Cdc crmp fsar_connecting_withgenerationy_us
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This document discusses connecting with Generation Y (Millennials) for financial services firms. Key points: - Gen Y is a large, wealthy and influential demographic that expects tech-savvy, personalized experiences. - To attract Gen Y, firms must use new communication channels like social media and provide a seamless, multi-channel experience. - Winning Gen Y also requires sophisticated CRM to personalize interactions and retain their long-term loyalty as they are less brand-loyal than other groups. Firms must shift to more customer-driven, individualized engagement.
Cdc crmp fsar_connecting_withgenerationy_us
- 1. Connecting with Generation Y A R T I C L E They’re still young, but their importance to your firm’s future is undeniable. Does your firm know how to connect with this influential demographic? They’re young, they’re tech-savvy, and they’re critical to your firm’s future. “Generation Y” (also known as “Millennials” or “Echo Boomers”) is the group of individuals born between 1982 and 1995, and they’re the largest generational group since the Baby Boomers, 75 million strong. Though they are still in their teens and early twenties, their buying power is growing rapidly. In fact, their earnings are expected to go up by 85% within the next 10 years and will outstrip their parents’ earnings by as much as $500 billion.1 Generation Y is a group financial services firms can’t afford to ignore, not just because of the wealth and business they represent, but because they’re different. As the first generation to grow up in an age of computer and Internet ubiquity, their attitudes, behaviors, and expectations are different from those of their elders. Financial services firms that assume the same approaches and strategies used with prior generations of customers will work with Generation Y may be in for a rude awakening—one that could be expensive to rectify. Who Is Generation Y? “Gen Y” has grown up in the dazzling age of multimedia and the Web—or at least, dazzling for those to whom it was new. For Gen Y, it’s the norm. Much has been made of the short attention span that reportedly characterizes Gen Y, but the simple fact is that this is a generation of immediacy. Gen Yers have since birth had a vast array of information and entertainment at their fingertips, accessible instantly. A certain amount of impatience with sluggish responses or overly complex processes seems a fairly predictable result. Other Gen Y traits that are particularly relevant to financial institutions are this group’s tech- savviness, practical-mindedness, and social consciousness. According to the results of a survey of more than 1000 people conducted by Deloitte and Harris Interactive, 45% of Gen Yers cite their own research as their top influence in making financial decisions, and not surprisingly, most used online tools as their top research method. Perhaps more interestingly, a far larger percentage of Gen Yers than of any other generational group were likely to rank family recommendations as their top influence.2 Gen Y is also practical, valuing simplicity and likely to base decisions on price, rather than brand. Finally, Gen Y is civic-minded and may consider an institution’s social consciousness in evaluating its products and services. Building a Relationship with Generation Y The desire to connect with Generation Y poses new challenges for financial services firms. For one thing, Gen Y is skeptical of much traditional marketing and may be difficult to reach with traditional approaches such as product-focused marketing. This necessitates a more relationship- focused approach that may require significant changes in process and culture for some financial services organizations.3 To build these relationships, financial services firms need to reexamine and refine their customer relationship management (CRM) systems and strategies to ensure they meet the increased demands of Generation Y. Gen Y routinely uses a wide range of tools and methods to communicate and engage with others, including cell phones, texting, instant messaging, blogging, podcasts, social networking sites, and more. This opens up a wide array of channels financial services firms can use to reach Generation Y, but it also introduces broader multi-channel complexity in managing interactions with these customers. Generation Y has high expectations of its financial services providers, and to meet these expectations, firms need to provide a seamless and consistent customer experience across channels and accommodate the simultaneous use of multiple channels. 1 Forrester. Meet Your Next Financial Consumer. 2007. 2 Deloitte. Catalysts for Change: The Implications of Gen Y Consumers for Banks. 2008. 3 Ibid. This Pivotal CRM–authored article was originally published by Financial Services Technology (FST). Pivotal CRM | Article
- 2. If this sounds complex and costly, it can be, and it is true that given Generation Y members’ current youth, the costs To achieve this, firms really need to step up their use of CRM of connecting with them may outweigh the rewards in the to ensure they effectively record and apply the knowledge short term. On the up side, Generation Y is more likely than gained in every customer interaction and coordinate customer other generations to consider purchasing additional products “touches” effectively. and services from their bank or brokerage,5 meaning their In addition to being challenging to win as customers, lifetime value and up-sell/cross-sell potential is very attractive. Furthermore, Generation Y exerts unprecedented influence Generation Y is the most difficult generation yet for over their parents’ choices as well,6 indicating that by winning financial services firms to retain over the long term. over a Gen Y customer, financial firms may gain multiple follow-on customers. Finally, it should not be overlooked that many of the trends and attributes of Generation Y are simply Generation Y has also grown up in a culture of individualism the vanguard of behaviors and preferences that are spreading and self-esteem promotion, raised with constant reaffirmation through other generations as well. Generation Y may be the that each person is special. As a result, generic mass- early adopters of social networking, for example, but this marketing, even tailored to the Generation Y demographic, is mode of interaction is having an increasing impact within unlikely to move them. Personalization is thus an important Generation X and older groups. All of these factors indicate pre-requisite to connecting with Generation Y. This again that it is a worthwhile investment for financial services firms to necessitates much more sophisticated use of marketing invest in methods to reach and retain Generation Y, building a automation and CRM: firms need to be able to collect deep relationship now that can grow with them into the future. customer information and apply it skillfully in multi-variant, multi- channel contextual communications. Simply using the customer name in an e-mail subject line or salutation is not enough. The Challenge of Retention 5 Forrester. The Generations of Financial Services Consumers. 2006. In addition to being challenging to win as customers, 6 Resource Interactive. Decoding the Digital Millennials. 2006. Generation Y is the most difficult generation yet for financial services firms to retain over the long term. Notoriously fickle, Gen Y customers are less likely than other groups to be loyal to a single brand—even one they like.4 Financial firms have their work cut out for them in terms of retaining Gen Y customers. Again, this Gen Y trait demands a new level of customer relationship management. Financial services firms need to shift from communicating and interacting with customers when and how it suits the firm to more customer-driven interaction, using event-based triggers, tracking and responding to milestones such as college graduation or home purchase, and building up an ongoing dialogue with Gen Y customers that is more tailored to their behaviors and preferences and personalized down to the individual rather than simply demographically segmented. Furthermore, the challenge of retaining Gen Y customers highlights the need for financial services firms to implement adaptive systems and infrastructure. If Generation Y is characterized by fickleness and lack of loyalty, it is a safe bet that this group’s behaviors and preferences will change over time. If financial firms implement rigid systems and processes that are difficult and time-consuming to modify, they will find themselves always a step behind with this changeable customer base. Rather, firms need to look to implement flexible systems that help them both detect changes in customer patterns and respond to them with new messages, products, services, and engagement styles. 4 Forrester. Gen Y Is Truly Different; Design Accordingly. 2007. CDC Software is a leading provider of enterprise software, including the industry-specific Pivotal CRM for Financial Services suite of customer relationship management solutions. To learn more, visit www.pivotal.com/financialservices or call us at +1 877-PIVOTAL. Copyright © CDC Software 2008. All rights reserved. The CDC Software logo and Pivotal CRM logo are registered trademarks and/or trademarks of CDC Software.