27 Jun How Millennials Want to Do Business: 10 Surprising Statistics
It’s easy to dismiss Millennials as self-obsessed, smartphone-wielding youths. But the data paint a different picture. Not only do Millennials – generally defined as those born between 1981 and 1996 – currently have the largest presence in the U.S. labor force, they wield $1.3 trillion in annual buying power.
Millennials aren’t just aimless young people. With the oldest members of the generation currently in their early-to-mid thirties, they represent the future of commerce – one that no accounting firm can afford to ignore.
So what do we know about Millennials and how they like to do business? Consider the following statistics:
Millennials start businesses younger
According to the 2016 BNP Paribas Global Entrepreneur Report, “While the older generation launched their first businesses at roughly 35 years old, so-called ‘millennipreneurs’ are setting out around 27—which means some of them already have almost a decade of experience.” Further, the report finds that millennials have launched about twice as many businesses as their baby boomer counterparts have.
What It Means for You: Simply put, your next client is likely to be a millennial. Millennials are more interested in entrepreneurship and self-employment than previous generations, and they’re starting earlier than ever. These Millennial owners need accounting support just like any other entrepreneurs. Attracting their business – which will be especially important as Baby Boomers move into retirement – requires that firms understand their needs and communicate with them in appropriate ways.
Millennials spend less than previous generations
TD Bank’s Consumer Spending Index reveals that Millennials spend an average of about $26,000 total each year—about 27 percent less than Gen Xers and 23 percent less than Baby Boomers, according to the index. Both Millennials’ risk-averse nature and lower incomes overall may contribute.
What It Means for You: Regardless of the reasons behind Millennials’ penny-pinching behavior, recognize that this generation is more thoughtful than others about what they spend and where that money goes. Ensuring that your firm’s expenses make the cut requires understanding what drives Millennials to spend in the first place.
Millennials expect positive corporate citizenship
Horizon Media’s Finger on the Pulse study reveals that 81% of millennials expect their favorite companies to make public declarations of their corporate citizenship. Further data from a 2015 Nielsen global online study showed that almost three out of four members of the generation were willing to pay more for a product or item that was produced by a brand that was dedicated to sustainability.
What It Means for You: If your firm doesn’t yet have a corporate ethics policy, it’s time to start thinking about what you stand for and how you can communicate your beliefs.
Millennials are distrustful of corporate altruism
Now, for the bad news. Despite the proclaimed importance of corporate ethics and sustainability to Millennials, most aren’t receptive to the efforts companies have made to date. Research out of Deloitte suggests that only a minority of Millennials believe businesses behave ethically (48 percent vs 65 percent in 2017) and that business leaders are committed to helping improve society (47 percent vs 62 percent in 2017).
What It Means for You: Don’t pursue charity solely for the sake of swaying Millennials. Find a cause your organization can get behind, and support in ways that appeal to both your customers and employees.
The biggest factor influencing Millennial purchase decisions is price
Millennials may say they care about corporate ethics, but they’re as prone as other generations are to the sentiment: “show me the money!” According to research shared by Adroit Digital, “About 62% stated that price is the biggest factor in their decision to purchase.”
What It Means for You: We’re not going to advocate for lowering your prices just to meet the demands of price-sensitive Millennials. Being competitive is important, but a race to the bottom in terms of accounting pricing serves nobody. Instead, you need to be able to justify the value you provide for the price you charge. Do this by clearly communicating what you offer and how it benefits Millennials, as both value and transparency are important to this generation.
Millennials love a good deal
That said, while dropping your prices overall isn’t a smart business move, offering occasional deals may provide sufficient incentive for Millennials to move over to your firm. Research shared by Forbes contributor Richard Kestenbaum suggests that “Two-thirds of millennials say they will switch brands if they are offered a discount of 30% or more.”
What It Means for You: Set-in-stone rates may be the norm in the accounting world, but shaking things up with limited-time deals or package-based discounts (for instance, a offering a discounted rate to customers who opt to have both their business and personal tax returns filed by the firm) can be a boon for winning the business of Millennials.
Millennials expect to use multiple communication channels
As you’re thinking about where and how to share these new promotions – or how to best communicate with Millennial customers in general – be aware that “More than 35% of Millennials state that they prefer to communicate with businesses over social media.”
What It Means for You: Providing proper support via phone and email is still important. But Millennials are driving an expansion of the channels we associate with customer support. If you don’t maintain at least one active social media channel, now may be the time to begin.
Millennials trust online reviews
Another great reason to spend more time engaging online? Over half of Millennials say they would trust an online review over the opinion of a friend or family member.
What It Means for You: The new importance of online reviews should mean several different things to accounting firms. First, it’s necessary to build the infrastructure on which online reviews can be left by claiming business profiles on popular sites like Google Business and Yelp.
Once these profiles are established, firms have two responsibilities. First, they should encourage satisfied customers to leave reviews on these sites. But they must also monitor reviews that are being left, as responding quickly to any negative sentiment that’s published is the key to recovering from potential reputation damage.
The majority of Millennials don’t have credit cards
According to Bankrate, “67% of Millennials don’t have credit cards. It’s the only adult demographic group where credit card ownership is that low—55% and 62% of 30-to-49 year olds and 50-64-year olds, respectively, have them, while ownership among American 65 and older is even higher.”
What It Means for You: As we’ll explore in the final section below, Millennials wariness of taking on debt limits the payment options available to them in the event of big purchases. So while you’ll certainly want to make credit cards available as a payment option for your firm’s clients (assuming you’re able to pass on credit card processing fees to them), this can’t be your only avenue for taking payment.
Millennials are more likely to save up for big purchases
Affirm’s Claire Murdough claims that, due to Millennials’ disinterest in credit, “Millennials are less likely to reach for plastic when purchasing, instead saving up for purchases until they can pay with cash or debit.”
What It Means for You: Although data is limited into whether or not Millennials’ personal savings strategies translate to their financial decisions or business processes, accountants and firm owners should be wary of the risk this behavior presents. If a generation prefers to save until big purchases can be made in full, there’s a risk that they’ll put off seeking necessary accounting support out of fears of large balances owed.
This makes it even more that your firm be upfront about offering multiple payment solutions. Cash and credit cards will always be important, but consider adding systems that allow your customers to pay their balances over time (preferably, ones that ensure you get paid upfront).
Preparing for the Millennial Generation
Ultimately, Millennials aren’t that different than previous generations. They may be more risk-averse than others, and they may have diminished buying power as individuals (though the impact of their generation as a whole shouldn’t be minimized), but their general wants and needs parallel older professionals.
Millennials want to feel that their needs are understood by their accountants, and they want to be able to trust that their financial advisors have their best interests at heart. They may use different language to express these needs, and they may prefer to communicate them across different channels, but their basic requirements are the same as earlier generations.
If you can treat them with respect and offer the service models and payment methods they prefer, you’ll find the transition from Baby Boomer to Millennial clients to be a smooth one.
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