this platform might be one way to do that.

McDonald’s is just one global company that has been struggling recently. The economy is doing well, the job market is bouncing back and the stock market has hit new highs in 2015, and yet many established companies aren’t growing. In 2014, McDonald’s and Coca-Cola saw plummeting revenue and net income year-over-year. CPG giant Procter & Gamble recently brought back in its previous CEO, Alan G. Lafley, and announced plans to divest some of its brands in order to drive growth. 



For these established brands to stage a turnaround, there is one key demographic that they need to engage: Gen Z. That’s because younger customers can not only provide insight on the trends that will go mainstream—their spending power is also growing exponentially. Here are three ways these companies can connect better with Gen Z: 

1. Hire executives who understand Gen Z. 

Many struggling companies have a diversity problem in that their most senior executives and board members are in their 50s or older. Yes, it’s possible for somebody in their seventh or eighth decade to have great insight into Gen Z, but it’s less likely for a company to understand this demo if all the key decision-makers are more than two generations older. 

McDonald’s has tried to inject some youth into its company by promoting Steve Easterbrook to CEO. Easterbrook, who is 47 years old, is the youngest person on a board where six are in their 60s and three are more than 75 years old. On the Coca-Cola board, five directors are in their 70s, and the youngest is Robert Kotick, 52, CEO of Activision Blizzard.

Walmart has a more diverse board. The chairmanship was just passed to 45-year-old Greg Penner, and board members include 39-year-old Marissa Mayer, CEO of Yahoo, and 31-year-old Kevin Systrom, founder and CEO of Instagram.

Someone in the boardroom needs to bring the perspective of customers under 35. Market research can help provide valuable insight about Gen Z and millennials. It’s critical to have someone who has strong insights into the lifestyles, purchasing habits and motivation of younger generations. 

2. Listen to younger customers. 

The ubiquity of mobile and social technologies continues to change the behaviors of Gen Z customers. However, their attitudes are also changing. For one, this generation is much more diverse and more entrepreneurial than older groups. In order to remain relevant, companies need to continuously adjust their approach.

Engaging with teens directly—and on an ongoing basis—can help companies get ahead of big trends and avoid missing huge opportunities. McDonald’s missed the trend toward “fast casual” restaurants like Chipotle (in which it was once a majority shareholder, before selling its stake in 2006), and Coca-Cola arguably missed the trend toward energy drinks and “better for you” beverages. Avoiding these missteps requires a comprehensive, two-way insight program that engages teens—one that involves listening across social media as well as more structured, in-depth insight communities.

3. Co-create with your youngest customers. 

Many Gen Zers think of themselves as more than just “consumers.” They want to have an impact and they want to feel like real partners in your business. 

Co-creation can help companies engage teens more deeply. Co-creation can take the form of engaging customers to brainstorm new products. It can also be as simple as giving customers the tools to customize products to their needs. Some companies are already toying with this idea. McDonald’s rolled out a “Create Your Taste” program, where customers can use kiosks to customize their burgers. Coke and Pepsi are both rolling out soda fountains where customers can create an almost infinite number of soft drink combinations. These programs are a step in the right direction—but imagine if they had been rolled out years ago, pro-actively, before sales started to plummet. A stronger insight program might have inspired these initiatives much sooner.

Reigniting growth in established companies requires marketing risks as McDonald’s is doing in Snapchat. But it also requires an understanding of today’s empowered customers and delivering products, services and experiences that will resonate with them. Engaging with Gen Z—the most connected and one of the most empowered customer groups—is a promising starting point for big brands struggling to defend their place in the marketplace.

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