By: Jeff Fromm and Cheryl Butler. Source: PSFK
Currently, millennials directly account for 21-to-25 percent of consumer discretionary spending in many categories. They are quickly becoming the largest consumer generation in the United States and brands are spending a significant amount of capital and time attempting to earn their love. However, the truth of the matter is that what millennials love more than anything is owning unique products or bragging about their “uncommon” experiences, which is why they are nearly obsessed with innovation.
According to a recent Deloitte Study, millennials describe themselves as innovative and want to work for and spend their money at innovative companies. According to our recent study of the top 20 millennial brands, the majority of all companies listed have invested in some form of innovation to attract millennial consumers (you can download the full Millennial Top 20 Report here). This is the point when you think to yourself, “Am I running an innovative company? If not, how can I get there?”
Below are three truths about millennials that inspired brands should embrace in order to spread their innovation gospel.
Truth #1: Millennials have little equity in old schemas
Successful brands often stick to tried-and-true strategies for a long time – if they worked before they will work again, right? Wrong. Many times brands rely on old schemas for too long. Millennials are looking for brands to innovate, and the most innovative brands from Amazon to Apple to Chipotle to Dollar Shave Club aren’t afraid to challenge the status quo.
For example, Chipotle doesn’t advertise on TV. Instead, the brand embraces content excellence, creating music videos, games, apps and even an original series on HULU to share its story of sustainable living. Dollar Shave Club is winning in the razor industry by disrupting the traditional business model. Who needs to shop for razors when consumers can sign up for at-home razor delivery for as little as $1 a month through the company website? Amazon has innovated with Amazon Prime, and Apple, known for releasing products in beta, practices fluid innovation.
Truth #2: Millennials prefer innovative brands
Brands that innovate capture Millennials’ word of mouse (they get the clicks and social awareness online) and their dollars. For example, from 2009 to 2013, Amazon sales increased from $25 billion $75 billion, and Chipotle reported a jump from $1.5 to 3.2 billion. From 2010 to 2014, Apple’s sales went from $65 billion to $182 billion. Dollar Shave Club, although not publicly traded, had 330,000 members and earned $12 million in venture capital by October 2013.
“Millennials are a generation steeped in innovation,” said Mark Logan,
SVP of Innovation at Moonshot, Barkley’s in-house innovation lab. “This generation has witnessed the rise of the PC, the Internet, the Web, social media and mobile–some of the most transformative innovations in history. They’ve come to expect world-changing innovation as the norm, and they believe that innovation is one of the most important purposes of a company. So, they’re drawn to brands that deliver innovation and scorn brands that don’t.”
Truth #3: Millennials will trade privacy for perks if they trust you
Several studies show that millennials will trade more private, personal information for perks if they believe that trade will result in a desired benefit. (A free item, a sneak-peek to the latest product, etc.) The major gaffe many brands make is that they don’t create a more personalized experience after they’ve received the gift of good data.
So, what questions do you need to ask in order to be considered an innovative company?
First, in order to have a new product or service pipeline you need to have core and emerging opportunities. These core and emerging opportunities may account for 90-95 percent of your pipeline. Using traditional metrics of ROI and thresholds to make go or no-go decisions is fine.
However, companies need to have a few blue ocean bets. These are the big-reach ideas and bets you make on them. You cannot apply the same ROI metrics to your blue-ocean ideas, or you’ll only hit the no-go button.
Now what?
When you have a blue-ocean idea, the two questions you have to ask include:
1) Is this in our brand authority?
2) Can we afford to test and make this bet?
Most companies, of course, will have additional questions around strategic fit and risks/return ratios, but at the core if the answers to the two questions are both yes, then you need to efficiently test your thesis and go from there.
Happy innovating!
Cherryh Butler is the trends/content specialist at Barkley in Kansas City. Jeff Fromm is founder and president of FutureCast, a millennial marketing research and consulting firm. They both contribute to MillennialMarketing.com.
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