Millennials are a unique demographic. Generally defined as being born between the early 1980’s and the late 1990’s, there's no lack of commentary around this generation, which is the largest in U.S. history (they’re essentially the children of the Baby Boomers—the ‘Me Generation’). Time Magazine memorably dubbed them the ‘Me Me Me Generation’ for being both confident and assertive (among other traits).
As a cohort, millennials in the U.S. number 80 million. Cumulatively, they add 600 billion of their hard-earned dollars to the economy every year, which is a full 28% of all daily, per-person consumer spending. By 2030, this number is forecasted to rise to 35%, according to a recent article in Forbes.
What makes them distinct
In addition to their numbers, they also command the attention of business because they are the first generation of ‘digital natives.’ Unlike older generations, millennials have never known a world without the internet, cell phones, Google, Amazon, YouTube, and all the other technologies and websites that have come to define our highly connected, information-rich modern age.
Another recent Forbes article entitled “How Millennials are Changing Retail Patterns” encapsulates what it is about millennials that makes this generation so powerful and compelling to business:
“Millennials have come of age during a time of technological change, globalization and economic disruption. These factors have given them a distinctly different set of behaviors and experiences.
This new generation is savvier and more educated. They turn to their handheld devices to meet all their needs. Whether it be hailing a ride through the Uber app or ordering a breakfast burrito through the Seamless app, technology is how they get things done. They are plugged into their devices and are disrupting traditional purchasing patterns.”
With their penchant for technology, millennials’ reputation for being constantly tethered to their phones is probably well earned. The 2016 Pulse of the Online Shopper report by UPS found that more than half of US millennials’ purchases were made online last year. However, the Forbes article includes results from another report (by Couponfollow) which disputes this, finding that only 16% of millennials make the majority of their purchases on a mobile device.
While the jury may still be out on exactly how likely millennials are to shop and purchase via their mobile device, it’s certainly true that mobile shopping is increasingly popular—as we discussed in a recent blog post. For millennials, the key distinction here may be age. According to a recent report from Vantiv (featured in PYMNTS.com), older millennials (aged 32-35) are actually more likely than younger millennials (aged 20-23) to make a purchase on their mobile device.
The report also found that both groups are very price conscious, with two-thirds of millennials attesting that they will switch brands if they are offered a discount of 30% or more. And millennials also place a high value on convenience and flexibility.
Popularity of subscription services
Indeed, it may be their need for convenience and flexibility that makes subscription services so popular among millennials. According to the PYMNTS.com article, the youngest generation of consumers are heavily represented among buyers of subscription services, with 70% reporting having at least one product subscription (as opposed to a service subscription, for example, for video or music streaming). Only 44% of the next age category (Gen X) reports having a product subscription. And baby boomers and retirees? Only 19% and 17% of them, respectively, subscribe to at least one product subscription.
Millennials’ spending is bound to increase as they get older, earn more, and have more disposable income. By 2025, they are expected to generate 46% of all U.S. income, according to a report by First Data. So, subscription retailers would benefit from turning this group into loyal customers now.
Optimized for millennials
One way to do this is to ensure that your subscription service is optimized for the way millennials prefer to shop and make payments. That means that having a mobile checkout process, or at the very least, a mobile-optimized checkout form, is critical. The First Data report also shows that few people in this age range have credit cards, so offering PayPal checkout, Apple Pay, and direct transfer (ACH) are critical to serving—and converting—millennials.
This age group also tends to prefer debit cards over credit cards. This means it's critical to have strong customer communication and dunning processes in place, so if their card is replaced or their credit limit reached, you’ll be more likely to get in contact with them to resolve the issue.
For Recurly merchants seeking to super-serve millennials, it’s that much more imperative that they enable our Account Updater service which can help automatically repair both debit and card transactions that initially fail. Read our blog post on this topic to learn more.
Whether your prospect is a millennial, baby boomer, or Gen Z, understanding their preferences and how they like to shop and complete purchases is key to serving them well and creating loyal customers. By staying up on the latest e-commerce trends and payment methods for your subscription business, you’ll prove that you’re attuned (dare we say, “woke”?) to the needs of your audience.