it’s a generally accepted marketing principle that retaining customers is cheaper than acquiring new ones. While we do not dispute this, one must keep in mind that it’s not always a simple task. The demands of existing customers change over time, requiring businesses to continuously evolve their offering. In the case of Millennials, the change will be much more rapid and more pronounced than in the past. The wealth shift that is expected over the coming decades means incremental innovation is no longer a viable option. We must prepare for a fundamental shift in value propositions. And we must start now.

Why the Millennial view of financial services matters

If we look at most developed countries, the coming decades will see wealth redistributed to a new customer segment: Millennials. This is a name given to the generation born between 1980 and 2000. Following on from Generation X, it’s possibly one of the largest cohorts in history. And it’s about to reach its prime earning and spending years. Crucially, demographics is about to play its part in ensuring Millennials are even more economically important: As well as earning money in their own right, Millennials stand to inherit billions of dollars in wealth over the coming decades.

«Do you want to be hip? Tell young people you don’t like big banks»[i]. This view typifies the attitude of many Millennials towards traditional financial services models. Most Millennials would rather handle their financial services through Google, Amazon, Apple or PayPal as they believe banks offer few benefits and there is little to distinguish one large bank from another.

Are they really a new breed of client?

People talk about Millennials being a new type of investor – they’re technologically savvy, they are on social media 24/7 and they trust peer reviews but not big business. They are not fundamentally different to existing clients, however. They’re just better at figuring out what’s authentic and what isn’t, and consuming only what really interests them. This in itself means they are already changing the ways we buy and sell. They are forcing companies to examine how they will do business well into the future and imply a radically different approach to engaging them. As they are not interested in traditional financial service providers per se, it is critical to reach them through voices they trust.

Key features of the Millennial

Skeptical, politically independent and very well educated
Optimistic, diverse and a bit self-absorbed
Socially savvy, extremely well interconnected and owner of multiple communication devices
High demand for personalized solutions
Embrace digital channels, social media and mobile communication
Expect offline and online integration
Short attention spans and like to be served with «stories»
Love to discover something new, but only from trusted sources
Like to share new discoveries with their friends (peer-to-peer recommendations)
Demand relevant, valuable and non-promotional interaction
Are you addressing this (disloyal) client base?

Millennials have almost no brand loyalty. They choose to buy services from the provider that offers the greatest convenience and value for money as determined by friends and social media peers. The internet has made it extremely easy to compare the value and cost of literally any service, and to know at the touch of a button how other people rate it (as well, crucially, as sharing your own assessment of service received). As a consequence, Millennials show no hesitation in moving swiftly – and regularly – between providers.

As you seek to address this core element of the future client pool, some key questions present themselves:

1. How is the average age of my client base changing, and – looking at the bigger picture – what measures am I putting in place to ensure my proposition appeals to a younger generation?

2. How can I help them achieve their central ambition, which is “self-fulfillment” rather than solely making money?

3. What am I offering that genuinely speaks to their aspirations and concerns, including environmental and socially responsible principles that tend to be important to them?

4. Do I sufficiently invest in building trust by offering independent and valuable insights that Millennials can discover and share in a format that is attractive to them (easily digestible, multi-channel availability and accessible on demand at any time and any location)?

5. What can I offer parents so that we build inroads and trust among their children?

6. Is my online and offline communication strategy adequate, and am I using suitable language and formats to anticipate relatively short attention spans?

7. Are my solutions intuitive and easy to use, such that they appeal to highly mobile clients?

8. How am I differentiating my value proposition in order to demonstrate the added value over other financial service providers?

Successfully engaging Millennials boils down to how to gain their trust and to offer services in a way that appeals to them. While this principle is valid for any generation of clients, the fickle nature of Millennials and the ease with which they can switch service providers means it has never been more important to get it right. As they become a dominant segment of tomorrow’s client base, can you afford to ignore their demands?