The Generational Perspective: How Our Past Defines Our Future Buying Behaviors
Everyone’s trying to figure out what drives consumers to purchase. To understand how they shop, you need to know what makes them tick.
Alliance Data’s Analytics and Insights Institute conducted a study with more than 2,400 respondents to better understand consumer buying habits and expectations. These insights, cross-referenced with results from our Understanding Customer Loyalty study, confirmed that consumer buying habits track closely with life stage and each generation’s cultural identity.
The study showed that buying behaviors were clearly influenced by what consumers were exposed to in their habit-forming years. Among the key takeaways from Alliance Data’s The Generational Perspective Study:
- Current shopping behaviors are driven by generational experiences. For example, Gen Xers and millennials grew up during the information revolution and want options and instant gratification.
- All consumers share baseline expectations of brands, regardless of their generation. Non-negotiables include payment security, easy brand interactions and transparent promotions.
- Each generation connects with brands differently. Consider that millennials define loyalty differently than the silent generation, and are willing to go out of their way for a brand they love.
Generations Connect With Brands Differently Based on Lifestyle and Life Stage
Retailers may miss the boat when it comes to connecting with consumers in a very authentic way if they ignore generational influences. Consumer buying behaviors mirror values formed at an early age — behaviors indicative of life experiences by generation. In other words, retailers may not meet emotional needs that help to build relationships with customers. Millennials, for example, may not like being labeled as the “me” generation, though it makes sense when you think about the influences that shaped their formative years.
Brands must think generationally about the customer experience and take a targeted approach when it comes to engaging customers. Millennials (ages 18-35) came of age during the social media boom and rely on technology for everything. From price comparisons to product reviews, this connected generation uses their smartphones to research options before purchase. They need to feel emotionally connected to brands, and the overall brand experience matters a great deal to them. To win with millennials, brands should allow connection to their social networks and enable self-service options such as chatbots to deliver in-the-moment service.
Generation X (ages 36-51) is the first group to be raised with email, the internet, and the rise of e-commerce — and the convenience that came with it. Now they work and drive the car pool, so they gravitate toward shopping experiences that are efficient, getting them what they need when they need it. Retailers should focus on solutions that save time for these shoppers, such as buy online, pick up curbside.
Baby boomers (ages 52-70) coming of age ushered in an era of consumerism. They didn’t grow up with 24/7 connectivity, however, so they don’t rank technology as a top priority. They care more about product quality and value, and now they may be empty nesters, which means they have more discretionary income. Retailers must tell them why a product is worth the price. Brands also should offer white-glove, personalized treatment to retain boomers’ loyalty.
Raised by Depression-era parents, the silent generation (ages 71-plus) chose traditional careers and stuck with them. They put trust in institutions, managed risks, and were prudent with their retirement accounts — and they have the financial stability to show for it. They shop with brands they know and trust, but value for the money they spend is most important to them. They have a “waste not, want not” philosophy about what they buy, so retailers must appeal to their sensible nature and focus on value first. In-store associates are a retailer’s best brand ambassadors for this generation, who want the salesperson to know them by name.
Consumer Confidence Dictates Spend
When consumers are more confident, they spend more. They’re more selective about where to spend, they’re able to invest in larger purchases (e.g., home improvement and auto), and they’re looking for value and quality in their everyday purchases (e.g., clothing and accessories). Retailers will therefore benefit from digging into their customer data and getting to know the different generational segments on a deeper level. Understanding why customers shop with your brand and what need the brand fulfills for them will help you attract and retain loyal customers.
Each generation connects with brands differently based on their life experiences, and brands must know the differences to deliver relevant solutions that match their shopping and buying behaviors. Brands that embrace what drives each generation will increase sales and win customer loyalty long term.
Shannon Andrick is vice president of marketing advancement at Alliance Data’s card services business.