Its not all about digital for millennials

Image credit Pixabay/Alan9187 under cc0

YouGov and GT Nexus  have found that 60% of millennials have changed one of their favourite brands in the last 12 months. This is not a shock to many, but the reasons for changing might surprise some marketers and cause a rethink on budgets. The survey respondents numbered 1955 and were split between the US, France Germany and the UK. What is perhaps surprising is that there was little differences between the responses across each country.

France shows very little brand loyalty among millennials where 75% admit to changing brand. This is substantially different to the UK (55%) and Germany (54%). Surprisingly across Europe there was little difference between those aged between 18-24 and 25-34. The US data did not differentiate these aged groups.

The importance of quality in the supply chain

Image Credit 2016 (LinkedIN)
Guy Courtin, Vice President Industry & Solution Strategy, Retail and Fashion at GT Nexus

The top reason for respondents switching across the globe was product quality (49%). Only in the UK did availability of product sneak into top spot 41.11% to 40.99%. In all four countries these were the top two reasons for changing brand.

Guy Courtin, Vice President of Industry and Solutions Strategy at GT Nexus commented: “It’s no surprise to see a high percent of this demographic shifting brand loyalty frequently. But when we think of millennials we think of their attention being drawn to cool, edgy and flashy. These survey results paint a different picture. This describes a demographic that’s more concerned with what goes on behind the scenes of a brand, how they produce goods or operate, opposed to being drawn to flash and sizzle such as apps and website.“

To ensure product quality, companies need to invest in operational capability. GT Nexus will hope that this rebalances budgets towards things like the supply chain and logistics where its product sits. As Courtin added: “A number of recent high-profile product recalls have shown us how quickly quality issues can damage the reputation of a brand. But it’s alarming to see how readily Millennials turn on their favorite brands if the product isn’t on the shelf or available for delivery. This shows that the brand loyalty of Millennials lies heavily on the shoulders of the logistics and supply chain departments.”

The importance of CSR

The survey highlights that customer retention is reliant on three things, availability, quality and perhaps surprisingly CSR.  Millennials across each country surveyed cited the treatment and payment of workers (25.1%) and the environmental (20.8%) credentials of a company as a reason to switch loyalty. Unlike previous generations millennials have shown environment and workers rights are important to them. The only surprise here is that these are the third and fourth reasons for switching brand loyalty and not the top two. GT Nexus did provide some of the raw data to us but it was not enough to identify whether CSR would have been the number one reason. This is because the question allowed multiple responses.

There was no qualitative study carried out to support the survey. Therefore whether this is just about the workers within the company or the complete supply chain is not evidenced. If products are manufactured in sweat shop conditions in a third world country, millennials may well take exception. Courtin commented: “Millennials are sending a very clear message to their favorite brands here. If you don’t respect the workers creating your goods – either inside your organization or in your supply chains – we will turn on you. Same goes for the environment. Manufacturers and retailers should heed this warning and strive for fair, transparent and environmentally friendly supply chains. The apparel and footwear industry has met some challenges in this area and should be extra vigilant. Because it also happens to be a category in which millennials are most likely to switch their favorite brands, forty percent according to the survey.”

Is digital is dead?

The survey highlights that digital is not one the key reasons to move away from a brand. Digital; whether mobile, website or social media presence did not feature highly. Less than 10% of respondents cited that each of those three categories was a reason for switching brand.

With the emphasis on quality and availability GT Nexus therefore challenges marketers to consider rethinking budgets towards more operational matters. The justification for this is the survey revealing that logistics and product quality are critical for customer retention. However this is only half the story. None of the questions asked millennials the reasons for choosing the brand they switched to. One suspects that at this point their information feeds might well focus on digital platforms.

Conclusion

GT Nexus would prefer the focus of investment to be on their supply chain solution and Courtin has a point. Brands need to retain customer loyalty and this survey reveals that it is not all about digital. Courtin added “Companies are investing significantly in technology, but this begs the question if they’re spending in the right places. Most enterprise systems and supply chain technology investments still come up woefully short when it comes to helping companies orchestrate how they buy, make, ship and deliver their products.  It’s no longer a matter of just reducing costs. Supply chain excellence ties directly to the health of the brand.”

This was not a comprehensive study. It throws up more questions than answers about millennials despite the interesting findings. Millennials are obviously not wholly focused on the digital landscape. Like everyone else they want to their chosen product to be available at all times and to work. In that way perhaps there is little difference after all between the different generations in the population today.

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