Connecting with Generation Y
A R T I C L E
They’re still young, but their importance to your firm’s future
is undeniable. Does your firm know how to connect with this
influential demographic?
They’re young, they’re tech-savvy, and they’re critical to your firm’s future. “Generation Y” (also
known as “Millennials” or “Echo Boomers”) is the group of individuals born between 1982 and
1995, and they’re the largest generational group since the Baby Boomers, 75 million strong. Though
they are still in their teens and early twenties, their buying power is growing rapidly. In fact, their
earnings are expected to go up by 85% within the next 10 years and will outstrip their parents’
earnings by as much as $500 billion.1
Generation Y is a group financial services firms can’t afford to ignore, not just because of the
wealth and business they represent, but because they’re different. As the first generation to grow
up in an age of computer and Internet ubiquity, their attitudes, behaviors, and expectations are
different from those of their elders. Financial services firms that assume the same approaches and
strategies used with prior generations of customers will work with Generation Y may be in for a rude
awakening—one that could be expensive to rectify.
Who Is Generation Y?
“Gen Y” has grown up in the dazzling age of multimedia and the Web—or at least, dazzling for
those to whom it was new. For Gen Y, it’s the norm. Much has been made of the short attention
span that reportedly characterizes Gen Y, but the simple fact is that this is a generation of
immediacy. Gen Yers have since birth had a vast array of information and entertainment at their
fingertips, accessible instantly. A certain amount of impatience with sluggish responses or overly
complex processes seems a fairly predictable result.
Other Gen Y traits that are particularly relevant to financial institutions are this group’s tech-
savviness, practical-mindedness, and social consciousness. According to the results of a survey
of more than 1000 people conducted by Deloitte and Harris Interactive, 45% of Gen Yers cite their
own research as their top influence in making financial decisions, and not surprisingly, most used
online tools as their top research method. Perhaps more interestingly, a far larger percentage of
Gen Yers than of any other generational group were likely to rank family recommendations as their
top influence.2 Gen Y is also practical, valuing simplicity and likely to base decisions on price, rather
than brand. Finally, Gen Y is civic-minded and may consider an institution’s social consciousness in
evaluating its products and services.
Building a Relationship with Generation Y
The desire to connect with Generation Y poses new challenges for financial services firms. For
one thing, Gen Y is skeptical of much traditional marketing and may be difficult to reach with
traditional approaches such as product-focused marketing. This necessitates a more relationship-
focused approach that may require significant changes in process and culture for some financial
services organizations.3
To build these relationships, financial services firms need to reexamine and refine their customer
relationship management (CRM) systems and strategies to ensure they meet the increased
demands of Generation Y. Gen Y routinely uses a wide range of tools and methods to communicate
and engage with others, including cell phones, texting, instant messaging, blogging, podcasts,
social networking sites, and more. This opens up a wide array of channels financial services firms
can use to reach Generation Y, but it also introduces broader multi-channel complexity in managing
interactions with these customers. Generation Y has high expectations of its financial services
providers, and to meet these expectations, firms need to provide a seamless and consistent
customer experience across channels and accommodate the simultaneous use of multiple channels.
1 Forrester. Meet Your Next Financial Consumer. 2007.
2 Deloitte. Catalysts for Change: The Implications of Gen Y Consumers for Banks. 2008.
3 Ibid.
This Pivotal CRM–authored article was originally published by Financial Services Technology (FST).
Pivotal CRM | Article
If this sounds complex and costly, it can be, and it is true
that given Generation Y members’ current youth, the costs
To achieve this, firms really need to step up their use of CRM of connecting with them may outweigh the rewards in the
to ensure they effectively record and apply the knowledge short term. On the up side, Generation Y is more likely than
gained in every customer interaction and coordinate customer other generations to consider purchasing additional products
“touches” effectively. and services from their bank or brokerage,5 meaning their
In addition to being challenging to win as customers, lifetime value and up-sell/cross-sell potential is very attractive.
Furthermore, Generation Y exerts unprecedented influence
Generation Y is the most difficult generation yet for over their parents’ choices as well,6 indicating that by winning
financial services firms to retain over the long term. over a Gen Y customer, financial firms may gain multiple
follow-on customers. Finally, it should not be overlooked that
many of the trends and attributes of Generation Y are simply
Generation Y has also grown up in a culture of individualism
the vanguard of behaviors and preferences that are spreading
and self-esteem promotion, raised with constant reaffirmation
through other generations as well. Generation Y may be the
that each person is special. As a result, generic mass-
early adopters of social networking, for example, but this
marketing, even tailored to the Generation Y demographic, is
mode of interaction is having an increasing impact within
unlikely to move them. Personalization is thus an important
Generation X and older groups. All of these factors indicate
pre-requisite to connecting with Generation Y. This again
that it is a worthwhile investment for financial services firms to
necessitates much more sophisticated use of marketing
invest in methods to reach and retain Generation Y, building a
automation and CRM: firms need to be able to collect deep
relationship now that can grow with them into the future.
customer information and apply it skillfully in multi-variant, multi-
channel contextual communications. Simply using the customer
name in an e-mail subject line or salutation is not enough.
The Challenge of Retention 5 Forrester. The Generations of Financial Services Consumers. 2006.
In addition to being challenging to win as customers, 6 Resource Interactive. Decoding the Digital Millennials. 2006.
Generation Y is the most difficult generation yet for financial
services firms to retain over the long term. Notoriously fickle,
Gen Y customers are less likely than other groups to be loyal to
a single brand—even one they like.4 Financial firms have their
work cut out for them in terms of retaining Gen Y customers.
Again, this Gen Y trait demands a new level of customer
relationship management. Financial services firms need to
shift from communicating and interacting with customers
when and how it suits the firm to more customer-driven
interaction, using event-based triggers, tracking and
responding to milestones such as college graduation or
home purchase, and building up an ongoing dialogue with
Gen Y customers that is more tailored to their behaviors and
preferences and personalized down to the individual rather
than simply demographically segmented.
Furthermore, the challenge of retaining Gen Y customers
highlights the need for financial services firms to implement
adaptive systems and infrastructure. If Generation Y is
characterized by fickleness and lack of loyalty, it is a safe bet
that this group’s behaviors and preferences will change over
time. If financial firms implement rigid systems and processes
that are difficult and time-consuming to modify, they will
find themselves always a step behind with this changeable
customer base. Rather, firms need to look to implement
flexible systems that help them both detect changes in
customer patterns and respond to them with new messages,
products, services, and engagement styles.
4 Forrester. Gen Y Is Truly Different; Design Accordingly. 2007.
CDC Software is a leading provider of enterprise software, including the industry-specific Pivotal CRM for Financial Services suite of
customer relationship management solutions. To learn more, visit www.pivotal.com/financialservices or call us at +1 877-PIVOTAL.
Copyright © CDC Software 2008. All rights reserved. The CDC Software logo and Pivotal CRM logo are registered trademarks and/or trademarks of CDC Software.