It is the time of handing over the baton from one generation to another. The Baby boomers, the most influential generation in history so far, is retiring from active economic life and receding into the background. According to Goldman Sachs, the largest generation today are the Millennials, with 92 million people.
Millennials are growing up and focusing on entering the workforce at a time of major technological change, economic disruption at home and globalization at an unprecedented rate. According to the U.S. Bureau of Labor Statistics, Millennials will comprise 75% of the country’s workforce by 2030. Millennial expert Crystal Kadakia said, “People who have been there forever, left to their own devices, are rarely in the best position to design the future. It’s those who consciously listen to the constituents of the future who can understand which direction to move in.”
Many major industries have had to re-think their marketing strategies because of the total break the Millennials are taking from the way earlier generations lived their lives. Millennials are the first generation to grow up with technology, and their intimate bond with technology is affecting the way they function day-to-day. They are in the habit of spending 18 hours per day using some sort of digital media. Furthermore, 90% of teenagers are heavily into social media, up from 12% in 2005, according to studies by Pew Research Center. Millennials use their smartphones to compare prices of products and services in real time, even as they look up information on products and scan peer reviews to check if the product is what they are looking for.
In parallel behavior, Millennials are influencing significant change in the way the insurance industry sells its products. For instance, having been swamped by advertisements from childhood, Millennials, are skeptical of advertisements, particularly because it is one-way communication and does not include conversation. They are more inclined to believe the opinion of someone they trust, like family, friends or social media connections. At the same time they tend to be disengaged with insurers, and are not into forming long-term relationships with insurance representatives, let alone recommend the company to friends and family. This was something earlier generations engaged in with enthusiasm.
Insurance companies, thus, have to engage with potential Millennial customers in ways different to what they have done all these years. A Gallup study found significant trends of how Millennials look at insurance. Building strong relationships with Baby Boomers and Generation X helps insurance companies to initiate a relationship with Millennials because they will go with whoever family recommends. They have stronger inclination toward family recommendation more than their parents’ generation did.
On the other hand, as a generation that turns to the Internet for confirmation and reassurance, Millennials are twice as likely as previous generations, to purchase insurance policies online. Large insurance companies have launched mobile and Alexa apps to get through to millennials’ who have smartphones and tablets as their purchasing motivators.
Many Millennials are delaying buying houses and are living with their parents, or are renting. A significant reason for this trend is overwhelming student debt. Nevertheless, with homeownership on the decline, the demand for home insurance is stagnant as well. However, renter’s insurance has seen a rise in recent years. According to renters’ insurance expert, Brian Richards, the rise in demand for renters’ insurance is because of decline in homeownership due to delayed marriage, college enrollment and shifts in labor force participation. Reduction in buying houses, though, does not mean there is a decline in demand for insuring the content of houses. And insurance companies are alert to that fact. Also, as insurance companies observe, millennial preoccupation in good jobs has fueled demand for income insurance providers.
Insurance companies, studying the behavior of Millennials have realized the need for different kinds of insurance which were not needed by their parents’ generation. For instance, many Millennials are not into buying a car or driving – which marked the rite of passage in their parents’ generation. Today, with increased cost of car insurance and the cost of buying a car, many Millennials are delaying buying cars or have simply decided not to buy at all. They use mobility services like Uber and Lyft, and when going out with friends in the evening, use ridesharing services 70% of the time. Therefore, insurance companies have launched products like rideshare insurance, which provides coverage for people who decide to offset the cost of owning a car by using their vehicle to transport passengers. There is also bike insurance and pay-as-you-go car coverage to suit different millennial needs.
The insurance industry, worth over $1.2 trillion dollars is undeniably one of the most lucrative businesses in the world. However, dealing with the millennial generation is posing a lot of challenges. Some companies are still continuing with the strategies of an age gone by, such as telemarking, and direct mail to potential customers. These gestures leave Millennials cold. On the other hand, there are smart companies who have understood the millennial psyche and have begun marketing not products, but lifestyles. They have rightly understood that millennials value experience more than material things. They want to travel and see the world and be able to use products without the hassle of ownership. Thus, the insurance industry is gradually coming to terms it has to provide, not tried and tested products like homeowners’ and auto insurance, but the kind of product that the current generation wants, with their tech-driven mindset. And along with customized products, Millennials demand exceptional customer service. So, “delighting” the customer has become the pivotal concept twirling the insurance and other industries around the marketing landscape.
As Crystal Kadakia said, “We thrive when we are pulled by the future, not pushed by the past.”