Editor's note: I'm thrilled to let you know that digital analyst and author Brian Solis of Altimeter Group is going to be contributing articles to Up and to the Right. This is his first one for us. --Dan Lyons
When was the last time you researched customer segmentation for your business? When was the last time you reviewed your customer’s decision journey?
If your business is like most others, you most likely studied how customers interact on the web and inthe real world some years ago. But have you observed how customers use mobile, apps, blogs, and social networks – to learn how they find you, and how they decide for or against you? Believe it or not, there’s a stark difference in behavior between the online and traditional customers we know and the connected customers of today.
With the onslaught of disruptive technology, consumer behavior and ultimately decision-making is changing. As a result, specialized research is now necessary to reveal to what extent your connected customers are redefining a new landscape for engagement and where their preferred touchpoints emerge. Whether it’s in mobile apps, social networks, or in the digital conversations defining the social web, how consumers discover, influence and are influenced is evolving in real-time.
But there’s something more to the story. There is a coming “C” change in consumerism, where the “C” represents the more connected, agile, and discerning customer as well as the need for an adaptive culture in your organization. Not only is a new breed of consumerism taking shape, the customers and popular culture you once knew and modeled your business around are simultaneously decreasing in size and impact.
At the same time, this evolution is giving rise to something so completely foreign, so completely counterintuitive, that it almost seems surreal and somewhat temporary. But on the contrary, this C change requires all hands on deck as it requires a completely new course.
Generation C Isn’t an Age, It’s a Lifestyle
Meet Generation C, a connected group of customers who are not defined by age but instead by the digital lifestyle they live.
It’s a horrible thing to consider, but we have to start thinking about the implications of generation shifts in business. Older generations of customers will not be your customer forever. Your markets will give way to younger generations of customers who may or may not know about or connect with your organization in the same ways as other customer relationships you’ve developed over the years.
At some point in the near future, your business must begin to shift the balance between diminishing and materializing opportunities to not only survive, but also prosper. Let’s take a moment to think about the population of the United States:
Millennials or Generation Y (people born 1981–1991): Approximately 51 million people.
Generation X (born 1965–1980): 62 million.
Boomers (born 1946–1964): 78 million.
Matures (born 1945 or earlier): 39 million
One way to see how Millennials behave differently than other generations is to look at their approach to the non-profit world.
In “The Next Generation of American Giving,” a study published by non-profit technology provider Covio, researchers found that younger generations are already loyal to less charities. Although the amount of giving goes up with age, Millennials are loyal to a smaller group of organizations.
The study found that Matures give on average $1,066 annually to 6.3 charities, Boomers give $901 to 5.2 charities, Gen X’ers donate $796 to 4.2 charities and Millennials give $341 to 3.6 charities.
I believe we can extrapolate from this behavior to get an indication of how Millennials will behave as consumers – and that perhaps that younger generations will be loyal to fewer brands than their predecessors.
The amount donated and the quantity of charities younger generations support is only part of the story. How organizations reach the Millennial vs. Gen X vs. Boomers or Matures represents the segmentation that’s necessary for a new genre of focused customer engagement.
At a high level, the study found that Matures and Boomers respond well to direct mail, whereas Millennials do not. On the contrary, online engagement proves far more effective for Millennials, including social networks such as Facebook, Twitter, and social media overall.
Additionally, text messaging plays a notable role in driving contributions. For example, 17% of Millennials polled donated money via text, larger than any other group, as part of the Haiti earthquake relief efforts. The study also noted that Gen X and Gen Y tend to channel-hop depending on the context of the event and the engagement. Thus they become a bit more elusive. For instance, they might make a mobile phone gift via text in an emergency to Cause A, write a check at an event to Cause B, or donate online or via a cause related app to Cause C. I read this as a need to develop engagement, commerce, and service channels that match the preferences and expectations of your customer segments.
In the non-profit world, organizations need to embrace no less than 11 separate channel strategies to reach all demographic segments, each with a unique supporting network and value proposition to appeal to different people uniquely.
