Industries from retail to finance, to hospitality and transportation have been disrupted in recent years by digital technologies. As a result, many organizations have had to adjust their business models and pivot value propositions just to stay afloat. Retail has been hit particularly hard, as once-lucrative chains fail in record numbers, according to Vox®. Meanwhile, the likes of Uber®, Netflix®, Airbnb® and other digital services continue to gobble up market share in other industries.
As this disruption snowballs, younger generations such as Generation Y and Generation Z continue ramping up their spending power. Millennials will soon be the largest age group in the U.S. according to the Pew Research Center®. Their buying power is increasing, and they are quickly displacing baby boomers and Gen X as the chief consumers. Small and medium-sized businesses therefore encounter more young buyers who demand transparency, digital convenience and service-oriented offerings. If today's businesses hope to succeed - let alone thrive - they must adjust to accommodate tech-savvy, younger audiences. Their ability to replenish a shrinking customer base of older generations depends on it.
Embrace technology
Gen Y and Gen Z spend more time on the internet and on their mobile devices than any prior generation. They use digital channels to open bank accounts, manage finances, connect with friends, consume multimedia content, learn languages and do much more. They can even open a business online by leveraging plug-and-play cloud resources. Accordingly, they expect to be able to engage with your brand online.
The precise nature of that engagement will vary depending on the industry, but it helps to use the competition as a benchmark. For example, some cab companies have started launching their own mobile applications that allow customers to hail a cab in the same way that they might an Uber®, according to Smart Cities DiveTM. In this case, the cab company might be able to retain a customer base that is intimidated by ridesharing while expanding their services to appeal to younger demographics. This will ultimately make them more resilient and competitive in their market.
Explore new digital marketing strategies
Younger generations are less receptive to interruptive marketing strategies like cold calling, billboards and TV commercials. Even digital ads irk many customers, with about 30% of American consumers using ad blockers on their computers, according to Deliotte®. Younger consumers in particular are 10% more likely to use ad blockers.
In response, businesses are exploring how they can market to customers through non-interruptive digital channels. These inbound marketing strategies rely on, among other methods, content marketing, social media and search engine optimization, among other methods. Many of today's brands create content such as blog posts and how-to videos that users might find useful, and then distribute that content via social media, email and other channels. These strategies are not necessarily total replacements for outbound marketing efforts, such as ad placements in local print newspapers or billboards, but they are integral to attracting younger audiences that spend less time consuming traditional media, and who are better at evading digital advertisements.
Prioritize loyalty programs
Most business owners are aware that it is much cheaper to retain existing customers than to acquire new ones. Accordingly, customer loyalty programs have never been more important.
In particular, businesses with a large base of baby-boomer customers can benefit from attempting to prevent churn with loyalty incentives, such as the ability to earn credit toward future purchases. Younger generations may be displacing older ones, but it is still important to retain existing customers.
Adjusting business practices in the face of a waning customer base is never easy, and it will require digital initiatives and the adoption of new technologies that deliver the omnichannel engagement younger generations crave.
As the Leading Bank for Business*, we at Comerica Bank demonstrate dedication to evolution by making it easy for organizations to open an online checking account and securely and intuitively manage their finances.
Contact our experts today to learn more about how we make business banking better.
