3 Key Insights
As the mother of two Millennials, I know first-hand about the wants and needs of this young generation. My sons are always connected to their smartphones, expect immediacy in their digital experiences, have very little patience for processes that aren't smooth and easy, and spend significant time researching products and services in-depth online before making purchasing decisions. Because of this dedication to pre-purchase research, there have been times that, even though I study and research the financial services industry every day, they have introduced me to a new finance app, or credit card offer that I hadn't yet discovered.
There are 2.5 billion Millennials worldwide, about a third of the global population. In the U.S., they are one of the largest population segments, totaling about 80 million. Insurers, banks and asset managers need to understand and learn to engage with this generation of potential new customers. There is a lot at risk here - miss the mark with Millennials and you could lose big but, get it right and you have the opportunity to win loyal customers for life - customers that could become your best advocates. Below I highlight three key insights regarding Millennials that I discovered while doing research for Akamai's recent whitepaper "Digital Transformation, Millennials and the Future of Financial Services" that today's financial institutions can capitalize on as they seek to improve customer acquisition within this huge demographic.
1. Millennials Are Always On and Expect Immediacy
These young consumers, including my two sons, were born into this hyperconnected world and have grown up with technology at their fingertips. They are the largest segment of smartphone owners - 86% own a smartphone. They are defined by a lifestyle of access and convenience, evident by the fact that one in five relies exclusively on smartphones and tablets to get online. Millennials expect pages to load at the same speed on desktop, mobile and tablet and actually have greater expectations for performance than online shoppers do. If they experience a problem with their bank account, insurance policy or credit card, they want to send a text or press "submit" to resolve it. They definitely do not want to spend extra time speaking to someone in person or over the phone to complete a transaction.
2. Millennials Crave Authenticity
Millennials demand superior experiences delivered consistently and reliably. Across generations, 82 percent of people would stop using a company after the third bad experience, while nearly one quarter of Millennials would boycott a company after just one bad experience. At the same time, when millennials have good experiences, they build relationships with brands and become loyal advocates. Consider that 67% would try web-based financial services from a brand they know and trust, even if that brand isn't known for offering financial products and services. Only 46% of Millennials see themselves staying with their current financial institution over the next few years. This propensity to switching is very dangerous to financial institutions since the cost of acquiring new customers is estimated at five times the rate of retaining existing ones.
3. Millennials Research Prior to Making Purchasing Decisions
Millennials rely almost exclusively on digital experiences when making purchasing decisions. They use comparison and calculator tools to research credit cards offers, personal loans, insurance policies, and mortgages online before deciding to purchase. They read and write social media posts and can both be heavily influenced by other users reviews as well as influencers of others' buying decisions. They expect to be able to search for banking products across all channels, and demand instantaneous information.
Financial services institutions see substantial business gains when they engage Millennials. A fully engaged customer can contribute as much as 37% more annual revenue to their primary bank, maintain more products, and keep higher deposit balances in their accounts than disengaged customers. The challenge is to identify and make the best use of technologies that will empower and build relationships that ultimately yield payoffs in terms of higher retention rates, revenue, and - the ultimate nirvana - customer lifetime value.
Essentially, it's about listening. The other night, as I put down my credit card to pay for dinner, my son suggested that I may earn more points if I used a different card, he was right. He suggested I download an app that tracks the cards in your wallet and makes suggestions about which one to use based on your purchasing situation. The app helps you make choices aimed at maximizing rewards and minimizing interest. Because I listened to him, I have now been earning more points. Financial Institutions will do well to also listen to Millennials, if they focus on engaging Millennials, by addressing the issues that are most concerning to them, such as security and ease-of-use, they can increase revenue and grow significantly as this generation ages - increasing retention through improved customer experience.