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[26 comments]

Millennials depend on word-of-mouth more than Boomers

January 21, 2014

A recently released study from Radius Global Marketing Research identifies some key similarities and differences in shopping habits, preferences, and influences among Millennials (18-32) and Baby Boomers (49-67). One of the key differences pertains the top sources of information that influence purchase decisions. Millennials appear to be more influenced by word-of-mouth (WOM) than Baby Boomers, while the latter are more reliant on advertising than the younger generation.

The survey asked respondents which sources of information are influential to them across four product categories - apparel, packaged goods, financial products, and big-ticket purchases (such as travel and electronics). WOM emerged as the leading purchase influencer (top-two box score) in each category among Millennials, with search engines also among the top three for each category.

Among Boomers, WOM is the top influencer for financial products and big-ticket purchases, but was only third for packaged goods purchases, and fell out of the top three for apparel decisions. Interestingly, though, Boomers ranked advertising among the top three influencers in each category, giving it top billing for packaged goods decisions.

The data is based on an online survey conducted in the summer of 2013 among a nationally representative sample of 738 respondents.

The strength of WOM isn't too surprising, given research released last year by Nielsen finding that recommendations are the most-trusted and most-influential information sources among global consumers. Asked to what extent do you trust the following forms of advertising, Recommendations From People I Know rated 84 percent in the Nielsen survey, followed by Branded Websites, 69 percent; Consumer Opinions Posted Online, 68 percent; Editorial Content Such As Newspaper Articles, 67 percent and Ads On TV, 62 percent.

Discussion Questions:

Do you expect Millennials will continue to rely more on word-of-mouth recommendations as a purchase influencer over advertising as they age? If so, what's driving the greater trust in WOM and what does that mean, in practical terms, for marketers?

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Instant Poll:

What's the likelihood that Millennials will rely more on word-of-mouth recommendations as a purchase influencer over advertising as they age versus Boomers at the same ages?

Comments:

I do expect that WOM will continue to be the major influencer for Millennials even as they age. They are rooted in the use of social media and texting as a strong form of communication and once those are ingrained they will likely stay that way.

Retailers will have to be very creative in their use of online communications and ads and definitely need to provide positive shopping experiences in-store that can be passed as news by WOM.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

It seems to me that Millennials are just a more social generation, based on my limited observations. They seem to rely on each other for everything. I was recently at a Quiznos where several college aged kids were dining together. A new arrival asked, in all seriousness, "What do you recommend?" Really? I imagine this behavior will continue for this generation as they age.

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Al McClain, CEO, Founder, RetailWire.com

As stated in my 2002 bestseller "Employing Generation Why: Understanding, Managing, and Motivating Your New Workforce," this enigmatic cohort has grown up in a world of deception and trickery and have been lied-to, conned, exploited, and manipulated more than any generation in history. As a direct result, they are entering the workforce -- and the marketplace -- with giant B.S. detectors glued to their foreheads.

Millennials love the humor and entertainment value in advertising, but they don't trust marketers to tell them the truth about their products. Although they discover items that they think are cool, they rely on the interconnectivity of their social networks to get the facts on what works, what things cost, who stands behind their products, what products are good for the planet, etc.

You can manipulate and cheat a Millennial into making a bad buying decision, but only once. From that point on, word will spread like wildfire and your brand will take a hit that it may never recover from.

Remember what happened to Kryptonite locks, Circuit City, etc.

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Eric Chester, Keynote Speaker, Author, Reviving Work Ethic, LLC

In a word, 'yes', given the omnipresent connection tools people have at their fingertips, they will rely more and more on WOM.

If this WOM category interests you like it does me, I recommend two books from one of the marketing companies pioneering the development of WOM strategies. The agency is Brains On Fire and they've put out two books: "Brains On Fire: igniting powerful, sustainable word of mouth movements; and the more recent: "The Passion Conversation." Brilliant stuff IMHO.

The awakening for me is that WOM marketing can be an actual strategy.

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Ian Percy, President, The Ian Percy Corporation

Not only will Millennials continue to rely on WOM, this is also going to continue to strengthen across all product lines and all age groups. Why? 1. Because it is the most trusted. 2. Because other methods of advertising are becoming too unbelievable. They seem to be just hype.

