OLDER people are not the only ones to try too hard to be hip and youthful. Long-established firms can, too. Just look at Procter & Gamble (P&G), one of the world’s largest consumer-goods firms, which this year applied to America’s federal patent office to trademark LOL, NBD, WTF and FML, abbreviations commonly used in text messages and social media. If it succeeds, the 181-year-old firm plans to use the phrases to market soap, cleaners and air fresheners to young buyers. Its move is the intellectual-property equivalent of Dad dancing. But it is a sign of large firms’ eagerness to woo millennial consumers.
To many firms they are a mystery. KPMG, a consultancy, reckons nearly half do not know how millennials—typically defined as those born between 1980 and 2000—differ from their older counterparts. That may be because such differences are overblown. According to Ipsos-MORI, a pollster, millennials are “the most carelessly described group we have ever looked at”. Many claims about them are simplified or wrong. It is often said, for example, that they ignore conventional ads; in fact they are heavily influenced by marketing.
Given such misconceptions, it is little wonder that firms sometimes get it wrong. In February, MillerCoors, an American brewer, released Two Hats, a light fruit-flavoured brew the beer-maker said would suit millennials’ tastes and budgets (tagline: “Good, cheap beer. Wait, what?”). Consumers just waited; the beer was pulled from shelves after six months. But some stereotypes about millennials have roots in reality. Companies are finding that three broad approaches do succeed when trying to sell to them: transparency, experiences (over things) and flexibility.
On the first of these, transparency, younger brands have led the way. In clothing, one example is Everlane, an online clothing manufacturer based in San Francisco. It discloses the conditions under which each and every garment is made and how much profit it generates as part of its philosophy of “radical transparency”.
Some large companies have made dramatic changes. ConAgra, an American food giant, has simplified its recipes and eliminated all artificial ingredients from many of its snacks and ready meals. After years of falling sales, it is growing again; millennials now account for 80% of its customer growth. “Bringing in these folks has been absolutely critical to growing the brands,” says Bob Nolan, ConAgra’s senior vice-president of insights and analytics.
Millennials’ appreciation of experiences over “stuff” is also real. Online platforms such as Airbnb have capitalised on youngsters’ taste for splurging on holidays, dinners and other Instagrammable activities, but so too have some older bricks-and-mortar firms. In 2016 JPMorgan Chase, a bank, launched Sapphire Reserve, a premium credit card that offers generous rewards for spending on travel and dining. Touted as “a card for accumulating experiences”, the $450-a-year product has been a hit with well-off millennials, who represent more than half of cardholders.
Younger consumers also have more debt, fewer assets and less job security than previous generations. In this regard, flexibility matters. Ally Bank, a subsidiary of Ally Financial, the former financial wing of General Motors, for example, does not charge its current-account customers any maintenance fees or require them to hold minimum balances. Such features have earned it the loyalty of millennials.
Business models are being revamped to serve commitment-phobic millennials. Big carmakers, including GM, Volvo and BMW, offer subscription services for their cars, offering access to new vehicles without lengthy financial obligations.
Yet many firms still have too homogeneous a view of millennials, says Laura Beaudin, a partner at Bain & Company, a consultancy. “If you want to resonate with a group that prides itself on diversity, having a one-size-fits all solution does not make sense,” she says. Some firms do embrace customers’ individuality—in May, Gucci, an Italian fashion house, introduced customised versions of a popular tote bag and pair of sneakers as part of a campaign called Gucci DIY. Gucci reportedly maintains a cadre of under-30 staffers to advise its boss. Expect more companies of a certain age to hark back to youth.