Most marketers have a good understanding of the Millennial mindset and have fine-tuned their strategies to reach this widely talked about generational segment. But now, the primary target has changed. It’s time to put some serious focus on Gen Z. This is particularly true for financial institutions who need to cultivate the relationships now in order to position themselves for future opportunities with this group.
Gen Z was born between approximately 1997 and 2012 and make up about 20% of the population. Their current spending power is estimated at over $300 billion. However, within 10 years, they are predicted to dominate the economy and have more spending power than Millennials and Baby Boomers combined. Enough said.
Everyone knows that Gen Zers are digital natives. They’re tech savvy, spend a crazy amount of time online every day, and engage heavily with social media. What might surprise you is that they are frugal and nostalgic – among many other things. Following are some insights around their attitudes and behaviors towards finances and brands along with some tips to reach and engage with them.
Gen Z is sensible with money and averse to debt.
Overall, they tend to spend less and save more. They worry about student loan debt and fear not being able to find a job or have enough savings. In fact, Financial Brand reports that they have been labeled as “the most stressed-out generation” and this has shaped their perceptions about finances too.
This generation will require more financial education than their predecessors in order to meet financial challenges.
Although this group is generally thrifty, likes to save, and is relatively self-sufficient with the use of apps and online tools, they still need direction on how to manage their money. In addition, they will be faced with harder financial decisions in the future as experts predict that the cost of college will continue to increase, investment rates of return will decline, and mortgage rates will go up.
Financial institutions have an opportunity to build relationships with Gen Z by providing educational content and creating financial literacy programs that speak to their specific needs.
The guidance should be relatable to their personal experience (think age and life stage) with a primary focus on shorter-term goals. Messaging themes should focus on trust, security and optimism, and convenience.
Gen Z is brand loyal, but they have high expectations.
They are more racially diverse and educated than previous generations. They view themselves as innovative, entrepreneurial, and hard working. They are nostalgic and are credited with reviving Y2K trends. They are used to having immediate access to information. They are social activists who are ready for change. They expect brands to be transparent, ethical, and socially responsible. Brands need to be willing to take a stand and to be aware of this generation’s beliefs, interests and desires in order to forge an emotional connection and develop a relationship of trust. Brands that can do this will be rewarded with their loyalty.
Traditional marketing won’t work with Gen Z.
The pandemic has further heightened digital behavior with Gen Z. These individuals won’t be found in traditional marketing channels and although they heavily use social media, they select from a wide variety of online content, much of it generated by their peer group. There will be less ability to “repurpose” content across different social platforms, so marketers will need to have a deep understanding of how their target audience uses each platform. Generally speaking, content should be in small, digestible chunks – similar to what this group is used to consuming on social media.
Influencers are key.
AGen Z is two times more likely than a Millennial to make a purchase based on a recommendation from an influencer. Influencers have more appeal to this group than celebrities do. Because this group is super connected through social media, ideas spread easily among them. However, influencers should be chosen very carefully. Select someone who is like your audience that shares a natural affinity for your products or services. An authentic recommendation will be perceived as relatable and aspirational. Since this group values transparency, if someone is not authentic, they will know it.
Avoid the common mistakes of generational marketing.
Don’t stereotype and assume everyone in Gen Z has the same habits and beliefs. This is a very diverse group and messaging will not fit all. Use data intelligently to further segment and refine your messaging strategy. Stay on top of trends as they change quickly and this group feels a particular need (and pressure) to stay trendy. The younger members of Gen Z are still quite young and this generation is still changing and evolving. As younger members come of age, they will have some of their own unique characteristics. Gen Z is diverse, progressive, independent, socially conscious, shrewd, competitive, intelligent and hard working. Bank marketers will need to get creative and take a different approach to win over this group, but it will be worth it.