Millennials and the East, the new “promised lands” of customer experience

Camilla Bottin
Content Manager @ THRON

Let’s expect fire and flames for this new era of the Dragon.

I was in China, an Italian tourist walking along the Great Wall. A thirty-year-old stopped me – I think he was called Jiang – to show me his strictly Italian watch.

I moved to take a closer look when the guy jokingly came out with, “Don’t touch my Breil”.

I knew that 27% of Chinese purchases in Italy were made up of jewelry, including watches, but coming across certain slogans and certain brands hundreds of miles from home had a certain effect on me.

The demographic shift has put in place new trends: Eastern markets and millennials are emerging on the horizon and going towards new concepts of customer experience, and this challenge must absolutely not catch us unprepared.

 

Will our heroes succeed in the difficult task of establishing loyalty among these new market segments?

 

In a market where the success of brands in achieving customer centricity is no longer a differentiator but rather a determinant for survival, the carrot and the stick have passed into customers’ hands. They have discovered that their true value for companies goes far beyond their wallets, or rather, beyond a strictly monetary sales consideration. Indeed, now, everything is played out on relationship dynamics.

People reveal a great deal about themselves through the content that they choose on various touchpoints (websites, e-commerce stores, mobile apps, social networks, in-store initiatives, etc.). The data, attention and feedback that users provide have taken on significant value for companies, which are becoming capable of perceiving the real needs of the user.

Just think about how a single complaint can cost a company millions of dollars, or how a review on TripAdvisor can make or break a restaurant: we can say to all intents and purposes that the customer is always right, and their power is huge. Their feedback is able to significantly influence company decisions.

To adapt to this evolving panorama, brands must begin to work from the “customer back”, turning the customer and their expectations into the starting point for any business. Unlike a product centric approach where the company focuses on a single product, trying to sell it to as many people as possible, with a customer centric approach, the right kind of product can be created for every type of customer.

The groups of consumers at the center of this rift caused by the Big Bang of groundbreaking innovation are largely middle-class populations that are growing in emerging markets and millennials, or rather, those born between 1980 and 2000 all over the world.

62%, or rather, two thirds of executives interviewed for the report “Seeking Customer Centricity – The Omni Business Model” developed by KPMG International in collaboration with The Consumer Goods Forum (CGF) are convinced that the growth of consumers belonging to the emerging markets area will have a positive impact on their business economics over the next two years. Furthermore, over half are optimistic with regard to their ability to attract millennials.

These segments stand out not only for their dimensions, influence and potential spending power, but also because they are more significantly connected through digital channels compared to any other generation of consumers. This is why it is more and more important to have an omnichannel strategy to improve engagement with Brands. Only by taking millennials as a reference do we discover the enormous online basin from which to draw on their preferences, orientations and expectations: indeed, they write online on a daily basis (social media, blogs, etc.).

In a study commissioned to Nielsen by Yahoo, in 2015 it emerged that 76% of them (8.4 million) are regularly connected, with the device par excellence being the smartphone (on average 2 hours and 41 minutes a day). Every month, these people spend the equivalent of 66 hours and 34 minutes online, the majority of which occurs through mobile devices (18 hours and 36 minutes from PCs, 49 hours and 30 minutes from smartphones, and 29 hours and 24 minutes from tablets).

This segment is rapidly emerging as the first source of consumer spending: indeed, they grew up in an age of consumerism characterized by a high propensity to spend that they will not renounce, even in times of crisis. The Nielsen report underlines how the majority of them (69%) are able to choose which products to buy independently, with a high degree of decision-making confidence and clearly defined preferences.

It is precisely on this millennial behavior that the executives interviewed hope to capitalize: the KPMG report cites a tendency to spend more on health (33%), to choose brands that are socially aware (30%), to evaluate purchasing experiences that go beyond products (30%), and to purchase via mobile devices (28%). Some companies with a revenue growth of 10% have millennials as their consumers.

 

Millennials, what are the challenges?