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Mel Kleiman, President, Humetrics

Boomers had mass media, Millennials have social networks.

The difference between one-to-many broadcast communication and narrow cast peer review is significant, so it's no surprise that Millennials differ from their parents and grandparents with respect to sourcing information.

It is unlikely that Millennials will start abandoning WOM for advertising, but I think you will start seeing resource-constrained Boomers turning off advertising in favor of peer endorsements.

I'm not sure anyone really trusts WOM but they increasingly know better than to trust traditional advertising.

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Ryan Mathews, Founder, ceo, Black Monk Consulting

It's become a cliche to describe Millennials as "tribal," but there is some truth to it based on their consumer behavior patterns. The most obvious sign that word-of-mouth matters is the importance of social networking and review sites as tools to spread opinions to a broad audience. Some marketers have clearly done a better job than others -- either using Facebook and Twitter as "new media" ad tools, or exploiting customer reviews on sites like Yelp and TripAdvisor.

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Dick Seesel, Principal, Retailing In Focus LLC

Yes, I do expect Millennials to grow up continuing to leverage WOM since they were literally born with that capability not in their "mouths" but in their hands. Although we may call social chatter WOM, I think we need to separate this trend. True verbal communication via the mouth is actually going away. However, that's a whole other topic to tackle.

Millennials "follow" those influencers whom command the following by credible WOM (or "Word By Mobile", WBM) history. The "haul" videos are great examples.

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Ralph Jacobson, Global Consumer Products Industry Marketing Executive, IBM

Word of Mouth (WOM) is the winning influence among Millennials as it symbolizes an antidote to being told what to want and desire and buy. It's a question of trust (lack thereof) in mainstream media and advertising. Yes, I expect it to continue to drive purchase decision for Millennials as they age. I expect WOM to dominate irrespective of the age group and gain salience even in the traditional milieu of ad-driven business of packaged goods.

For marketers, these results point to a future of making advertising feel more like WOM and with more Millennials taking leadership roles in ad agencies, that industry will transform in how it creates and communicates "the message" with greater sense of authenticity and transparency.

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Mohamed Amer, Vice President, Global Integrated Retail Unit, SAP

Word of mouth that comes from online peer reviews is what Millennials are used to. It's part of their culture. Just read the stats and facts around acceptance of WOM over traditional advertising. So it stands to reason that Millennials not only rely on, they also accept WOM more than others.

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Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Millennials distrust advertising that sends one message to many from the company's perspective. As a result, they want to know what others think, what others' experiences have been, and what others recommend. Until or unless advertising changes to reclaim lost trust, Millennials will continue to rely more heavily on what others say and recommend.

What this means for marketers is that trying to identify loyal consumers and encouraging them to recommend their products will be more effective than advertising for this generation.

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Camille P. Schuster, Ph.D., President, Global Collaborations, Inc.

I think this survey is flawed. It really depends on the definition of WOM, search engines, online shopping sites and advertising. Online shopping sites have advertising. WOM includes everything from social chatter to listening to grandma talk about what she puts in her yummy Christmas cookies.

I think it's also flawed to assume all "baby boomers" are the same. This is a huge age group with some 49 year olds who are very technically savvy and some 60 year olds who have never sat behind a computer. Granted this survey was online, but still, the difference in knowledge for this "baby boomer" generation is extremely wide.

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Janet Dorenkott, VP & Co-owner, Relational Solutions, Inc.

These findings are very similar to my research comparing older Millennials (Mature Millennials - MM) with older Baby Boomers (Mature Baby Boomers - MBB).

My results of social media sites influence (agree/strongly agree) on these cohorts are as follows:

MBB (%) MM (%)
A good resource for researching products 22% 55%
A good resource for researching food retailers 21% 47%
A good resource for researching restaurants 30% 59%
Positive comment from a social media friend more likely to buy/visit 52% 76%
Negative comment from a social media friend less likely to buy/visit 49% 74%

Source: "Mature Millennials v Mature Baby Boomers: Foodservice Attitudes and Behaviors -
Similarities, Differences, Opportunities." International Foodservice Distributors Association, September 2011.

