Want to know why millennials buy? For that matter, want to know why any demographic cohort buys? New research from eMarketer and Harris Interactive might point the way.
Now, I’ve mentioned this research before (notably in last week’s e-commerce link digest), but it’s worth digging into in some detail. Essentially, Harris Interactive asked consumers what they would do if they won $100,000. Because of the size and growing importance of the Millennial segment, eMarketer chose to focus on that cohort, noting:
“…June 2014 research also by Harris Interactive confirmed that millennials were savers—or at least wanted to be. Fully 64% of US internet users ages 18 to 36 planned to save or invest more money in the next six months—the most popular spending change among respondents in that group.”
What’s really notable in the poll, though, is how strikingly similar the responses were regardless of age. “Pay off existing debt/loans,” “Save for a rainy day fund/unexpected expenses,” and “Invest towards my retirement” represented the top three responses among Millennials, Gen X, and Baby Boomers. (To be fair, saving for retirement just barely beat out “Buy a car” among millennials, but the basic point remains).
Anyone familiar with Keynes’ “paradox of thrift” will recognize the inherent problem if everyone saves at the same time[*], and may be a contributing factor to the continued slow economy in many industries.
Economics aside, the fact remains that you won’t help millennials buy your products or services — or any other segment for that matter — if you don’t offer real value for their money. Just don’t confuse “value” with “low prices.”
Running the “Race to Zero”
Many businesses respond to tough times by simply lowering prices, trying to convince their customers that they’re the right choice because their products and services aren’t very expensive. Let me be clear: This is a terrible idea. This approach, which I call “the race to zero,” represents a race you simply can’t win. With the radical transparency offered by the Internet and mobile — where most of your customers now know more about your products, services, and prices than your employees do — you simply can’t outrun your competition that way. Too many industries have spent the last few years teaching customers that if they just keep looking, they’ll find a better deal. And that’s exactly what customers have done.
Why would you want to play that game?
Focus on Value
Instead, focus on showing your customers the value you offer. Value represents a key component of a compelling brand story, and helps customers understand why they would want to spend their money with you. Things like the P’s & Q’s model helps customers see what they get in exchange for their hard-earned money, and helps them decide whether or not you’re the right option for them, regardless of where you price your products. No one balks at the prices offered by Southwest Airlines, Procter & Gamble, or Zappos. Even premium products like iPhones and Mercedes are seen as good values by their target customers.
And, as a result, those companies have thrived during the last few years.
More importantly, this focus on demonstrating value works no matter what the economy does. Even as the economy has started to improve, many of the businesses who lowered prices during the downturn (and still somehow managed to stay in business), now face customer resistance to raising their prices. Whereas those who focused on value throughout the latest recession don’t need to raise their prices, further improving the value proposition to their customers. How’s that for a neat trick?
No matter what your customers are willing to spend, running the race to zero is a losing strategy. Offering value from your products and services remains the best way to convince customers that you’re right for them. And that’s true whether you sell to Millennials, Baby Boomers, Gen X, or all of the above. The Internet and the rise of mobile have given your customers the ability to find the right product for their needs anytime, anywhere. Develop your marketing around demonstrating value, and you’ll go a long way towards making sure customers choose you.
As a reminder, you can participate in my next webinar, called Digital Marketing Directions: Key Trends Driving Your Marketing Next Year, on Tuesday, September 16, 2014. You can read all the details here. You can also check out the slides from a talk I gave on price transparency a while back. While the talk is from a few years ago, the basic points remain true:
If you’re interested in learning even more about how customers changing behavior shapes e-commerce and marketing, register to receive a special report I’ve produced in conjunction with hotel marketing firm Vizergy, “Digital Hotel Marketing in a Multiscreen World.” While it’s targeted specifically at hotel and resort marketers, the lessons apply to just about any business. You can get your free copy of the report here.
As an FYI, I’m presenting a webinar called Digital Marketing Directions: Key Trends Driving Your Marketing Next Year on Tuesday, September 16, 2014. You can read all the details here.
Finally, you might also enjoy some of our past coverage of the mobile, local, social web and how to make it work for your business, including:
- What Your Customers Expect from Mobile and E-commerce in 2014
- The Secrets Behind “It’s All E-commerce” for 2014
- Should Marketers Really Trust Google in 2014?
- The Zen of Digital Marketing Strategy
- 7 Steps to E-Commerce Heaven
- Today and Tomorrow: Mobile and The Changing Customer Journey
- Mobile Makes E-commerce Even More “Frictionless”
- Your 2014 Internet Marketing New Year’s Resolutions – Thinks Out Loud Episode 56