Millennial Economics
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Millennial Economics: Selling to This Unique Buying Group | Guest Contributor Seth Barnett
It is no secret that Millennials are products of their environment and upbringing. They have lived in a world surrounded by marketplace competition and have seen the fear that develops from a failing economy. Not only that, most Millennials were seeking their first careers when the economic bottom fell out from under the global market. This created a unique attitude in the Millennial consumer. Millennials are a generation that is just now pulling themselves from a recession and have continued to struggle to build success. Having said that, they are also choosy consumers who want to understand and appreciate value in their purchases. Selling to the Millennial market is not impossible, but it does take some finesse.
A while back I heard a Baby Boomer make the comment “millennials are less concerned about compensation and more concerned about price.” This was said to a group of business leaders and the gentleman making the comment was right. Millennials put less focus on compensation than any previous generation. This is because most of millennials, such as myself, entered the job market during a time when we could not be concerned about how we were compensated, but more so about what it was going to take to eliminate our competition and secure a position in the workforce. In 2009 there were 6.5 people available to work for every 1 new job available. This meant that not only was a recent college graduate competing with other recent college graduates, but they were also competing for a job with a plethora of other unemployed individuals. 2009 also saw the largest contingent of college graduates to date. Millennials had to learn to adapt. In many cases they eliminated competition by being the lowest bidder. The median income for a recent college graduate prior to the economic downturn was around $35,000 a year, but by 2009 it was down to $25,000 a year. This resulted in many young people taking their first jobs outside of college for well under what they would have been paid had the market not been in a downturn. When I graduated in 2009, my first job brought in $7.00 an hour and I was happy to have it. I knew that the experience I was gaining was the true measure of success. Having lived for the first several years out of college on mere pennies gave me the ability to worry less about compensation and at the same time gave me a heightened awareness of cost, which remains with me even to this day.
That being said, just because a Millennial is concerned about cost doesn’t mean they have relinquished their ability to spend. In economics there are typically two kinds of consumers that make up the market at any given time. The first are those that economists refer to as the “living for today” consumer. These consumers spend today based more on impulse and worry about what they spent at another time. The second is the practical spender. More than 50% of all living generations other than Millennials identify with this group. These are the budgeters, the realistic consumers that only spend what they know they can. Millennials fit somewhere right in-between these two groups and would make up a group I would consider “realistically living for today” consumers. For many non-commodity industries the reality that this younger consumer group may be cautious about spending is potentially detrimental to their business model. Those of us in the promotional products industry, however, can worry less because we offer something more unique.
One of the statements I have heard most when learning about this industry over the last few years is “cost-effective”. Now, I don’t know if that it’s the most common phrase used or it’s just my Millennial ears helping me be a realistic consumer. The term “cost-effective” is something that we in the industry are happy to explain. Let’s be clear here, cost-effective does not mean “cheap” - which is a very bad word in Millennial land. The fact is that our industry delivers products that are affordable and that have an impact on return that cannot be matched with any other medium. We pride ourselves on having the lowest cost per impression of any advertising medium, coming in at roughly $.06. This alone is a significant selling point when dealing with an economic group of cost conscious buyers.
Another point here is in how many Millennials are already within our buyer market. More than 50% of those in the Millennial generation will own and operate their own business sometime in their career. If they can find the means to do it, this will be achieved sooner in life rather than later. This makes this group of buyers a great target for our industry. Not only does this group want to watch cost, they also want to grow and expand their business.
Selling to this younger group is not an exact science. Your ability to market to these new consumers using platforms where they do business will be crucial. However, when it comes to actual transactions, Millennials have the ability to massively grow a market if it meets their needs and identifies with their culture. This means that as an industry we should be continuing to showcase that we are fun and interesting, and also promote the fact that the solutions we sell are a cost-effective tool that can meet their needs on countless levels.
Seth Barnett is the Diversity Development Manager for PPAI. As an advocate for the industry's marketplace success, he develops new ways for business to meet the growing demand of a diverse workforce and a changing buyer market. Follow Seth and PPAI’s generational conversation on Twitter. To learn more about all things Millennial as they relate to the promotional product industry, visit www.ppai.org/diversity.