Our Viewpoint

Our Viewpoint

The Y Factor: How to Market to Generation Y

June 17, 2013

For years, we’ve been all about baby boomers, using segmentation and business intelligence to market to them as they moved from one life stage to the next.

Generation X didn’t change our focus. In fact, the generation barely made a blip on the financial radar and never fully emerged from boomers’ shadow. Generation Y, however, will be a game-changer.

This large and powerful demographic group—consisting of individuals born between 1981 and 2000—is the Holy Grail of progressive financial institutions, and for good reason.

Currently, 80 million baby boomers live in the U.S. along with 69 million Gen Xers, but there are a whopping 100 million Gen Yers, according to the U.S. Center for Health Statistics, which records birthrates. Add in the fact that Gen Yers are the baby boomers’ children—the future recipients of that generation’s wealth—and their value ticks up exponentially.

But don’t think for a moment that Gen Y is comprised of slackers. They won’t rest on the accomplishments of their parents. These highly educated, well-read individuals have the potential to earn significant income on their own as post degreed professionals and entrepreneurs. Gen Y’s income is projected to reach $6.2 trillion by 2020, which is as much as the older Gen Xers in a lot less time. Clearly, this is not a group to ignore.

The Gen Y 411

Gen Y is a unique demographic segment. They are nothing like their predecessors. They embrace different life experiences and career paths. They’re highly mobile and willing to move from coast to coast—and then back again.

Gen Yers like to research just about everything, and they’re much more focused on investing and saving than their predecessors. They like to save money, buy homes as soon as possible, and retire early—if possible.

As such, they have aggressive financial goals, and they’re looking for information, guidance, and access to financial planning tools to help them make decisions. They’re willing to do their homework and conduct thorough research before making any big life decisions.

They’re also the first generation to grow up in a digital world. They’re tethered to their smartphones and tablets. And they’re intensely “app happy.”

Gen Y was born into a high-tech world. They are fueled by instant information and the ability to connect anywhere at any time. As a result, they approach life from a global perspective.

Developing a Gen Y Strategy

It’s easy to think that a Facebook page and Twitter account are among the best ways to connect with Gen Y. But in reality, a tweet is largely ineffective without an underlying strategy for building a relationship with this age group. Before you venture into social media, start with the fundamentals. Design specific products around Gen Y and the way they interact with your institution.

Make sure you offer the ancillary products Gen Y wants, such as remote deposit via smartphone, person-to-person payments, e-statements, and electronic bill pay. Electronic delivery is key.

Staying current with technology is a process, not an event. To be the institution of choice for Gen Y, you have to keep your self-service options fresh and be quick to adopt the new technologies that Gen Y wants. Stay on top of technology and your Gen Yers will stay with you, even as they move. Convenience to them doesn’t necessarily mean physical proximity.

Communicating What You Have to Offer

Currently, Gen Y customers fall into two segments:

  1. Those who are in college or live at home with their parents.
  2. Those who have already entered the workforce.

Regardless of their life stage, Gen Yers rely on their parents for advice. They go to their parents first for financial advice, and then they turn to their friends and other family members. After they hear from family and friends, they go online to make sure they’re hearing the same message from their online communities.

When your institution creates its portfolio of products and services geared to Gen Y, it’s essential that you tell your Gen Y customers and their parents about it, using the appropriate communication channels for each audience.

Let parents know you have financial products and tools available to help their children. Tell them how to access those tools and provide a contact person for additional information. Use your business intelligence software to identify these parents and push messages to them through all your communication channels (including your front-line staff).

For your Gen Y customers, communicate through the same channels they currently use: email, text, or the Web. Speak plainly, directly, and authentically when explaining new offers. Don’t be preachy or sound like you’re selling. Offer to send text alerts when new products or services become available, and make sure you follow through.

A website of their own

Consider creating a separate, less traditional website specifically for Gen Y customers to satisfy their insatiable appetite for information and personalization. Instead of a home page with pages labeled “checking” or “savings,” consider pages labeled “create a budget,” “qualify for a home loan,” or “early retirement planning.”

Create a blog that chronicles the financial journeys of some young customers as they save for homes, start businesses, or get out of debt. In this format, young customers tell their stories, use your tools and products, and let readers follow their progress and interact. This kind of blog can even offer an occasional video element, if budget and time permit.

Be sure to keep the information fresh, update articles, and add new posts at least twice a week. That means you have to dedicate resources to this initiative to keep the site relevant and meaningful. If you don’t, you’ll turn off the very group you’re working so hard to attract.

Using Social Media Wisely

Financial institutions are moving beyond blogs to other forms of social media to connect with younger customers. Some are employing the same techniques retailers currently use, such as push messages promoting special offers, Facebook pages, and Twitter feeds. Some institutions are organizing branch-to-branch scavenger hunts via Foursquare (a location-based social site) to increase branch traffic.

The question becomes: Will these techniques appeal to Gen Y or not?

Gen Yers don’t want to interact with their financial institution in the same way they interact with their favorite retailers. An auto loan or checking account isn’t an impulse purchase. Gen Yers want their financial institutions to be trusted advisers who take them seriously.

So what’s a financial institution to do? The best advice is to use social media in the way that makes the most sense. If you have an event or seminar targeting Gen Y, for example, Twitter is a great communications vehicle.

Customized text messaging also can be effective. If a Gen Y customer comes into the branch or posts a comment to your blog, for example, a text message thanking him or her for the branch visit or post can do a world of good.

You also can use social media to create online communities where Gen Y can interact and share financial management challenges or success stories. If you have the resources, let your Gen Y customers create their own profiles, post questions, and build communities using social networking tools.

After you commit the resources to make social media successful, proceed slowly and deliberately. The use of social media by financial institutions is in its infancy. You don’t want to tweet or post without a strategy to support and give direction to what you’re doing. The fundamentals of marketing still apply.

Branches become destinations

Don’t think for a minute that the emergence of Gen Y customers means the demise of the branch office.

It’s true that Gen Y prefers to conduct transactions electronically and in a self-service mode. But these customers also want to use the branch for financial guidance and consultation. Your branch becomes a destination, and your employees become consultants.

While not all branch visits result in additional accounts or loans right away, they do represent opportunities to build relationships with these otherwise digital customers.

Some institutions are physically changing the branch atmosphere: offering coffee, food, play areas for children, and Wi-Fi for customers waiting to see service representatives. Plenty of opportunities exist that offer no obligation advice and consultation to these knowledge-thirsty customers.

Seizing the Opportunity

Gen Y presents a tremendous opportunity for financial institutions nationwide. By investing the time and resources into marketing to this channel, you are investing in the future growth of your institution. With the right strategy, electronic tools and straightforward messaging, you will earn this segment’s trust and subsequently, their business.


Chris Braccia
Director, Product Management

Chris Braccia serves as director of product management at D+H. Prior to joining D+H, Chris was the marketing director for a Connecticut mutual savings bank for 13 years. He has also served as a research analyst and sales manager for a $1.5 billion mutual savings bank. During his banking experience, Chris was one of the first users of MCIF (Marketing Customer Information File) technology. He is a graduate of the National School of Banking at Fairfield University. He is a frequent speaker at many banking and credit union conferences.