With rent in the U.S. at an all-time high and interest rates remaining at an all-time low, the best way for Millennials to avoid paying 30 percent or more of their monthly income on rent is to become homeowners. In June 2015 first-time homebuyers accounted for 32 percent of purchases, the highest numbers since September 2012. In fact, UBS Analyst Susan Maklari said, “We believe the Housing Market is transitioning to more volume based growth, driven by the re-emergence of entry level.” As these emerging homeowners are also in their child-bearing years, they are looking for homes with more space than the typical urban dwelling. And pointing to more stability in this demographic, the national unemployment rate for adults ages 18 to 34 declined to 7.7 percent in the first quarter of 2015.
All signs point to “yes”: Millennials are perfectly positioned to start becoming homeowners and this is why building materials marketers have to get smart and consider new ways to reach this group.
Who Is the Emerging Homeowner?
The emerging homeowner is part of what is often referred to as the Internet Generation, the iGeneration, Google Generation, Echo Boomers, Trophy Generation, Trophy Kids, the Boomlet, Nexters, Generation Y, the Nintendo Generation, the Digital Generation, or most commonly, Millennials.
This group ranges in age from around 18 to 35 and are slated to outsize the Baby Boomer generation and become the largest living generation with population projections up to 75 million in 2015. According to research by Youbrand, Millennials are estimated to have a combined global spending power of $2.35 trillion but they are more likely saddled with debt and therefore tend to be more fiscally conservative than their parents.
Albeit similar to Boomers by population standards, Millennials’ defining character traits are vastly different from their parents. Millennials are characterized as inclusive, hopeful, confident, open-minded, influential, technologically advanced, community-minded, achievement-oriented, sociable, optimistic, talented, highly educated, collaborative, motivated and resourceful.
They have always felt preferred, needed and important. After all, their parents have been telling them that their entire lives. By-products of their Boomer parents’ child-rearing styles, “You are special” was the mantra of Millennials’ youth. Since childbirth, they have been taught to be interdependent and to “start achieving now!” They’ve grown up participating in a variety of pursuits like sports, clubs and extracurricular activities. It seems as if they’ve been multitasking and overachieving since the moment they came out of the womb.
They are the first generation to grow up with the Internet and other forms of digital media. Their generational personality is shaped by their experiences, relevant societal trends and national events. Their world revolves around a strong focus on family, including advocacy by their parents and elevated divorce rates—plus busy and over-planned lives, multiculturalism, globalism, youth participation in street gangs, hate groups, violence, school shootings and, of course, terrorism.
Finally, this group is diverse. An indicator of America’s changing makeup, one in four American counties have passed or are approaching the tipping point where black, Hispanic and Asian children constitute the majority of the under-20 population.
The Millennials demographic covers an age span of 20 years and includes consumers in their late 20s and early 30s with money to spend. The older segment of this demographic falls into the first-time homebuyer category and are prime targets for both new and existing home sales, and for home remodeling and renovation projects. While the economic downturn in 2009 caused Millennials to delay marriage, families and homeownership, as the economy continues to show signs of strength this generation has begun pursuing these pieces of the American dream once again.
Contrary to common misconceptions that Millennials have abandoned all traditional paths in life, 73 percent of Millennials are employed, 28 percent are married, 37 percent own a home and 38 percent have kids. Surprisingly, 48 percent said they would be able to function without their smartphones and 44 percent say they are loyal to the brands they buy, while 52 percent will choose quality over price, according to IRI.
Millennials’ Intricate Relationship with Technology
For many Millennials, technology is just as important as food and water. They’ve grown up watching cartoons on an iPad or on the Internet, playing video games on the latest Wii, Playstation and X-Box. They comfortably surf the Web with lighting speed, stream music, message each other on Facebook, and text instead of dialing their friends’ 10 digits. Most don’t even know their friends’ numbers—all numbers are programmed and speed dialed for easy access—so what’s the point of memorizing them?
In middle and high school they had cell phones and social media; in college they emailed assignments and completed online courses. In the working world, they email and use social networking tools like Facebook and LinkedIn instead of picking up the phone. You won’t catch them reading a printed newspaper—they read all of their news online. To them, blogs are a news source. And business meetings, well, they prefer the virtual ones.
They surf the Web for everything. They blog. They pay their bills and balance their checkbooks online. Most don’t even use a phone book. They have the latest iPhones and Androids, and most, if not all, own or have access to a computer and/or a phone with high speed Internet. They prefer flat screen high-definition TVs and stream Netflix or Hulu. To them the landline phone went extinct years ago.
Even when it comes to home buying, Millennials rely heavily on technology. Decisions are made from in-depth research on multiple platforms where they can investigate price, quality and past consumers’ experiences with certain products. Websites like Trulia or Zillow can help them explore properties in a preferred area to determine school quality, crime rates and walkability. They are also able to compare the cost of the surrounding homes in the neighborhood.
