Appealing to Millennials – Think Smart, Not Hard
Issue: June 2015 | Life | Download PDF | English By Chiponda Chimbelu
Millennials, Generation Y, 20-somethings, Echo-Boomers, Generation Next, Generation We, the Global Generation, Digital Natives – regardless of the label, we have all heard of these young consumers.1 The generation born between 1980 and 2000 totals 2.5 billion people globally – roughly one-third of the world’s population. They wield tremendous power and demand attention.2,3 In the U.S., Millennials are a highly diverse group socially, racially, ethnically and religiously that is influencing the cultural and political expectations of the country.4 Their annual spending power is $600 billion and estimated to increase to $1.4 trillion by 2020.5
Compared to older generations, Millennials are the most well-educated cohort of young adults. However, many leave college or university with debts and few job opportunities. Some struggle to begin their personal and professional journeys. Many opt to stay in their family home, deferring house purchase, marriage and other milestones that traditionally mark the transition to adulthood.6
The challenge for insurers is to understand this important population group and engage with them as consumers. Today, only 34% of this generation owns a life policy.7 How can the industry be better at helping young people who want to buy insurance products that suit their needs? Millennials possess specific attitudes and behaviors that call for a fresh approach to marketing financial services – especially insurance products. It follows that insurers must understand their preferences and then deploy strategies to gain their business and loyalty. Key to this challenge is understanding Millennials’ use of technology, their collaborative nature and their relatively low levels of financial literacy.
This generation has glowing optimism when it comes to their financial future – currently 23% are satisfied with their personal financial circumstances.8 Over half believe they will earn enough in the future and end up where they want to be financially, and almost three quarters of them believe they will be able to save enough to have the lifestyle they hope for.9,10
However, Millennials have low financial literacy rates compared to previous generations. They have not needed to be as financially independent at a young age as past generations. This is because of their economic reliance on parental support for longer portions of their lives, and of course, due to the economic conditions they are experiencing as their careers take off.
Despite their optimism, the majority of Millennials think about their financial future daily; they worry about their own economic conditions as well as the macroeconomic conditions as they continue to face high unemployment rates and overwhelming debt levels (see Figure 1). Often it is difficult for them to fund insurance or long-term investments because they have other financial priorities on which to focus.
It is perhaps no surprise they need help understanding their finances, with 68% admitting their financial planning needs improvement.12 Just 19% of high-net-worth Millennials have a “high level” of financial and investment knowledge while 14% of all college-educated Millennials demonstrate an “advanced level” of financial literacy.13,14 The consequences of this lack of knowledge may negatively affect their financial security. As they age and must assume greater financial responsibility, they will require more guidance and hand-holding compared to previous generations.
Millennials are not especially conversant with complex financial products, including insurance; around 40% are “not at all” familiar with the industry.15 This suggests they need more professional help than previous generations, but over 70% either do not know where to turn for advice, or lack the time and interest, while only 16% use a paid financial advisor.16,17 They need our help to understand the benefits available to them, this process will help build trust between the industry and this generation.
Millennials are early adopters of new technology and this affects how they seek and access information.18 Many believe their relationship with technology makes them unique.19
Millennials are “digital natives” because technology has been ever-present in their everyday lives. They are avid users of mobile and Internet technology, and they rely heavily on digital media to manage their daily activities.20 They are highly informed, connected multi-taskers who are constantly aware of their options.21 Insurers must embrace technology and learn to customize and personalize benefits to cater to Millennials’ specific lifestyles and preferences.
Millennials have grown up in a world of customization, which means they have certain expectations for the level of personalization available to them regardless of the product, service, experience or industry. Allowing them customization that fits personal preferences is important. However, in providing customization, companies run the risk of forcing Millennials to do too much work on their own. Having options expand almost endlessly, makes decision making extremely difficult. Usually, people over-invest time just to keep their options open and this can be detrimental if they cannot make a final decision and instead select to make no choice at all.22
Millennials invest time comparing options online and in stores before they actually commit to buy; 45% spend at least an hour per day looking at retail-oriented websites.23 They research products, compare prices, respond to promotions and try to understand how these products and services suit their needs. In terms of completing a purchase, brick and mortar stores still dominate, but Millennials are multichannel shoppers.24
Millennials’ expectation of instant access to information and services is only increasing.25 They require that insurers offer easy access to information that makes their buying decisions simple.
They seek the fastest and easiest way to complete their purchases while trying to find the most cost-effective options. Millennials desire a simple and easy starting point that is accessible and user-friendly. Insurance companies must ensure that this starting point provides these new consumers with sufficient information and direction. Providing online access to benefits options, and making personal telephone support available, can help.26
Millennials do not wish to be “sold” life insurance via the Internet, in-person or over the phone; they want an easy way to “buy” it themselves through self-empowerment. To be empowered they need education about how life insurance can fit within their lives.27 Insurers should operate in a transparent way and facilitate an active partnership based on open communication that allows Millennials to function as co-creators in the sales process.
Experiences shape the lives of Millennials; they share them online and in real time, and they gain a sense of community through events and similar interests. This makes them feel connected to other people, to the community, and the world.28 They are socially conscious and globally connected. They are keenly interested in what companies do to support the social and physical environment. Insurers must emphasize connections to the causes they support and share the positive differences this support is making.29
Millennials share multiple facets of their lives – from products to services to experiences – with their peers. Social media plays an important role in facilitating sharing, trading, buying, selling and exchanging information about products, services and experiences. Note the differences between generations concerning the likelihood of sharing events and experiences through social media. (see Figure 2).
Due to their hyper-connected and collaborative nature, Millennials tend to turn to their peers or other consumers on social media for advice and feedback on what products to buy. Over 80% say this user-generated content plays a role in their purchasing and nearly a third would not purchase insurance without reviewing such content beforehand.31
The consumption behavior of Millennials shows the trust and collaboration they form through online channels. The majority research products and services online before making a purchase, and these connected individuals trust their peers for assistance and help.32 Furthermore, they believe that other consumers also value their feedback, which is why 70% continue to share their opinions online.33 This relationship between Millennials’ social interaction and exchange of information allows for more success in peer-to-peer and online resale markets.
Millennials face significant financial challenges but have time to overcome them. They need to plan more efficiently for their long-term financial goals if they are to have any chance of achieving them.34 Insurers must interact with this generation to succeed with them. Companies that successfully incorporate interactive elements into the learning and sales process will better engage Millennials and keep their attention.
Insurers can also engage Millennials by appealing to them as researchers. Providing open access to information that meets the needs of their interconnected world will help these digital natives become informed decision-makers. As much as Millennials want to make smart decisions about important life milestones, sometimes they just lack the information or the resources to find the right answers. Insurers who help them to find the answers and become informed could develop stronger relationships and long-term loyalty than their competitors.
Insurers must develop strategies to ensure they are up-to-date with the newest technologies and to give Millennials the smooth and simple buying process they seek. Insurers may want to consider providing remote access to information that is as specific to Millennials as possible. Ultimately, the process comes down to building relationships in a setting that does not push Millennials into a transaction but leads them to make the best, well-educated decisions for themselves.
For more articles in this publication, view the Table of Contents.