Is it true that millennials lack brand loyalty? Are they more willing than previous generations to switch providers – or is it just that the environment has changed and they are faced with more choice?
Understanding the loyalty of this generation, and what their loyalty triggers are, is critical for financial services providers. The research is mixed, but much of it is now showing that millennials can potentially be more loyal, and actively advocate for brands, if those brands develop relationships that are meaningful to this generation of consumers.
Two key factors in developing loyalty among millennials are engagement and authenticity.
Consumers seek validation for their purchasing decisions, and turn to their social networks for affirmation. Millennials have broader and more numerous social networks than any previous generation and are more likely to consult (and trust) online blogs and discussion groups. They are unlikely to go to the local library to check out Which magazine’s Best Buys for Washing Machines and are less likely than other demographic groups to visit their bank manager for advice.
But fundamentally they are no different to previous generations of young people: they are nervous about making financial decisions. While they may turn to social networks first for validation, and then more broadly to the internet community, they are happy to engage directly with financial institutions . . . if those institutions will engage on their terms.
Some financial institutions have made progress: Royal Bank of Canada sought to engage with millennials through humour by creating a series of YouTube videos to explain financial products; Bank of Ireland introduced FaceTime meetings with financial advisors, but many others are slow to adapt.
The key is communication appropriate to the consumer – which is hardly a new concept. But the communication channels are new, and multiple. And in order to establish a relationship, and create loyalty, banks must carefully select which channels will be the most effective.
Authenticity (& Individuality)
From the goods they purchase to their interaction with companies, millennials put a premium on authenticity, creativity and distinctiveness. Their interests and priorities are eclectic and fragmented, despite being better connected, and they have a natural interest in customisation and individuality. Brands that can deliver a degree of customisation and personalisation will succeed.
Millennials have a low tolerance for inauthentic products and will change provider if something does not deliver as promised. Is this a lack of loyalty, or just common sense?
So banks should engage in a two-way personalised conversation with them utilising appropriate channels including social media, and deliver customised (or customisable) services, as promised.
If they do so, they not only create one happy customer, but that millennial customer is much more likely than previous generations to feedback input and better yet, become a brand ambassador, actively advocating the brand on social media.
Banking and payment services must add value and must deliver greater customisation and control to these consumers. Millennials expect to buy, pay and manage their finances whenever and wherever they want.
At Vipera, we help empower banks to offer these features to their customers – here’s one example of how we achieve it.