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GLOBAL 2016: Young, digital natives, with great buying power, do not like being sold, but are willing to listen

Talk about doing good and really meant what you say

 
by Victoria Sakal
Consultant
Kantar Vermeer
Victoria.Sakal@mbvermeer.com
 
At over 20 percent of the population with over $40 billion in spend potential (within the U.S. alone!), the most diverse generation to date, Generation Z promises today’s brands a world of opportunity. Aside from having a distinctly different profile from millennials and preceding generations, Gen Z will inevitably influence older generations’ buying behaviors and decisions, so brands must act now to identify meaningful ways for winning with these consumers. From key sources of information and influence to decision-making behaviors and psychographic profiles, a deep understanding of this generation’s wants, needs and preferences will enable brands to lay the groundwork for future success. Forming strong, well-founded relationships early on will position brands to capture this massive demographic group’s full potential as it matures into a more powerful consumer base.
 
Despite undeniably more purchasing power and few current financial obligations, Gen Z is much more cautious with spending than previous generations. Gen Z individuals have learned from the past and are more acutely aware of future responsibilities than previous generations: Gen Z has experienced the 2008 recession and witnessed its impact on the older generation. Even at a young age, student loans and adult obligations are recognized as a future reality. To merit a purchase from these prudent spenders, brands must communicate their value – and unique value-add. Specifically, brands playing in otherwise “mature” categories have a unique opportunity to capitalize on this financial sensibility by fostering close relationships with future consumers. A two-way relationship oriented around listening to consumers’ needs and preferences will nurture a closer connection, creating familiarity and trust rooted in authenticity. Brands delivering compelling content, personalized conversations and ongoing engagement will have a more meaningful relationship and be much more relevant and front-of-mind in the future, where long-rooted bonds will translate to preference and continued loyalty.
 
The first digital natives
Born into an era of technology, digitalization, and high-speed Internet, Gen Z’s are the first digital natives. Technological proficiency, comfort with information overload and constant multi-device activity fuels Gen Z’s always-on mentality, dictating shopping behavior and interactions with brands, and also their mindset and expectations. As lines between physical and digital continue to blur, speed, ease of access, convenience, and constant connection and availability are table stakes, as is the convergence of online and offline purchasing into a seamless, consistent omni-channel experience. While this creates a prime audience for everything from communications, marketing, engagement and relationship-building to search and purchasing, the combination of Gen Z’s frugality with constant bombardment means brands must work harder to “cut through the clutter.” Only the most authentic, personally relevant and interesting communications and interaction will capture Gen Z’s fleeting attention, warrant their engagement and earn their trust. With millennials, brands won through share of eyeball; Gen Z will be won through share of heart – brands must not only capture attention, but maintain it by seamlessly fitting into consumers’ lives authentically enough to earn their preference.
 
Given its social existence, Gen Z is highly conscientious of a brand’s reflection on its identity. Any affiliation or purchasing decision is an extension of one’s self – with constant bombardment by brands, messages and offers, personalized guidance and an authentic perspective in the form of micro-celebrities and peer groups – even strangers! – are increasingly influential. Because relationships must now be fostered long before the point of sale to win at the moment of truth, brands must creatively engage these new influencers to advocate without selling. Brands engaging consumers in an open, two-way dialogue early-on with more than just a product or service offering are more likely to “stick” amid Gen Zs’ constant yet sporadic conversations, and remain in their consideration set. Relevant content, experiences and other hard-sell-free interactions will build affinity among consumers, but brands must also embrace the potential of word-of-mouth and creative manifestations of more personal messaging for transparently communicating their offer.
 
Sense of social responsibility
Related to its tech-enabled global connectivity, Gen Z has more worldly priorities and a notably greater sense of social responsibility. Cause-conscious, Gen Z prefers products making an impact on the world with a higher-order mission. Consistent with their judicious spending, Gen Z’s see spending power as a way to make a difference: they are more favorable to products improving lives or delivering some benefit than those which are solely novel, cool, or innovating for innovation’s sake. Needs are less about function, superficial emotions, or material satisfaction; Gen Z transcends stereotypes, exclusivity and disingenuous claims, preferring a better outcome for all. Brands aligned with causes consumers are proud to identify with – genuinely and honestly “doing good” – will quickly earn allegiances, while jargon and insincere intentions will assuredly backfire.
 
To win early and prolong future success with Gen Z, brands need to acknowledge key distinctions from millennials. This rising generation is getting older younger – meaning greater pragmatism in buying behavior and earlier consideration of more mature product categories previously irrelevant. As consumers embrace relationship building over direct selling, careful curation of brand interactions is essential. Gen Z redefines the meaning of “influential” in marketing: WOM, peers, and micro-celebrities are more likely to relay real, authentic messages, and brands exhibiting a genuine social conscience are much more resonant. From tactical marketing plans to a brand’s overall purpose, a broader worldview is expected, but innovation, convenience and security remain table stakes.
 
In an age more tech-driven than ever, Gen Z is raising standards for brands. Even with the proliferation of omni-channel, interactions are expected to be more human, benefits higher-order, and offers more individually relevant. Close attention to this generation – leveraging the vast amounts of behavioral data it generates wherever possible – is crucial for building lasting connections, out-pacing evolving needs, and ultimately winning with the consumer.

Action Points to take brands from today to Z

1. Customize.
 Gen Z desires control, and perceives brands as a form of self-expression. Brands need to acknowledge and embrace these core characteristics by incorporating elements of personalization, creativity, and co-creation into their offerings to ensure they’re allowing consumers to reflect their true identities.

2. Integrate.
In a world of data democratization, Gen Z consumers are receptive to sharing their information – as long as it’s used in the right ways. Experiences are expected to be seamless, well integrated, and consistent.

3. Be authentic.
 It’s less about pitching a product or out-smarting with a clever offer, and more about speaking to an individual to identify with their basic human needs. Consumers will be more receptive to marketing that is less of an interruption, and more of a value-add to their knowledge, interests, and lifestyle.

4. Add to the greater good.
Aside from ensuring offers are useful, relevant and worth Gen Z consumers’ carefully-protected spending power, brands must meet Gen Z’s higher expectations of “value-add.” Winning brands will not only help consumers discover, learn and grow as individuals and express their identity, but also make a positive impact on the greater good of society.