Companies: you should already be ready. Success in marketing to U.S. Millennials—the generation of people now 18 to 34 years old—will be critical to companies across product and service categories. One reason, of course, is that Millennials represent the consumer market of the future. U.S. Millennials already account for an estimated $1.3 trillion in direct annual spending. This sum will grow dramatically, for only now are the first Millennials reaching peak buying power. In the U.S., by 2030, Millennials will likely outnumber baby boomers 78 million to 56 million—and they are forming lifelong shopping preferences and habits now.
It is perhaps more important that this generation is transforming consumer marketing itself. Millennials are distinguished from older generations by their spending habits, brand preferences, values, personalities, and general outlook on life. Furthermore, they engage with brands far more extensively, personally, and emotionally—and in entirely different ways—than have other generations.
Millennials expect a two-way, mutual relationship with companies and their brands. We call this the reciprocity principle. Through the feedback they express both offline and online, Millennials influence the purchases of other customers and potential customers. They also help define the brand itself. The Internet, social media, and mobile devices greatly amplify Millennials’ opinions and accelerate their impact. Companies can expect that a positive brand experience will prompt Millennials to take favorable public action on behalf of their brand. A bad—or even just disappointing—experience can turn a Millennial into a vocal critic who will spread the negative word through social media, reviews, and blogs. And that criticism can go viral.
In marketing, as in pop culture, Millennials are leading indicators of large-scale changes in future consumer behavior. They are influencing and accelerating shifts in consumer attitudes, spending habits, and brand perceptions and preferences among Gen-Xers and even baby boomers. As a result, this generational transition is ushering in the end of consumer marketing as we have long known it.
The conventional, linear framework that most companies have used to manage brand engagement no longer holds. Executives and marketers must embrace the new reality: marketing is an ecosystem of multidirectional engagement rather than a process that is controlled and pushed by the company.
Millennials are also leading indicators of the new “status currency”—the status and values that consumers wish to project through their purchasing decisions and their brand affiliations. One way a company can connect with this new status currency is by convincing Millennials that they are “doing good” when they purchase its brands. Companies need to demonstrate through their values, heritage, and meaningful actions that they help those in need, are socially responsible, are good environmental stewards, protect personal data, or are transparent and sincere.
If they have not already begun to do so, companies must make marketing to Millennials a top strategic priority and begin to master the art of two-way reciprocal marketing. Companies are already finding that pushing consistent, prepackaged brand messages to the masses through traditional media is not as effective and cost efficient as it once was—certainly not with Millennials, nor increasingly with Gen-Xers and boomers.
Executives and marketers will need a comprehensive, intimate view of Millennials across channels and media. Companies must place a high priority on transforming their marketing functions by breaking down organizational silos and building the capabilities and partnerships needed to succeed in the new reciprocal-marketing ecosystem. To start, companies and marketing organizations need to set and communicate clear and measurable Millennial goals. They should reach out to Millennials, wherever they are, with a cross-media, cross-channel, and cross-device brand presence. Brands should reinforce their authentic reputations with the right brand values, personalities, and communications. They should relate to Millennials by moving from push communications to two-way, open dialogue. And they should cultivate Millennial referral among customers as well as Millennial employees.