Competing for the Next Generation of Digital Customers
New Demographics
Generation Z (born 1997 – 2010) differs from their Millennial Gen Y counterparts (born 1981 – 1996) in how they communicate with others and how they want to be communicated to. As such, they have high expectations for companies who are trying to establish trust and long-term relationships with them. Gen Z demands speed, convenience, and concise, straight-forward communications.
Gen Z is “digital born.” Most have had an iPad since kindergarten and don’t remember a world without technology. They are technically-savvy and operate multiple devices at once – smart phones, laptops, Smart TVs, and iPads – and are able to absorb a vast amount of information. And, despite their daily digital multi-tasking, they get good grades. They are a grounded, hardworking, and competitive generation. They have seen their Millennial cohorts get into financial trouble, and as a result, Gen Z is financially-focused, debt-adverse, and concerned about their financial security. They’re interested in saving money and reducing debt and are worried about the high costs of education.
Gen Z grew up in an almost always connected world, and despite their ability to absorb varied and vast amount of information, they have very short attention spans – typically less than 8 seconds. That’s not a lot of time to get their attention, so communicating clearly and concisely is a must (in 240 characters or less).
Simple, intuitive interfaces, personalized emails, “snap media” such as short videos, chat-bots for 24/7 responses, and text messages work best with Gen Z. On average, this generation receives over 3,000 text messages per month, with 98% of those text messages opened within 30 minutes, and responded to quickly. Gen Z is all about digital communication and do not generally respond to traditional direct mail.
Seamless customer service is also high on Gen Z’s demands. They want multiple communication options, self-service, frequently asked questions (FAQs), and “snack size” content. They are a resourceful generation and are able to use guides, blogs, and calculators to help them search for answers to make financial decisions.
Competing for the Next Generation of Digital Customers
Financial institutions are aggressively competing for the next generation of customers. Millennials have typically formed loyalties between the age of 25- and 34-years-old. As Gen Z enters their early 20’s, establishing trust and building relationships with this next generation of customers is more important than ever before.
To do so, financial institutions must change their ways of communicating with this next generation if they want to effectively compete for their business in the future. This is especially critical for companies who view student loans, student loan refinance, and unsecured lending as entry products for building longer-term customer relationships, such as auto, home, wealth management, retirement, etc.
For example, Sallie Mae, a traditional student loan provider, recently re-branded itself and is competing for Gen Z with new marketing content and communication tactics that may appeal to this generation.The company will introduce new blog features, articles, and videos on personal finance and planning, as well as paying for college. The company also upgraded its mobile apps, chat functions, and customer service platforms and is leveraging its private student loan experience to expand its personal loan and credit card products.
Enhancing the Digital Customer Journey
“In an age of multiple and massive innovations, obsolescence becomes the major obsession.”
– Philosopher Marshall McLuhan, quoted in the Columbus, Ohio Dispatch
Today’s digital customer fully expects a friction-less digital customer experience. Their expectations include personalized offers, an easy-to-complete application, simple document downloads, transparent rate options, fast approvals, and easy funding. And yet, many traditional lenders have been slow to adopt technology to make this possible. Lenders need to continuously review their application flows and underwriting practices to reduce friction and create a seamless best-in-class digital customer experience. A simple, intuitive lending process will result in higher conversion rates, increased loan volume, and reduced costs per loan.
Technology partners can help you to leverage new digital features and evaluate emerging technologies. Partnering with third parties can provide new capabilities such as SMS, fraud detection, identity verification, income verification, and loan balance verification. A best-in-class digital experience will ensure your company is well-positioned to compete for the next generation of digital customers. Furthermore, it will provide the foundation for offering future products and services as you customers life priorities change over time.
Companies who invest in new technologies, to meet increasingly demanding customer expectations, will remain competitive – even if it means sacrificing short-term earnings for the ability to compete in the future. Whereas, those companies who do not invest today may well be irrelevant tomorrow.