I do not see any real change in the behavior of Millennials. As "digital natives," social media is their equivalent to the digital backyard fence; once favored by former generations to get and give the scoop. This is a new communications' world with new paradigms. Everyone goes back to zero.

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Richard J. George, Ph.D., Professor of Food Marketing, Haub School of Business, Saint Joseph's University

I think that Millennials are increasingly looking for customized, personal experiences when shopping and WOM is the most customized and personal way to receive a recommendation. While WOM is highly prevalent via Facebook, social media and other avenues, I imagine that as social habits change as these Millennials age, so too will their shopping habits. I think what we will see is a continued integration of WOM and traditional search engine marketing to find a happy balance between the two avenues.

For example, Bing has started to join Facebook search results with Bing search results to merge SEO with WOM via social platforms. If this can be perfected, then we will not be faced with a choice, but rather can have both options equally optimized for consumers.

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Jesse Karp, Omnichannel Consulting Manager & Loyalty Practice Lead, Cognizant Business Consulting

Word of Mouth's importance has ALWAYS been critical. The only difference is access to the insights, opinions, experiences, etc. of others. The shopper of yesteryear relied on asking their Mom for advice, then the schools provided some of that for some products (health classes recommended hygiene and grooming products), Dr. recommendations were trusted, and the butcher, fish peddler, green grocer, etc. provided recommendations.

It is only when those options are less available that the information sought was the typical advertising (unidirectional, biased, product-focused, etc.). Even then, the best ads used either experts (4 out of 5 Dentists...) or attempted to place the viewer/reader/ad-recipient into a situation that uses the product in an easily relatable scenario (so, it is like a friend or social network/contact suggested it).

Mastering Word of Mouth is appropriate and should not be discounted -- I just don't think it was ever less important. The immediacy of internet, texting, websites, etc. just allows questions and recommendations to be shared more quickly while more and more stores have reduced or removed the helpful clerk or expert that previously provided the recommendations to the shopper.

Many of the subscribers of this site can recall the phrase, "Never trust anyone over 30." The reliance on peers for direction is not a new phenomena at all.

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David Zahn, Owner, ZAHN Consulting, LLC

"What's driving the greater trust in WOM and what does that mean, in practical terms, for marketers?"

Falling trust in corporate messaging/advertising.

And the practical impacts?
1. Reduced ability to drive sales by hyping less than par products and services.
2. Summary execution of products that catch a bad rap on digital WOM media -- whether said bad rap is justified or not.

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Ben Ball, Senior Vice President, Dechert-Hampe

Young people (even the young boomers of antiquity) have almost always relied on WOM for insight and for their friends' approval. They have looked to their peer group for social cues about what's trendy and what's not, what works and what does not, what's "worth it" and what has lesser value to buy. This simply changes as people age and set their own limits, chart their own life course, and recognize that their own priorities and budgets may be very different from others even in their circle.

Social media and the internet have changed a great deal about marketing and daily living. I doubt that basic human nature has changed in a generation, though.

'Liatt'

Looking at the survey results, truthfully, some of the responses speak to the immaturity of the Millennials. Do I think they will continue to rely on WOM as they age? More than we boomers, for sure.

But let's think like the survey respondent. When I dash out to the grocery store to shop for my family, am I going to ask my friends where the deals are today and what's on special? No, I'm going to check my app for deals on those things I purchase most often at the store I am headed for. Or something along those lines.

We boomers may refer to that as advertising, Millennials will likely call that site information, search engine, whatever. You say Toe-may-toe.

Now, let's look at making a big ticket purchase? Yep, Millennials will likely ask their friends. Surveys, on the other hand, are indicating that the rest of us tend to prefer the reviews of strangers. Will this change for Millennials? Very likely. As they mature, they will learn how to prioritize their requirements better and will seek out reviews that address each of the requirements that matter to them.

So what does this mean to marketers? What it has always meant. You have to skate to where the puck is going to be. Know your audience, observe how they make buying decisions, lord knows we have enough data for that, and give them the information where, when and how they want it. Easy peasy! Ha!

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

I would not only expect Millennials to continue to rely on WOM to influence their purchase behavior, but expect also that WOM will become more influential among neighboring demographic groups including Baby Boomers.