 

There are some challenges to be taken into account and the executives interviewed by the KPMG report are aware of these. Just think about the low level of income available to millennials: this year’s Censis/Confcooperative focus “Millennials, lavoro povero e pensioni, quale futuro?” (Millennials, poor work and pensions, what does their future hold?) has established that 5.7 million Italian workers risk poverty by 2050. Today alone, there is a significant gap of 14.6% when comparing a father’s pension (boomer) with that of his son (millennial). There are over three million NEETs (Not in Education, Employment or Training) who are giving up on any kind of prospect due to a lack of work, and 2.7 million working poor or “trapped” workers engaged in unqualified activities.

Among the other obstacles identified by the executives interviewed are their aversion to traditional advertising techniques (26%), the influence of online reviews and approvals that they, being hyper-connected, are constantly monitoring (25%), and their tendency to surf without purchasing (24%). Among the most accredited techniques to engage them is providing them with a compelling experience: indeed, they are known as pioneers of experiences. In FutureCast’s “The Millennial Brief on Travel and Lodging”, it reads that “72% of them choose to give priority to experiences over luxury and material goods”. This escape from material security is down to the economic crisis that they have experienced first-hand: Why invest in houses or shares when everything can vanish in a short space of time? It is better to focus on the here and now, living unique experiences from day to day.

This “caesura” between millennials and boomers is highlighted by two advertisements for the same product, Martini liqueur, aimed at the same target range (young people between the age of 20 and 35 years old), but created in 1993 and 2016 respectively.

In the second advert, we see a complete subversion of the ideals of “success” that the brand was offering its customers: in the Nineties, the reference character was the man full of money, with a beautiful woman (in this case Charlize Theron!), a boat, a luxury car, etc., while in the 21st century, young people want to enjoy their time, their friends’ company, experiences and, why not, gender equality. This reference can be seen at the beginning of the second advert, when the guy “throws” the old ideals into a suitcase, with a clean break from the past.

Furthermore, they are real influencers: their trends transfer between generations, infecting their parents, the boomers (those born between 1946 and 1964).

 

In search of loyalty through a circular business model

 

Millennials tend to be more socially aware than more advanced age groups. They are influenced by offers of products that are marketed as ethical, sustainable and environmentally friendly.

It is also thanks to this trend that companies are moving toward circular business models: unlike the traditional, so-called linear approach in which products are made, sold, used and then discarded, in a circular economy, products and materials are recovered and regenerated at the end of their service life.

According to the KPMG report, almost a third of the executives interviewed confirmed that their companies are already using circular economy practices. This model brings about customer loyalty on a higher level because it leads to the creation of relationships throughout the entire product life cycle.

An example of brand proximity to an environmental cause is that offered by Lacoste, the famous, French, polo shirt brand that substituted its iconic crocodile logo with ten species of animals at risk of extinction. These consisted of the Anegada ground iguana, the Gulf of California porpoise, the Sumatran tiger, the Cao-vit gibbon, the kakapo, the California condor, the northern sportive lemur, the saola, the Javan rhinoceros and the Burmese roofed turtle.

This new range, in a limited edition, has been created in collaboration with the International Union for Conservation of Nature. The number of polo shirts available corresponds with the number of animals still living in the wild of the species represented by the logo: to give an example, there are only 350 shirts for the Sumatran tiger.

This same proximity to ethical, sustainable or environmentally friendly causes can make a breakthrough in Eastern markets too: the consumer market in China has developed only in the last twenty years, so brand loyalty does not exist like it does in the West. This means that a focus on consumer health and that of the environment in which we live really can make a difference.

Those who know Italy well will perhaps have heard of “M’illumino di meno” (I’m lighting up less), an awareness campaign on environmental sustainability devised by the Caterpillar program for Italy’s Rai Radio 2. Here, lights are switched off to “turn on” interest with regard to the future of our planet.

Passing by the signs of an Intesa Sanpaolo Italian bank branch, I saw that they stayed off from 7 p.m. to 11:30 p.m. on this day. I also discovered that the bank, the only Italian company to be included in the 20 most sustainable corporations in the world in the 2017 ranking drawn up by Corporate Knights, has been adhering to this initiative since 2010. It has been making this symbolic and concrete gesture to draw Italians’ attention to the issue of sustainable energy.

A small deed that can make a difference, that is what people are looking for in a brand.

Download the paper:

Seeking customer centricity  
The omni business model

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