“Teenagers, college students and young adults in entry-level positions do not have any money to spend.”
“I’m not in the electronics or music business, so I’ve got nothing to sell to today’s young people.”
“I don’t understand customers under the age of 30.”
These are hypothetical reasons many owners of small businesses have given for ignoring “Generation Y” – the market segment of consumers born between approximately the mid-1980s and 2000. However, these assumptions miss a fundamental reality. While some members of Generation Y are still too young to have their own disposable income, this segment represents a tremendous amount of current and future buying power. For example, 42 percent of teenagers have a debit card and 33 percent have their own checking account, according to the recent Schwab survey on “Teens and Money.” College students are in the formative years of developing spending habits and preferences.
Small businesses in particular are well positioned to capitalize on this growing market for the following reasons:
Small businesses are approachable. Research shows that people under the age of 25 prefer the personal service and homespun feel of most small businesses. They are attracted to quirky, unique products and services that express their individuality. If those products are green or organic, even better. Generation Y is not interested in what their peers and neighbors have. In other words, their mindset is the opposite of the “keeping-up-with-the-Joneses” attitude prevalent among their parents. It’s all about individuality.
Small businesses are social. Small businesses may be especially well equipped to communicate with young consumers through modes they prefer – social networking, mobile marketing and local events – for a variety of reasons: Small companies can speak to young people in their own “language,” using a less polished, more up-to-the-minute tone in comparison to how most large enterprises typically do. They can create immediacy by marketing a sale or special event that young customers can respond to in real time. And they can have more intimate and meaningful two-way conversations with customers via Facebook fan pages and Twitter. Small business will find that if you offer an experience or product worth discussion, Generation Y customers will do some of your marketing through word-of-mouth.
Small businesses listen. Young people do not respond well to most traditional marketing but tend to engage better in conversations with companies that demonstrate they understand their needs. They are apt to develop loyal relationships with companies and brands that express the desire to hear them and are able to customize their offerings accordingly.
If you decide to engage with Generation Y, here are some tips to keep in mind when talking to a segment that accounts for $43 billion of U.S. spending power.
- Highlight any social justice, corporate responsibility or environmental initiatives in which your company is involved.
- Do not pretend to be hip when you’re really not, or you’ll sound like parents trying to fit in with their teenagers’ friends.
- Use language in your promotional efforts that is casual, funny and to the point.
- Remember that, to some extent, the parents of Generation Y may have to approve of what your company stands for.
- Differentiate yourself not only from other small businesses in your market space, but also from large enterprises to which you could lose customers.
- Consider the payment methods younger customers might have at their disposal when deciding whether to accept cash, credit cards, and/or online payments (80% of Gen Y has debit cards).
- Include a blog on your website that has timely information on trends and issues of interest to Generation Y.
- Promote return visits to your brick-and-mortar store or e-commerce website with simple but memorable promotions, (i.e. flavor of the week, buy-one-get-one-free, karaoke nights, food-eating contests, etc.)
- Test out coupon offers on daily deal sites such as Buywithme, EZDeal, Groupon and LivingSocial.
- Further segment your Generation Y outreach efforts according to the fact that young consumers with buying power are racially, ethnically and economically diverse.
There are many markets you may focus on as a small business – the greatest generation (1909-1945), Baby Boomers (1945-1965), and Generation X (1965-1975). Many consumers in these groups have more current spending power than Generation Y. However, today’s 18- to 25-year-olds will grow older and yield more spending power. You do not want to look back and ask yourself “Y” you did not start building a relationship with them while they were younger.
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