Your Next Challenge: Gen Z
For the last decade, marketers have been obsessed with trying to reach the elusive millennial consumer. The quest is not unwarranted, as the Millennial generation continues to make its presence felt on the financial services sector with each passing year. But with the leading edge of Millennials now in their late thirties, this group is no longer the new kid on the block. So, just as your financial institution is starting to reap the benefits of your Millennial strategies, a new challenge awaits: Gen Z.
The emergence of Gen Z may be welcome news for marketers suffering from Millennial burnout, while others are left wondering what they’re getting themselves into. Here are a few things we know about Gen Z so far:
- Gen Z is the generation following Millennials (also known as Gen Y). As an aside, when Gen X was popularized as the name for us slacker kids coming of age in the 1980s and 1990s, the intent was likely not to start an alpha naming convention for subsequent generations, but that is what demographers and researchers have done until a more commonly accepted name emerges.So perhaps a more accurate description would be Generation Z, the Generation to be named later. iGen, Gen Tech, Pluralist Generation, Post-Millennials, and Homeland Generation are just some of the names being tossed around as contenders, but only time will tell as to what sticks.
- There is no universal consensus on the age breaks for generations, but Gen Z typically refers to individuals born starting around the year 2000, give or take a few years (born starting at the turn of the millennium, as opposed to Millennials/Gen Y that started approaching adulthood at the turn of the millennium).
- As was the case of every generation preceding them, Gen Z’s attitudes and behavior will change as they age. After all, we all (ok, most of us) grow and change from our teenage years. However, ignoring Gen Z for this reason would be a mistake as generational demography can help distill how shared cultural and societal experiences during formative years might influence future behavior. In addition, even if your financial institution chooses to ignore Gen Z until they reach critical mass, a late start makes it all the more difficult to compete against others that are already starting to attract Gen Z consumers.
- Also similar to their older cohorts, Gen Z is not homogeneous. Individuals born within a twenty year span cannot be painted with the same broad generalizations. Likewise, there is nothing particularly magical about generational birth year cut-offs that would make a Millennial born in 1999 automatically different from a Gen Z’er born in the year 2000. Gen Z is a diverse group of individuals, some of whom will have tendencies that are more similar to older generations than to those within their own age group. In fact, Gen Z’s heterogeneity may be even more pronounced than prior generations given their larger than ever ethnic diversity.
- The sheer size of Gen Z should be reason enough for financial marketers to start paying attention to the youngest generation. Spurred by an average of 4.1 Million births per year in the U.S., Gen Z will soon outnumber their predecessors. By comparison, Baby Boomers and Millennials averaged approximately 3.9 Million births per year, with only 3.4 Million Gen X babies born in an average year in the late 1960s and 1970s.
- Being the first generation to be true digital natives, Gen Z is starting off as the most information intensive generation ever. They were born into and raised in a world of constant connectivity through an onslaught of mobile devices and social media. There is evidence that the youngest generation consumes and processes information differently, and neuroscientists continue to research the effects of all this digital technology in terms of how it may be rewiring the brain. It has been said that Gen Z has an attention span of 8 seconds, which is down from the average attention span of 12 seconds in 2000, and just below the 9-second bar set by the ever attentive goldfish.
All this is to say is that what worked for reaching Millennials may not necessarily work for Gen Z. To gain a deeper understanding of Gen Z and shed light on some of these differences, Raddon recently surveyed approximately 2,500 Gen Z’ers between the ages of 16 and 18. As presented earlier this month at the Raddon Research Conference, this research reveals many interesting trends already starting to emerge with this younger group.
Consumption of media and advertising is clearly different for this generation, with smartphone ownership exceeding television ownership. And since 57% of Gen Z use their phones several times an hour, the influence of social media is a natural progression. Social media influence is apparent as 55% of Gen Z report a product purchase decision being influenced by information or advice found on a social network site.
The reliance on digital technology also influences Gen Z’s attitudes regarding where they might turn to for future banking needs. Gen Z is much more likely to say they envision a future where technology companies supplement the financial services they might receive from traditional banks or credit unions. As highlighted in the chart below, 44% of Gen Z anticipate supplementing traditional banking services with solutions from technology companies, compared to only 28% of Millennials and 23% of Gen X.
As the generations evolve, financial institutions will need to evolve with them to remain relevant and meet the new demands of the changing consumer. Just as we learned with Millennials, some financial institutions will figure it out more quickly than others. Gen Z is your next challenge and opportunity for growth.
To help you rise to the challenge and capture this opportunity, download the full report, Generation Z: The Kids Are All Right at raddon.com/GenZ, or subscribe to Raddon Research Insights for full access to future studies such as this.