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January 01, 2012

Cover Story

The Big Shift: The Next Great Generation Has Arrived

by Marilynn Hood


Click here to order the Direct Selling News issue in which this article appeared.


DSN Cover

Seismic shifts among the generation segments are already in motion. For baby boomers (born 1946-1964), their consumer focus will be diverted toward whatever makes them comfortable as they age. The volume of their consumption will decrease significantly as well. They simply won’t need as much, and their numbers will continue to decline in the coming years. Millennials (born about 1980-1994), on the other hand, are set to redefine consumerism. They want quality, they want it on their own terms, and they don’t like to wait in line to get it.

The millennials—the first generation to come of age in the 21st century—are also known as Generation Y, or simply Gen Y, because they follow on the heels of Generation X. Whatever you call them, they now comprise the entire 18- to 32-year-old young professional demographic.

This group is easily the most important marketing concern to come along in decades, and by 2017 their spending is expected to surpass that of the boomers. As Jason Dorsey, The Gen Y Guy® speaker and consultant, points out concerning his generation, “We are the opportunity!”

Shrouded by the current recession, the sheer numbers and potential marketing clout of this generation have gone largely unnoticed. With the lack of jobs hampering their career development, their spending has been suppressed. Many have been forced to delay establishing their own households and starting their families.

As the economy recovers and these young people enter the wealth accumulation phase of their lives, the buying power of this generation will be set to surge. Like an elephant veiled with an invisibility cloak, they have managed to tiptoe into the room almost unseen. Marketers who have failed to take notice and peek under that cloak won’t even know what hit them when this enormous group of creative, educated, tech-savvy young people comes into its own.

With the economy slow to yield jobs, this ambitious generation has decided to create their own. It’s almost the perfect storm: a huge generation of creative and independent thinkers coming of age during a prolonged recession that has stubbornly refused to yield jobs.

Some of America’s largest and most enduring companies have been started during weak economic times. Names such as GE, GM, IBM, CNN, Disney, Microsoft and Apple, are easily recognized around the world, with many needing only their initials to be instantly identified. But a 2009 Kauffman report, titled “The Economic Future Just Happened,” revealed some even more astounding discoveries: In 2008, almost half of the Inc. list of America’s fastest growing companies, and in 2009 over half of the Fortune 500 companies, were started during a recession or bear market. If those lists are any indicator, think of the possibilities this Great Recession holds! And here’s another interesting tidbit: This study also found that jobs created from startup companies tend to be less volatile and less sensitive to economic downturns than jobs in the overall economy.


Gen Y Social Media Gen Y Technology

Entrepreneurs tend to emerge more from the ranks of the young than from those who are older, and with good reason. There’s all that vim and vigor of youth. They typically don’t have much wealth, and many haven’t yet started their families. That means most of them don’t have much to lose, and even if they do, so what? They have the rest of their lives ahead of them.

Generation Y’s streak of entrepreneurial tendencies runs even wider and deeper than that of previous generations. The relative peace and prosperity of the economic times in which they were raised has allowed education and technology to flourish. Rather than their parents having to struggle to survive, as was the case for several of the previous generations, Gen Y has been raised in households that, by and large, have been afforded the opportunity to thrive.

So how has Gen Y been generating its own employment? Freelancing or contract work has appealed to some, allowing them to be in control of their own work schedule. Gen Yers have also started new businesses at a much higher rate than that of any previous generation. And why not? Their entrepreneurial tendencies are strong, and with brains in their heads and their parents still paying for the shoes on their feet, they have the confidence to strike out on their own.

The Appeal of Direct Selling to Gen Y

Direct selling offers possibly the most attractive avenue for those with the initiative and independent streak to be in business for themselves—and for those who desire to fit their work around their lifestyle. With the proven products, training programs and built-in support systems that direct selling companies typically provide, distributors can be in charge of their own success without having to create the whole enchilada themselves.

It’s a business model that seems tailor-made for Generation Y. Socially connected to a degree that no previous generation has been, these young people are already masters at networking. Plus, direct selling’s low entry cost allows those who are long on drive but short on capital to quickly get started. And they do like quick!

Dorsey points out the advantages to direct selling companies of recruiting this young generation. He says, “Our lifetime value in direct selling exceeds all the other generations. Not just because we’re spending more and we’re going through these life changes, but if we’re in our mid-20s we might work in direct selling for 30, 40 or more years. So this really is the right time to reach us, and that’s what’s so powerful.”

In fact, Dorsey believes strongly that Gen Y is the key to growth for direct selling companies. He says, “If you have a direct selling company in the U.S., and you’re not growing quickly, it means you’re not engaging Gen Y!” That’s a powerful directive for direct selling companies.

So how should companies go about targeting Gen Y? Dorsey and his colleagues at the Center for Generational Kinetics found the most reliable predictor for a person’s behavior and preferences to be that of his or her generation of birth. Each generation buys differently, communicates differently, is motivated differently, and is in a different life stage. You need to speak the language of the generation you’re trying to reach and go where they live, which for Gen Y is online. If you fail to adjust your sales and marketing approach to match the generation you’re trying to reach, it can be worse than ineffective; it can be a complete turnoff.

