Millennial Attitudes Transforming Business
Like social media, the collaborative economy has gone mainstream but hails from a millennial upbringing. Lyft, Uber, Airbnb, Thumbtack, TaskRabbit, and more were created by millennials for millennials. Generation Y attitudes and expectations continue to be a key driving force behind the growth of the collaborative economy. Therefore, we will begin with a short discussion of this fascinating generation.
Having grown up amidst the tech boom-and-bust of the late 1990s and housing boom-and-bust and Great Recession of 2008, and often mired by student loans, the millennial generation is skittish about consumption and employment. Unlike their parents, millennials are not as interested in owning a car or home. Instead, the most prized possession for millennials is their smartphone, which most say never leaves their side.
Millennials now constitute the largest population cohort the United States has ever seen and are the largest civilian labor force, accounting for more than one-third of all US workers. Millennials value flexible work hours and want jobs that enable them to be constantly connected, according to research by Internet analyst Mary Meeker. Consulting firm Archpoint found that one-third of millennials would actually forgo a higher salary to work at a company that did not limit their technology access, and more than half wouldn’t accept a job at a company where social media sites are blocked. Nearly half use personal smartphones for work purposes (compared to 18% of older generations), and more than 40% of millennials are likely to download and pay out of pocket for apps to use for work purposes in the next 12 months.1 It’s no surprise that 2.7 million (44%) of the on-demand workers in the United States are millennials, according to findings from MBO Partners and Emergent Research.
On the consumption side of the equation, Barron’s has calculated millennials’ purchasing power to be $200 billion annually. Here are six additional millennial behaviors and attitudes worth noting. As you will see, many of these have crossed the chasm, so to speak, and are now true of the broader consumer population.
- Prefer convenience, experiences, and access over ownership. The Great Recession changed consumer attitudes toward possessions and social status. According to BAV Consulting, 66% of all consumers (and nearly 80% of millennials) now say they aspire to a more minimal lifestyle with fewer things. These individuals find more satisfaction and status in experiences (widely trumpeted through social media, no doubt), than in pricy material possessions. The sustainability movement, popular among millennials, has further aligned attitudes against a material culture. Finally, far more millennials than non-millennials report a desire to “visit every continent and travel abroad as much as possible,” according to a survey by Boston Consulting Group.
- Insist on access to information and transparency. While millennials are highly skeptical of “corporate mouthpieces” and advertising, they trust and rely on online ratings and reviews. More than half reported accessing user reviews and researching products from multiple information sources while shopping. Cumulative ratings and reviews posted by previous customers have become incredible validators and drivers of purchase, influencing more than 80% of millennial buying decisions.2 Would you buy a humidifier with a two-star rating on Amazon? Would you dine at a restaurant rated negatively by your friend on Yelp? Most millennials wouldn’t.
- Want to consult friends and family. Although millennials self-identify as being independent, their behavior indicates a desire to constantly seek reassurance from friends and family on major purchase decisions from consumer electronics to financial advice. Often, they turn to social media to do so. More than 50% of millennials explore brands via trusted friend groups on social networks, and they tend to favor brands that have company Facebook Pages and mobile websites. A majority also use social media to talk about products and brands they are proud to support.
- Expect constant mobile connectivity. Nearly 90% of millennials have their phone on them at all times, and roughly half say they would sooner give up their sense of smell than give up their access to technology.3 Technology firm Mitek found that more than 80% of millennials believe it’s important for retailers to have high-quality mobile apps, while 86% say there are still many websites that lack good mobile functionality. In addition, 36% have made a decision on where to buy or switched providers based on mobile functionality, and 14% say they would not do business with a company that doesn’t have a mobile site or app.
- Demand instant gratification. When millennial consumers tweet to complain about poor customer service, they expect an immediate response. When they order a Lyft or Uber ride, they expect the car to show up immediately. Many cancel the order if the estimated arrival time is more than 10 minutes. Millennials carry these expectations of instant gratification with them into every arena of their work and home lives—and hence the explosive rise of the collaborative, on-demand economy.
- Drawn to urban (and urban-like) environments. In her book The End of the Suburbs, Fortune editor Leigh Gallagher follows the path of rapid urbanization in America. Consistent with millennials’ preference for access and experiences over ownership, she found that many millennials are choosing to live in urban areas with a higher population density, which typically offer convenient access to shops, cafes, and restaurants, and cut down on commute times. This has been an important enabler for local on-demand service marketplaces, which depend on proximity of people and economies of scale.
Not Just Millennials
As much as people love to dissect Generation Y, the truth is that many of these attitudes have actually permeated the mainstream population. A lot of consumers these days—not just millennials—want to do their own product research, validate purchases with family and friends, and find convenience and instant gratification. These expectations are the natural result of constant connectivity. While millennials may have been the first generation to be digitally savvy, a lot more people across every generation fit this description.
Take the topic of trust in big banks and big corporations, for example. This level of trust has been on the decline for decades (Figure 3.3).4 Occupy Wall Street—a protest against the lack of trustworthiness—was seeded by millennials but spread to a broad cross-section of society.
Figure 3.3 Of all US institutions, American consumers are most skeptical of Congress, big business, and big media—both television news and Internet news (Source: ©2015 Gallup, Inc. All rights reserved. The content is used with permission; however, Gallup retains all rights of republication.)
As trust in too-big-to-fail corporations and their advertising campaigns has eroded, there has been a simultaneous rise in trust of friends and peers to fill the gap. Through social media and online ratings and reviews, friends’ and peers’ opinions are now more accessible than ever before, creating and reinforcing this behavior of consulting the community.