© 2009 hanifin loyalty llc

How loyalty marketers can successfully engagethe new generation of consumers

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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

Yin & Ying of Millennial Makeup

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Technology

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Survey of 7,705 college students in the US during 2007:97% own a computer94% own a cell phone60% own some type of portable music and/or video device49% download music using peer-to-peer file sharing34% use websites as their primary source of news

DNT TXT WHL U DRVWho’s in charge

… the user or the device?

“Totally Immersed”

Communication

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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

“Always Plugged In”

Outlook – It’s all about me…

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"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

“Entitled…..but Loyal?

A New Breed of Consumer

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Not just a shift in behavior, but a wholly different consumer

� Gen Y teaching parents about technology and parents rely on them for advice on what to buy and how to use it

� Influence will be felt across Gen X and Boomers

� Consumer 2.0 – the first generation not to “grow out of it”?

Favorite Brands

• Adidas• American Apparel• Apple• Ben N Jerry’s• Converse • H & M• JetBlue• Levi’s• Red Stripe• Target• Trader Joe’s• Vitamin Water• Volkswagen• Whole Foods

� 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?

Purchasing Influences

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Why Should We Care?

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A lot has changed…

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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

…since loyalty “took off” in 1981

CMO’s Recognize Change

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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

Good News for Loyalty Marketers

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“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

Social Networking Participation

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� 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

Understanding Social Media?Major League approach to Strategy

Who to Watch?

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� 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

Bank Products for Gen YExamples of Leadership

Young and Free Alberta

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4th largest credit union in AlbertaMicrosite 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

Pizza Hut - Facebook

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"Pizza Hut Interface” - a new channel for placing orders» Mobile, text, widget, web, telephone

Access to 300,000 Facebook fansRecently 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

Matching Up With Gen Y

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LifehacksFrictionless interactionConvenience, reliable service

CommunityAuthentic brandAppreciation

PersonalTailored approachSeeking to be served

TransparencyLimit the Loyalty Asterisk™Show Respect

Final Thoughts

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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

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Questions?

Bill HanifinBill@HanifinLoyalty.com +1.954.531.9277

Read the Loyalty Truth Blog: http://blog.hanifinloyalty.com/