Segmenting by generations provides the starting point when you’re targeting a particular market. From there, several refinements need to be made, with one of the most strategic being that of geographical region. Behavioral norms and preferences are different in different parts of the country, as well as in different countries around the world.

Another key consideration is that of culture. Not only is the United States becoming a multicultural nation, but Gen Y is even more diverse than previous generations. The Hispanic population in particular is growing in importance, so much so that according to a CRMTrends.com report, the United States is now the third-largest Spanish-speaking country in the world.

Social media has also proven to be a real boon to companies’ marketing efforts, particularly when used in conjunction with generational profiles. While the profiles allow companies to zoom in on a particular generation, social media goes a step further, helping them zero in with great accuracy on their specific audience. Companies can create highly targeted messages and present them in the most effective form of media. They can now reach their intended markets with much greater accuracy and with a message that fits, essentially turbo-charging their marketing efforts. Not only can they get their message in the right ballpark, but now they’re also afforded more turns at bat.


 

What Defines a Generation and Why Does It Matter?

Unique events and experiences, along with the economic and political climate in which they occur, help shape the values and mindset of each generation. They may view and respond to the same situation differently, depending on their frame of reference. They also influence one another in various ways, as parents and grandparents raise their offspring and as the generations work together.

With as many as five generations now in the workplace, their differences can cause friction. More important, however, are the unprecedented opportunities and synergies that can be had when the generations successfully integrate. Understanding where each is coming from can help businesses and organizations tap into the knowledge and strengths that each has to offer and create an environment where all can thrive.

In the family sense, a new generation occurs with the birth of one’s first child. The parents are one generation, and their offspring are the next. In the cultural sense, a generation is a group of people born in the same date range. The cutoff points on the dates that separate one generation from the next tend to occur unevenly, usually as big events in history unfold. Any one person born within five years of an end point may well identify more with the other generation than that of his or her birth year.

Recent generations have experienced change at a heretofore unparalleled rate. For centuries, humans around the world depended on animals, such as horses, oxen, camels or llamas, to power their transport and carry their loads. Industrialization changed everything, bringing about increased mobility and unheard of advances in the methods of communication. Those born in the late 1800s or early 1900s went from horse and buggy days to witnessing men walk on the moon while they watched on their television sets.

These enormous social and economic changes have created profound differences in the experiences and lifestyles of the generations living today. At family gatherings, it’s not all that unusual to find great-grandparents who did their homework by the light of a kerosene lamp, college students returning home from study-abroad programs, and toddlers running around carrying their own iPads!

 


Engaging Gen Y

As Dorsey points out, if direct selling companies wish to grow quickly, they need to engage Gen Y. With technology being their native language, social media is second nature to this generation and provides a great way to keep not only them but the entire company engaged as well. Here’s a look at a few of the ways successful companies are using social media.

Creating a Worldwide Community

Social media plays a key role in keeping global companies connected, particularly for 4Life Research, which has offices in 22 countries around the world. As 4Life Vice President of Marketing Jason Gough says, “We make a concerted effort to focus on social media as a primary communications channel. We tailor our content to fit social media formats for readability, length, energy and viral quality.”

4Life also knows that keeping its distributors connected to one another contributes to the energy of the company, something which helps keep Gen Y actively engaged as well. As an example of the extraordinary level of engagement that technology allows, 4Life’s recent photo contest drew thousands of entries from distributors in 20 countries. “From the plains of Mongolia to the Andes in South America, 4Life distributors sent pictures of themselves with 4Life products in their communities and staged shots against exotic backgrounds,” explains 4Life Vice President of Communications Calvin Jolley. “The contest was a great success because we discovered a way for distributors to interact with us through the universal language of imagery. And as the photos came in, we were there to engage in the conversations they sparked.” By bringing together distributors and company executives alike, their contest not only engaged but also enhanced the entire company’s sense of community.

Networking

The ultimate networking tool, social media amplifies what direct selling companies do best—network. And since Gen Yers are already adept at networking, using social media for business purposes suits them perfectly.

Facebook has provided a natural outlet for Gigi Hill, a direct selling company that launched publicly in 2009. With a target market of busy women, the company’s executives are able to spread their enthusiasm for the fashionable and functional handbags and totes they sell. And spread it has, with Gigi Hill Co-Founder and CEO Gabrielle DeSantis-Cummings reporting a growth rate topping 100 percent in each of the past two years.

Creating Loyalty

Scentsy is a direct selling company that has enjoyed rapid growth. Social media allows them to engage all levels within the company and to create loyalty. As Scentsy Chief Marketing Officer Cory Pugh explains, “Scentsy uses social media to create fun and exciting online engagements for our consultants and customers. Using social media as a platform to engage our fans with promotions like Bring Back My Bar—which allows consultants and customers to vote on which retired Scentsy fragrances should be brought back for one month—also creates loyalty to Scentsy because it provides an opportunity to influence the brand in a meaningful way.”

In the grand scheme of things, it’s quite likely that the development of social media is still in its infancy. Gen Y may lead the charge in its use, but entire companies stand to reap the rewards—and not just from social media, but also from the enormous contributions that Generation Y will continue to bring to the table as the future unfolds.


Special thanks to Dr. Paul S. Busch, Texas A&M University System Regents Professor and Professor of Marketing in the Mays Business School at Texas A&M University, for his counsel in regard to this article.