Millennials: How should we understand consumers of the future?
Written by Benedicte Lykke Larsen
Millennials (born 1980-1995) are a generation of consumers that think and act in a considerably different manner than previous generations. They have extremely high demands for the companies they engage with. Interestingly, decision-makers in most of companies are often at least a generation older than Millennials, which can be rather problematic. Why? Because it can be hard to understand exactly what goes on in the minds of these young consumers and, therefore, hard to develop products and services, which relates to their wants and needs them.
In this article, we aim to provide a tool that enables you to understand Millennials’ consumer behaviour. Through 8 parameters, we dive into what drives Millennials’ consumer behaviour and what motivates their decisions when choosing between brands and products.
Why are Millennials so interesting?
In 2025, Millennials will make up 75% of the global workforce. As such, Millennials are, demographically, one of the biggest generations to date. The youngest have lived their first years in the early 20s, while the oldest are almost 40 years old. Therefore, there is a high diversity amongst this generation as the oldest probably have started their own family, while the youngest might still be living at home. Despite this diversity, there are values, attitudes and priorities common to this generation, which characterises them and their consumer behaviour.
They have grown up in a time of rapid changes due to globalisation, the internet and digitalisation. The generation is partially digitally native, which has meant that they don’t distinguish between the online and offline world – they simply melt together. In addition, they are concerned with sustainability and health. Millennials have experienced the financial crisis in 2008 where the oldest Millennials had difficulties finding jobs, whilst the younger Millennials watched their parents become unemployed. As a consequence, Millennials have become more cautious about spending money, which has established a new mindset that has affected their consumer behaviour drastically – namely, the sharing economy. The sharing economy gives Millennials the opportunity to live a flexible lifestyle and plays into their need of being social.
The 8 parameters that drive the Millennials
These parameters can be used as a tool to analyse your existing business and its ability to accommodate Millennials’ wants and needs. Every parameter is described and then related to a subscription-based case, which have succeeded with one (or several) of these parameters.
Figure: The 8 parameters of Millennials’ consumer behaviour
Millennials have grown up in a world where everything is in constant development. Therefore, when brands or products do not develop continuously, it corresponds to being ’old-fashioned’ or, at worst, they are perceived as being ’outdated’. Especially the fact that Millennials are digitally native has affected their way of viewing the world. Everything evolves rapidly and the things that have previously been experienced as radical changes (e.g. the internet and smartphones) are the new norm.
Netflix Interactive Content – In December 2018, Netflix launched the new Black Mirror movie, Bandersnatch. Bandersnatch is an extremely innovative concept, as the person who watches the movie controls the plot and action along the way (with their own remote control) by making decisions on behalf of the main character. This is an innovative way of engaging your users – both in the online and offline world!
However, digital experiences don’t satisfy the Millennial’s need for social experiences. The offline world also plays a central role in the generation’s perception of brands, products and services. This means, among others, that Millennials choose to prioritise experiences over material objects, because experiences make them happier and add more value to their life. As such, they spend more money on travelling, eating out and other experiences than previous generations have done.
Aarstiderne – In Denmark, Aarstiderne is a well-known provider of subscription meal boxes. However, in addition to the recurring delivery of delicious, organic products and recipes, they also invite their members to dinner parties, arranging visits to Aarstiderne kitchens and farms. Consequently, Aarstiderne not only offers its members exceptional experiences at home, but also with the company and other members.
Millennials focus on self-realisation and personal development – often accompanied with friends, family, etc. At times, this focus on self-realisation can be misinterpreted as selfishness. Nonetheless, studies have shown that there has never been so much interaction between people as there is now – the difference is that are even more (and new) ways of being social. For instance, Millennials are able to be social without being together physically, e.g. through Snapchat and e-sports. As such, the concept of being social has been redefined.
Rapha Cycling Club – Rapha has become a lifestyle brand and almost a religion to many cyclists. Members of Rapha Cycling Club (RCC) pay an annual fee to be a part of this community, where the members focus on biking, performance and team spirit. RCC also arranges virtual biking races on the app, Zwift, where cyclist all over the world can compete with and against each other.
Millennials have experienced the financial crisis and the following events of an oversupplied marketplace (regarding material possessions). It has fundamentally changed their view on consumption and what material possessions symbolise. It is no longer prestigious (to the same extent) to own a big, flashy BMW or expensive Bang&Olufsen speakers. Previously, possessions like these have acted as measure of personal identity and success for older generations. This trend and attitude has helped pave the way for the sharing economy. It has become unnecessary to own these “flashy” things, which in particular meets Millennials’ desire for greater flexibility and freedom in life, as well as better control over their economy.
