Part 2/3: A Peek Into Zconomy: How Gen Z Will Change the Future of Business and What to Do About It.
Welcome back!
In this three-part series, we are doing a high level dive into Zconomy: How Gen Z Will Change the Future of Business and What to Do About It by Jason Dorsey and Denise Villa, PhD.
If you haven’t read part one yet, STOP! Go back and read part one. Part one is all about the making of Gen Z - the “new normal” they are driving, generation defining moments that influence their behaviors and preferences, and their mindset on money, spending and saving. It’s crucial to gain this foundational understanding before learning how to engage them as consumers and employees.
Let’s set the stage and remind ourselves some key things about Gen Z:
The eldest is already 26 years old
They are the fastest growing generation in the workforce
79% feel that other generations don’t understand them well.
They already make up over 40% of US consumers and on track to soon be the largest consumer population.
They are the first fully digitally connected generation. 55% are on their phone 5 or more hours a day.
They use social media as a resource for everything – news, entertainment, community, dating, job hunting, education, etc. And they use each social platform for different purposes.
They are frugal with spending, and conservative with saving.
They are largely a generation of activists and their voice and expectations carry beyond social media into their decisions of which brands to buy from and which companies to work for.
Gen Z was the number one generation to initially lose their jobs during the pandemic.
Effects of COVID-19
Zconomy was published in 2020 in the midst of the COVID-19 Pandemic so I have sprinkled in some facts and findings from The Center for Generational Kinetic's research study THE STATE OF GEN Z® 2021-2022: Gen Z as Consumers, Savers, and Influencing Personal Finance. Zconomy authors Jason Dorsey and Denise Villa, PhD are the President and CEO of The Center for Generational Kinetics so we are staying in the same research family so to speak.
Keeping the impacts of COVID-19 at the forefront of the conversation of Gen Z as consumers is critical because, like for many of us, it has drastically shifted their mindsets and behaviors towards money, spending, saving and even employment pursuits. These facts from the 2021-2022 State of Gen Z report paint a quick picture of just how worried Gen Z is about their financial future.
Gen Z was the number one generation to initially lose their jobs during the pandemic, or face a reduction in pay or reduction in hours.
60% of Gen Z (13-25) worry about their own financial situation daily or multiple times a week.
48% of Gen Z (13-25) worry about their family's financial situation daily or multiple times a week.
34% reported their savings were negatively impacted by the pandemic.
36% said their earnings were negatively impacted by the pandemic.
39% indicated their spending was negatively impacted by the pandemic.
68% of older Gen Z (19–25) experienced a delay in some aspect of their life that was caused by the pandemic. For older Gen Z (19–25), the greatest delay (27%) caused by the pandemic was associated with postponing a switch to a new job, followed by shelving additional education (25%), and deferring moving away from their family or parents (21%).
All the while, this generation is still "exerting tremendous influence on shopping, saving, purchasing, payments, investing and financial trends." Zconomy describes Gen Z as the new “it” generation and will be for the foreseeable future, even after the impacts of COVID-19.
Expectations as Consumers
Because of their age, as well as the delays experienced in major areas like employment, education and living independently, the top areas they are spending their money in right now are apparel, cosmetic and beauty, gaming, entertainment, food and beverage and restaurants. And they have already disrupted how these industries conduct business.
As they continue to age up, and as the world continues on it's path back to normalcy (or a "new" normalcy), Gen Z will start to have major impacts on industries such as banking, cars and transportation, renting and buying homes, insurance, investments, travel, hospitality, and tourism.
So whether you are selling lipstick or investment accounts, it’s crucial you understand their expectations as consumers.
Make it Worth Their Money
They may be more frugal and fiscally conservative than previous generations at their age, but they do not compromise on value and quality. They look for good deals on well built and durable products. While “Thrifting” is very popular with this generation, they would rather buy well-made second hand clothes and save for a more expensive item such as a pair of shoes, rather than spend little on all poorly made products.
They also know they have options and take their time to compare prices with other companies, and read ratings and reviews to make sure they are getting the best deal.
Make it Personal
Gen Z came of age with everything from Netflix, Amazon and ads on social media generating content and suggestions based on their own individual preferences. This is all they know and this is what they expect. Non-targeted ads are a big turn off. 44% of Gen Z say they will leave a company website if they can tell the company doesn’t know what they are looking for before they get there.
In addition to ads, they expect the full shopping experience – from browsing, to check out, to returns – to be fully tailored to their individual preferences and needs. If not, they will quickly move on to a company that will.
