This document discusses how loyalty marketers can successfully engage Generation Y consumers. It provides facts about Gen Y, noting they are the most ethnically diverse generation and are totally immersed in technology. It discusses their communication preferences, with high use of instant messaging, social networks, and texting. Gen Y has purchasing influences from friends and is not swayed as much by advertising. The document argues loyalty marketers must adapt to cultural changes and understand Gen Y's social media participation and banking preferences to effectively engage this emerging consumer segment. It provides examples of companies successfully targeting Gen Y and concludes that meeting them where they are, minimizing fine print, and fulfilling data promises can help loyalty marketers match up with this new breed of consumer.

1. How loyalty marketers can successfully engage
the new generation of consumers
© 2009 hanifin loyalty llc

2. Some facts about Gen Y
Born between 1977 – 1996 (aged 12 – 31 today)
77 - 80 Million (almost 25% of US population)
Almost equal to Boomers in size, 50% more than Gen X
Most ethnically and racially
diverse generation in US history
Super-sized “me” generation
2

3. Yin & Ying of Millennial Makeup
3

4. Technology
“Totally Immersed”
Survey of 7,705 college students in the US during 2007:
97% own a computer
94% own a cell phone
60% own some type of portable music and/or video device
49% download music using peer-to-peer file sharing
34% use websites as their primary
source of news
DNT TXT WHL U DRV
Who’s in charge
… the user or the device?
4

5. Communication
“Always Plugged In”
We know they are immersed
76% use Instant Messaging
75% have social networking account
28% own a blog and 44% read blogs
95 Million active texters in US
= 12 Billion messages/Mo.
But their use of channels varies by segment
Teens text more than overall population (73% vs. 52%)
Have lower 25% response rate to SMS ads
Only 15% want to use a mobile device as means of payment
5

6. Outlook – It’s all about me…
“Entitled…..but Loyal?
"You now have a generation coming into the workplace
that has grown up with the expectation that they will
automatically win and they'll always be rewarded, even
for just showing up“
Mary Crane, Consultant
"I believe that they actually think of themselves like
merchandise on eBay“
Marian Saltzman, J. Walter Thompson
“Want to rock their iPods, set their own flexible work
schedule, and still be CEO by Friday”
Morley Safer, CBS News
6

7. A New Breed of Consumer
Not just a shift in behavior, but a wholly
different consumer
Favorite Brands
• Adidas
Gen Y teaching parents about technology and • American Apparel
• Apple
parents rely on them for advice on what to buy • Ben N Jerry’s
and how to use it •
•
Converse
H&M
• JetBlue
• Levi’s
Influence will be felt across Gen X and • Red Stripe
• Target
Boomers • Trader Joe’s
• Vitamin Water
• Volkswagen
• Whole Foods
Consumer 2.0 – the first generation not to “grow
out of it”?
7

8. Purchasing Influences
62% of global teens are apathetic
about advertising
42% make purchase decisions
based on recommendations
of friends
Questions:
» Gen Y signs on to online banking
more or less than download music?
» Gen Y uses credit card more or less
than Boomers?
8

9. Why Should We Care?
9

10. A lot has changed…
…since loyalty “took off” in 1981
Loyalty Marketing
American Airlines launched AAdvantage
Birth of Loyalty Marketing as we know it today
The older end of Gen Y, born the same year, is 27 today and
entering prime earning years
Cultural Change
IBM launches it's first PC
The term “Internet” first mentioned
MTV (Music Television) is launched
Arnold Schwarzenegger was just a body builder
10

11. CMO’s Recognize Change
Most recognize the need for change but have yet to
embrace the challenge and define a customer strategy
for Gen Y.
75% believe that the millennial generation will have a major
impact on their business over the next 3 years
54% admit that they do not have a strategy for targeting
attracting or retaining Millennials as customers
11

12. Good News for Loyalty Marketers
“The drivers of loyalty are not materially different across
the generations - the difference is how we communicate
and the impression we make”
Howard Lax, Sr. Consultant, Harris Interactive
12

13. Social Networking Participation
13

14. Understanding Social Media?
Major League approach to Strategy
Play by Play Announcer
» Your web site is the necessary foundation
Color Commentary
» Blog is a platform for opinion and thought leadership
Player Roster
» Use LinkedIn to assemble your business network and circle of influence
Groupies
» Use Twitter to gather a crowd, then choose who to speak with
Inner Circle
» Use email, the phone, and in person for deeper conversation
Fans
» Use Facebook to build an audience
Sponsors
» Your valued Customers/Clients should be treated to Newsletters and more
personalized digital correspondence
14

15. Who to Watch?
15

16. Bank Products for Gen Y
Examples of Leadership
Bank of America “Keep the Change”
» Launched in 2005, now with 2.5 Million customers enrolled
» 700K new ckg & 1M savings opened so far
PNC Bank “Virtual Wallet”
» 2007 launch: online bill paying with budget and savings tools
» 20K accts opened thru Dec. 08, 65% new, 70% Gen Y
Wells Fargo “My Spending Report”
» Online budget & bill paying suite offered with new ckg acct
» Millennial “bundle” - easy to understand & to use
16

17. Young and Free Alberta
4th largest credit union in Alberta
Microsite featuring “Larissa”, now Myles
» Talks w/GenY in their language
Results: 8 month test in 2007
» 39,082 unique visitors
» 2,010 new accounts
» $2,875,000 new balances
» Equal to $179K unpaid media coverage
www.YoungFreeAlberta.com
17

18. Pizza Hut - Facebook
"Pizza Hut Interface” - a new channel for placing orders
» Mobile, text, widget, web, telephone
Access to 300,000 Facebook fans
Recently launched "Lotta Pizza Lotto“
» People who become a "Pizza Hut" fan are eligible for weekly $50
gift card
"We are moving fast to put our online customers in charge.
Any way they want to order from us, we'll be there for them.”
-Bob Kraut, Pizza Hut MarCom VP
18

19. Matching Up With Gen Y
Lifehacks Community
Frictionless interaction Authentic brand
Convenience, reliable service Appreciation
Personal Transparency
Tailored approach Limit the Loyalty Asterisk™
Seeking to be served Show Respect
19

20. Final Thoughts
1. Meet them where they are
» Sell less, share more, offer lifehacks
2. Minimize the Loyalty Asterisk™
» Position your brand as trusted advisor
» Tell them about universal default, the $35 burrito
3. Fulfill the promise of data
» “1 to 1” marketing may finally be affordable
» Social networking opens the door
4. Don’t try to rationalize the need
» They think differently than we do…you don’t have to “get it”
5. Don’t forget everything you learned
» Remain attentive to profitability & marketing ROI
» Be attentive to traditional financial models
20

21. Questions?
Bill Hanifin
Bill@HanifinLoyalty.com
+1.954.531.9277
Read the Loyalty Truth Blog:
http://blog.hanifinloyalty.com/
21