It is nearly time to transcend the discussion of Millennials and just acknowledge that the US is composed of a population of 100 million persons minimum that rely on digital research, WOM and recommendations from friends rather than advertising to make purchase decisions.

Advertising will not go away, but it will increasingly take on a role of awareness-building rather than purchase influencing. Watching the myriad of ads on television these days, many are populated with qualifications that deny the top line message or, at the least, would cause a prudent person to engage further research.

There is nothing like hearing a good report about a product from a trusted friend or colleague and the power of recommendation will trump advertising from marketers as a purchase trigger increasingly -- regardless of demographic group.

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Bill Hanifin, Managing Director, Hanifin Loyalty LLC

So 18 years olds behave differently than 67 year olds? Very, very interesting.
As with all of these cross generational surveys, I'm never very convinced they've separated age-related effects from generational ones, but I look forward to the follow-up survey in 2047.

'notcom'

The trust in WOM is based on personal experience with a product. Does it taste or perform to expectations? Compared to advertising ,which is more relevant to the individual? Social media has just made it easy to share opinions and the reasons behind them. In life and in marketing, personal connections matter.

For marketers, finding a new way to communicate that increases trust - Dove campaigns, "natural" lingerie models, well selected consumer experience stories, will be a start. Expect more interactive websites where you try glass frames or apparel or paint colors and furniture against personal photos and ways to share those through social media. Personalization in promotional and loyalty programs will be very important as these experiences are shared -- it's about value and trust for individual consumers -- then shared with those they know.

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Anne Bieler, Sr. Associate, Packaging and Technology Integrated Solutions

There isn't a greater trust in WOM...there always has been and always will be the greatest trust in WOM. What has changed is what qualifies as WOM. Originally WOM was truly word of mouth, typically from someone you know. Online testimonials, Yelp, web site reviews on companies, products etc. are much more readily used and available. The more marketers understand how powerful these WOM tools are to consumers making buying decisions, the more they will become a focus for companies marketing their products, programs and services.

The pitfall to this effective way to influence consumers will be as a result of less than ethical marketers who abuse, mislead, deceive and/or commit fraud and cheat consumers. Those of us who insist on the high road and adopt the under-promise, over-deliver philosophy are at risk of losing our voice through this vehicle by those who seek to take advantage and abuse these effective tools as a means to provide real life WOM information-testimonials to their existing and potential new consumers.

'ksiemers'

Time. Separation. Family formation.

The Millennial Generation will not morph into their parents -- the Boomer Generation and older Generation X, but they are still working to get to the onramp to adulthood.

As Millennial Generations move on to new neighborhoods, cities, and form new family units -- marriage and children -- communications patterns inevitably shift. In certain categories and industries, they will seek and accept advertising as the influencers of their purchase decisions.

This Generation "C" (Constantly Connected) is one of the most exciting to come along. They are positive in outlook, and believe that nothing can stop them. Having 5 or 6 years of frustration in terms of the job market hasn't dissipated their belief that the world is their oyster. We let them stay home with mom and dad, and hold them on the insurance program until they are 26.

Eventually they will cut loose. But they will be ready to wisely choose the media they want as an influencer -- Traditional, Promotional, Social, Online/Mobile -- that is only going to make marketer's jobs more challenging, as they will have to focus on a basic that is too often overlooked -- PROPER MEDIA ALLOCATION. The Millennial will use many and in some instances most of 30+ different media forms.

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Roger Saunders, Managing Director, Prosper Business Development

Most entertainment mediums I use in my own downtime are subscription based and to that end aren't rife with advertisements. I think the dominance of Netflix, Hulu, HBOGO, and the like are really more to blame than some sort of psychological aversion to being sold a product or even some social media fueled tribal instinct on my part.

Joseph Cox, ASM HCM, ASM

I think Ryan said it best: Millennials have social networks. This WOM resource is not fading and will only get stronger. Millennials will age along with the evolution of social networks. Where it is headed is anyone's guess at this point.

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John Karolefski, Editor in Chief, CPGmatters.com

WOM will continue as the major influencers for Millennials, but will evolve to the selection of particular opinion leaders as their experience teaches them the most trustworthy of their "friends."

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Mike Osorio, Senior VP Organizational Change Management, DFS Group

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