Social Responsibility
They believe and expect brands to stand for something larger than what they are selling and to contribute to the greater good of the world.
Remember when Nike came out with the Colin Kaepernick ad? Remember how disruptive, shocking and controversial that was? Many people boycotted the brand and their stock tanked immediately. But over the next few weeks, their stock surged 9.2%, and overall the whole ad ended up bringing in $163.5M! Nike predicted this. Why? Because they were selling to the future customers. They knew it was a risk and knew they were going to take a hit with the older generations, but they also understood Gen Z and knew Gen Z was going to be their target consumer for the next 2 decades.
According to the 2021-2022 State of Gen Z Report, 59% (of Gen Z) reported they will start using a product or service they’ve never tried before if the company takes a stance on a social issue they are passionate about. 55% of Gen Z said they will stop using a product or service they like if the company takes a stance on a social issue they don’t agree with.
Building Brand Awareness & Loyalty
Gen Z takes brand engagement to a very different level than previous generations. While other generations stay loyal to brands because they have always provided a quality product, Gen Z is looking to get behind a brand, align themselves with the brand’s overall mission and for those brands to reflect how they aspire to live their lives.
"Gen Z doesn’t buy brands, they join brands." – Mary Ellen Dugan, CMO WP Engines
Building awareness, securing their business and gaining loyalty all comes down connecting with and tailoring to Gen Z in every step of the customer journey.
Positioning
What do you stand for? What’s your purpose? What problem are you solving? What story are you telling?
Reputation
Do you walk the walk, or talk the talk? It is important for Gen Z to see that your company not only takes a stance on social issues, but they also care immensely about how you treat your employees. According to the 2021-2022 State of Gen Z Report, 60% of Gen Z said that a company’s reputation as an employer influences their decision to buy (or not buy) a product or service! This puts the pressure on companies to "demonstrate they treat employees well to not only attract and retain the best talent, but also to attract and keep Gen Z as customers."
Engagement & Awareness
What are you offering and why will they want it? Connect with their aspirations, convince them they need your product even if they aren’t ready to buy it. Many Gen Z will suggest brands they follow to their friends, family and social followers without ever actually having purchased the product before. Get their community of influencers - their friends, family, social media networks, celebrities and online influencers - talking about your product or brand both person to person and online. According to the 2021-2022 State of Gen Z Report, 56% of Gen Z reported they are more likely to try a product or service if their favorite online influencer recommends it.
Reviews and ratings are no longer an option. Gen Z relies heavily on reviews and ratings before making an initial purchase. 70% of Gen Z has not bought something they really wanted because they read a bad rating or review about it.
“Gen Z is the first generation that uses the internet for entertainment first, information second. Most brands think about whether their content is informative is informative and whether they’re targeting the right audience, but they’re not thinking about entertaining people. It’s a huge factor with Gen Z. Is your brand funny? Is it serious? What is the component of entertainment that you’re trying to hook this generation with? Because if you don’t understand how you’re going to entertain and capture this generation first, you could lose them very very quickly." - Mary Elllen Dugan WP Engine CMO
Initial Purchase
In addition to getting a good deal on a quality product, Gen Z is all about easy and low risk buying experiences. If the check out process is too lengthy or manual, if they can’t pay with payment apps (PayPal or Venmo) or payment account saved on their phone (ApplePay), they may never complete the purchase.
Do you provide an easy return experience? 96% of shoppers would shop with a retailer again based on a good returns experience, while 69% say they would not buy from a retailer if they had to pay for return shipping, and 67 would not buy from a retailer that charges a restocking fee.
Make it easy to post a review, thank them for sharing with a quick response, and even give them creative options to put their personal touch on a review such as posting a video or picture with the product using a certain hashtag.
Referrals
Word of mouth marketing is the single most influential way to drive sales to Gen Z. If a friend or family member has bought it before, they are much more inclined to buy it as well. Use that knowledge beyond securing a first time purchase, but leverage it for future sales. Make existing Gen Z customers part of your marketing strategy. Ask them to tell their friends and family how much they love your product and follow it up immediately with recognition or even a reward such as referral perks, discounts on next purchase, making a donation in their name, etc.
That’s it for this post…stay tuned for the final blog of the Zconomy series where we look at how their expectations and behaviors as consumers align with their expectations and behaviors in the workplace:
How do you recruit, retain and engage Gen Z as employees?
And if you missed part one, click the link below to check it out:
BONUS VIDEO!
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