This isn’t just about age; this is about lifestyle and preference. For example, Millennials won’t monopolize the use of emerging and disruptive technology for long. At some point, early adopters and consumers in the early market majority across every demographic will start to rely upon new technology to communicate, connect and discover. I refer to this converging class of connected consumers as Generation-C, where the “C” represents connectedness.
As I introduced in What's the Future of Business? (WTF for short), anyone who places increasing emphasis on technology as part of their daily routine is behaving the way Millennials do. As a result, their behavior and decision-making naturally evolves as well.
In the Convio report, it was discovered that real-world relationships were the most valuable introduction to charitable opportunities. If we apply the idea of Gen-C here, those relationships would also exist digitally. And as the study found, Facebook, Twitter and other social networks are reproducing the effect that real-world conversations create. A donor, for example, might learn of a cause, or be motivated to support a cause, because of a friend’s post on their Facebook wall. From there, they may donate online or send a check. But, awareness and ultimately a decision were sparked within a new medium where a link facilitated an action and transaction. It’s interesting to note that in the study, 50% of Matures and 30% of Boomers report using Facebook regularly.
What Does This Mean?
It means that how you think about consumers and how your business is designed to attract and nurture relationships with them requires an updated and segmented approach. Each must be designed with tailored messages and engagement strategies to reach your designed segments as inspired by behavior and preference. Engagement is just the first part. Equally important, your supporting channels must make the desired actions and transactions seamless.
To do so requires internal collaboration and integration to engage customers through an effective multi-channel strategy. The Convio study found that in most non-profit organizations, direct mail, online fundraising, web strategy, social marketing, and email communications are managed in separate departments. Sound familiar? While some or all functions may report up to the same leader, each are run with dedicated goals and in many cases are in direct competition with one another. Naturally silos arise for political reasons. This causes strife, and prevents alignment. It also prevents efficiencies in processes and overall strategies.
As the report says, “While these outcomes may have reduced internal strife, this approach is fatal to effective multichannel marketing.”
At the end of the day, you are not alone. Many of the enterprise organizations I’ve worked with over the recent years have not yet considered that a new generation of customers thinks differently than their more traditional counterparts. More importantly, they have not studied how this new behavior impacts the course of the customer decision journey and the different touchpoints that emerge as a result.
To engage new touchpoints first requires the recognition that they exist. The next step is to follow a series of important steps to enlighten leaders and bring the organization together to bring about the next chapter of business and relevance.
Your 5 Steps Toward Relevance Among Generation-C
1. The first step is to survey the customer landscape to learn about how the coming “C” change will affect your business and current channel strategy. Ally yourself with key stakeholders to generate interest and concern. Together, present the case for this research and how the results will potentially impact the organization. The goal is to earn executive-level sponsorship and interest among decision makers.
2. Review the findings from the customer segment and behavioral analysis to document important findings. Synthesize all insights and escalate implications not just at the enterprise level but also at the line-of-business, functions, and channels levels as well. The mission is to open the eyes of those who “didn’t know what they didn’t know.”
3. Organize a working session with the taskforce. Include representatives from each channel, function, and/or line of business to present the research to the broader team and have it cascade from there. The goal is to answer questions, create a sense of importance or urgency across the board, and encourage alignment to take unified action.
4. It takes a culture of customer-centricity and innovation to introduce new adaptive business models that help organizations engage and optimize new touchpoints in this new generation of consumerism. The taskforce is now tasked with transformation. It must meet regularly, impartially, to analyze opportunities and best adapt to them without jeopardizing current initiatives.
5. Continue to research and monitor consumer behavior and preferences. Part of the work of the taskforce is to evaluate channel strategies, current approaches, and results to redistribute resources and budgets according to opportunities. Additionally, alignment must be defined to improve collaboration among the teams to finally break down silos. Lastly, update, humanize, and optimize the story, value proposition and delivery for each channel and each segment.
Brian Solis is a principal analyst at Altimeter Group and author of What's the Future of Business? (WTF). You can follow him at BrianSolis.com and @briansolis.
Photo Credit: ThinkStock
Originally published Nov 19, 2013 2:00:00 PM, updated January 18 2023