SWAPFIETS – Many (in Denmark and Holland at least) have tried biking to work or to school without getting far, because the bike has punctured. With Swapfiets (which in Dutch means swap-bike), members avoid all the hassle that may be associated with owning a bike. Members pay a monthly fee of €17.5 per month to have their own bike, which Swapfiets fix and replace within 12 hours if anything goes wrong.
Experts say that: ”Millennials are a generation of researchers”. Today, consumers have greater access to data about products and services than ever before – it’s just a few clicks away. Unlike the rest of the population (whom also have access to the information), young consumers actually use it. In a study conducted by Retail Institute Scandinavia (2018), it appears that 66% of Millennials use their smartphones to research prices and information, while they are shopping in a store. However, this is not only the case in the retail industry. Consumers compare prices, services and information across all industries. In general, transparency and openness has become more important than ever before in corporate communication, since Millennials (as a consequence of the financial crisis, among others) have become more sceptical and selective towards companies they choose to engaging with.
Zetland– A Danish media company is embracing the transparency trend. In the campaign; ”we promise to spend your money properly”, Zetland highlights exactly what subscribers pay for and what their money goes to, such as payroll, recruiting new subscribers, IT and administration, etc.
According to young consumers, there aren’t enough hours in a day, which has created an inherent impatience. Millennials’ are convinced that they are always in a rush, which is actually instigated by the digital online-world. Here, they have become accustomed to a completely different kind of speed, lots of information, “stores” are open 24/7 and there is never a queue. Therefore, time has become very valuable and is one of the most important aspects of their lives. For that reason, Millennials are concerned about how they can optimise the way they spend their time. Millennials constantly seek new ways, services and products to optimise their time, and that is why RoT (Return on Time) – rather than ROI – is a competitive advantage in the battle of attracting and retaining these consumers.
Consumption – is a subscription model that really speaks into the Return on Time trend. Some examples of Consumption subscriptions are Dollar Shave Club, Aarstiderne, Kaffekapslen, Ginger Organics and Target Subscriptions, all of which offer selected products in fixed delivery and automatic payment, so you don’t have to go to the store.
7. SOCIAL RESPONSIBILITY
It is no longer enough ”just” to have a great product or service. Brands must signal a purpose or a mission of being a part of something bigger. Millennials want to make the world a better place and expect that the brands they interact with do the same. In fact, no less than 75% of Millennials expect that the company they work for or buy products/services from give back to the community and not just harvest the profit.
Bam and Boo Toothbrush – For 5€ (paid quarterly), consumers in Germany, France, The Netherlands, Spain and England can get a subscription on sustainable toothbrushes and toothpaste. Bam and Boo focus on the big waste that plastic toothbrushes cause. Therefore, their toothbrushes are made of bamboo, which is both biodegradable and made of 95% sustainable materials.
Work/life balance is important to Millennials. It is no longer “cool” to work 70+ hours a week – and your work does not define you as a person or how successful you are in life. In addition, a consequence of the aging population, obesity and other health-related issues have resulted in young consumers focusing more on healthy alternatives and health in general. This relates to not only physical health, but also mental health. For instance, it has become less taboo to speak openly about anxiety, depression and other mental illnesses and challenges.
Headspace – is a subscription-based app, which offers different courses that focus on mental balance and meditation. For example, you can follow different courses that help improve the quality of your sleep or change your view of everyday life. Headspace offers a charming universe with a mix of audio clips and little animated videos, which can be tailored to your needs.
Millennials are everywhere – and, thus, a generation you must to get a hold of in order to ensure the future survival of your business. Subscription- and membership-based business models have become increasingly popular throughout the years – especially among young consumers – as this model meets a lot of their demands, wishes and needs.
But the abovementioned parameters are not just applicable to the consumer behaviour of Millennials. While the above has emerged and are characteristic of Millennials, the 8 parameters have also “spread” to other generations. For instance, other generations have also adopted the sharing economy and see the benefits of renting instead of material owning possessions. The main difference here is that Millennials have grown up with these trends – and therefore, they provide the basis for the generation’s expectations, wants and needs of the brands the engage with.
Have you become curious and would like to know more about Millennials?
Subscrybe arranges presentations and workshops about these young consumers, where you (and your colleagues) can learn more about what drives the Millennials’ consumers behaviour.
Benedicte Larsen firstname.lastname@example.org// +45 2283 1112
Tine Møller email@example.com//+45 2758 0882