According to the U.S. Census Board, there are 92 million millennials, making this generation the biggest in U.S. history. The millennial is set to dominate spending, and consumer packaged goods companies need to adapt to tap into a generation who collectively are expected to spend more than $200 billion annually starting in 2017 and $10 trillion in their lifetimes. Mining data for insights on shopping habits and learning from the start-up community will be key to reaching the millennial consumer.
Millennials are digitally savvy, increasingly segmented and highly unpredictable. They expect to be able to shop anywhere, anytime and want seamless, personalized experiences across multiple platforms — from tablets to smart devices to home computers.
The adoption of smart devices has made a big impact on e-commerce sales, allowing for shopping on the go. Smartphone penetration among millennials is high. A recent Bank of America survey showed that nearly 4 in 10 millennials (39%) say they interact more with their smartphones than they do with their significant others, parents, friends, children or co-workers. However, despite the use of digital devices being common to millennials, their spending habits and interests are more difficult to predict than previous generations. They are increasingly segmented, with differing interests and devotions to brands that have specific appeal to them. In addition, CPG companies need to be thoughtful in their method and style of outreach, as millennials are easy to alienate.
So how are CPG companies able to sustainably capture the millennial market? By tailoring the customer experience based on individual needs.
Fortunately, both consumer goods companies and retailers are now awash with data to learn from. Millennials are generally more comfortable sharing their information if they think they will receive more personalized experiences, such as discounts that are specifically tailored for them. According to our recently launched holiday shopping report, more than half (54%) of survey respondents are open to sharing personal information and shopping preferences in order to receive personalized offers (up from 51% in 2015 and 33% in 2014). As might be expected, those aged 18-24 are most likely to do so (62% versus 55% in 2015).
As a result, CPG companies are investing in data collection and analytics capabilities to enable personalized customer experiences and pricing based on loyalty, purchase history, and demographics. They are increasingly utilizing predictive analytics to provide personalized service offerings and taking advantage of location-based services to embed themselves within customer lifestyles. What’s important is consistent communication with the millennial at every point in the purchasing journey.
Start-ups have often been leading the way, using digital innovation to appeal to the millennial consumer. A large number of start-ups are also created by millennials, so they are often very familiar with whatever problem millennials have that their new venture can solve. Large CPG companies are less agile and need to listen and learn from the start-up community. The pace of change seems to have increased rapidly over recent years with disruptive technologies seemingly altering the entire marketplace overnight.
There are some very interesting start-ups that are working with big brands to ensure they capture the attention of the millennial consumer in the right way. The solution from UK- and U.S.-based UserReplay, which won our Consumer Innovation Award earlier this year, enables businesses to discover the details about their customers’ digital experience by combining replays of customer journeys with sophisticated analytics that identifies customer pain points and monetizes their impact—enabling businesses to improve conversion rates, resolve technical and usability issues more quickly, recover lost customers and prevent fraud.
So, in order to appeal to millennials, CPG companies cannot treat them as a homogenized group. They must use smart data to appeal to this group as individuals, utilize technology to create seamless, well-designed experiences that fully-function across all platforms, and need to learn to move as quickly as a start-up. Not much to ask when your audience is the generation with the biggest spending power in history.