A common mistake in targeting GenY
For a variety of reasons, Gen Y is a very attractive demographic for financial institutions. If you can get them young, they are likely to stay a long time. And over that time, you have countless opportunities to cross-sell a variety of products and services. But advertisers often make one common mistake when attempting to target them. In actuality, Gen Y is made up of two distinctive groups – and their needs are entirely different. Understanding these differences, and how your products are relevant to them, can mean the difference between money well spent and money down the drain.
When you want to target GenY, you’re really thinking age 18-34, right? Instead, you need to be thinking about age 18-24 and age 25-34. Gen Y.1 is the first group and is made up of primarily 18-24 year olds who are financially inexperienced and are not committed to any single financial institution. The second group is Gen Y.2, and encompasses a slightly older group who are more mature, and more interested in financial products and services.
Let’s take a look at how the two groups differ. For starters, Gen Y.1 consumers are more often underbanked than Gen Y.2 consumers. Their money is more likely spent on pursuing an education, while Gen Y.2 often have full time jobs. Those in Gen Y.1 usually have someone else managing their finances, while those in Gen Y.2 are more often in charge of their own funds. Looking at this, a common pattern is noticed: Gen Y.1 is at a different financial maturity state than Gen Y.2. To earn the loyalty of young consumers, financial institutions need to design products that are both suited for the fiscally juvenile Gen Y.1 and their more responsible counterparts in Gen Y.2
If they’re so different, how can a financial institution create campaigns that appeal to both the younger and older sub-sections of Generation Y? For the younger half, start appealing to them as soon as possible and worry less about whether they are profitable or not. Market products like prepaid cards, student loans, and checking accounts to them (and their parents) as early as possible. Design mobile banking for speed and simplicity, like considering an app that provides the ability to check balances without entering a password each time. Or add support for financial co-management tools such as giving parents the ability to oversee the Gen Y.1 consumer’s account, receive alerts, or easily transfer money.
What about services that attract Gen Y.2? This group of consumers appreciate having a wide variety of tools and actions at their disposal when it comes to online banking. Since they are often learning how to break away from financial co-dependence, tools that help manage and create budgets can become a real advantage when selling to Gen Y.2. Providing online and in-branch financial helpers will teach them to become better purchasers of financial services and products for the future. Another aspect of Gen Y.2 is that, unlike the younger consumers, they have a need for products like home loans and brokerage accounts. By acting as a trusted teacher and provider, you can go a long way to earning Gen Y.2’s loyalty and long-term trust.
In December 2013, The Consumer Banking Study was completed which highlighted the factors that Gen Y respondents found attractive in a financial institution. These include fine-tuned mobile banking sites and applications, customizable rewards tied to their checking account, cash back options, having a recognizable brand, and local banking. Often, Generation Y consumers labeled customizable reward options as “somewhat important” with examples being online shopping credits, loan discounts, and free checks. The study also said found that a recognizable banking brand is more important to Gen Y adults than to anyone in Gen X or the Boomers. Banking locally was also fairly popular with Gen Y. However, some responses from Gen Y who don’t bank locally say they prefer big banks because of conveniences they don’t expect to be provided at community banks or credit unions. Therefore, it’s important to stay on top of changing technology, and make sure your services are as quick and convenient as possible.
It’s no secret that Gen Y is a valuable audience to attract. But understanding your audience is at the heart of every successful campaign. Understand the two groups that make up Gen Y, and you’ll find that your marketing efforts will be much more successful.