Once a house is selected, they are able to research specific projects and products that would be involved in order to estimate costs. They use websites like Buildeffective.com to design the space using exact product models with pricing information included. Then, online platforms like HomeAdvisor.com can be used to select a contractor for the job.
Millennials’ entire process takes place online and building product manufacturers must keep this in mind if they want to reach this generation.
How to Market to Millennials
Not only are Millennials large and influential, but they are also disjointed and difficult to reach. Media conduits like blogs, social media, smart phones and tablets are making it increasingly difficult to pinpoint exactly how to target this highly elusive group.
As a company operating in the 21st century, it’s essential to your success to reach out to this group where they engage with businesses—via the Web and other social networking channels. If you’re a company selling a product or service and you’re not online, you can forget about marketing and selling to this generation.
What you should do is adapt your business process for community-based networks that enhance their online experiences, and allows for peer validation and for greater choice in customizing products and services.
Say goodbye to traditional marketing measurement, like the quantity of clips you receive or the number of advertisements you run. With social media and Millennial marketing, it’s not about the output of your efforts but about the engagement with your customers. Think conversation and relationship-building versus hits. Are your consumers reading your blog site, are they commenting and interacting on your website, clicking onto multiple web pages to read comparative information and engaging in conversations with your company?
Since social media is new for some, think measurable outcomes. If you’re only looking to start a blog because someone told you it was a good idea, then you will create a monologue but not a dialogue. Begin with an outcome that you clearly define, create a benchmark and measure against it. It’s all about appealing to consumers, having a discussion and most importantly, listening and responding to what your Millennial customers have to say. This stems directly from Millennials’ close relationship with technology and their constant need for stimulation.
They are a diverse group that craves specialization and are willing to remain loyal to brands if they feel they are being engaged. Crowd Twist found that if Millennials don’t find a form of brand engagement meaningful they will be much less likely to stay active. On the other hand, Crowd Twist also reports that Millennials desire discounts and like to be rewarded for normal daily tasks.
Develop a marketing strategy around your social media campaign. Are your goals to improve your reputation, decrease negativity, increase sales, etc.? Start with the goal in mind, not the tool, and work your campaign around it. Otherwise, social media is just a waste of your time. All social media marketing platforms are not right for every company. Select which ones work best for your brand, depending on your objectives, or try them all and analyze which work in your favor.
In addition, because Millennials conduct exhaustive research prior to making a purchasing decision, provide Millennials with an abundance of information and enrich the interactive customer-buying experience. Encourage online sharing and comparative information.
Also of note, this group responds to humor, irony and direct messages. Limit the fluff and focus on value, convenience and accessibility. Millennials do not respond well to irrelevant messages, so make sure your marketing speaks to them in a language they understand.
Flash, dazzle and entertain them without slowing them down. Offer loyalty incentives and free offers through contests and promotions to entice this crowd. They are a generation of upgraders, so stay on top of technological advances in the marketplace. Consider personal web portals for them on your site and provide web-based support and live online chats to provide additional information and enhanced customer service options. Provide the most information and tools you possibly can.
Millennials’ Emerging Influence in the Home Environment
Millennials are young adults. They are getting married and having children. For those of us in the home and building products marketplace, how and where Millennials choose to live and raise their families will be the single most significant factor in shaping the nation’s housing industry over the next 20 years.
Millennials’ technology-obsessed lifestyles and sociable, open-minded and inclusive characteristics seem to point them in the direction of a community-oriented, virtual lifestyle. Relationships are vital to them; they love to connect with friends (evident in their infatuation with social networking) and their participation in volunteer organizations from their time in high school and college continues into their adult years.
As a generation, this group actually ”likes” their parents and also wants to mirror a family life and setting like they had growing up, yet that doesn’t mean they want to reside in the same type of living spaces. As they begin to “settle down,” have families and purchase their own living spaces, some seem to shy away from the urban condominiums, lofts and apartments of their single counterparts, instead moving toward suburban areas with a specific focus on family, community and civic engagement.
Millennials are not only reaching the home-buying age, they are also reaching the age when they are old enough to have input and work in the home-building field so they can influence the trends. The Responsive Home Project was created by Millennials for Millennials and they take a look into the traits that Millennials look for in homes. Space was four times more preferred than the densely populated community. This does not mean Millennials are looking for an excess of space; it is however, a nod to yet another misconception that Millennials are only interested in urban living when in fact they are just concerned with functional living space for each stage of life.
Why Millennials are Important to Building Product Manufacturers
As a business owner or marketer in the home and building products channel, why should you reach out to this group? Simply stated, they will be the driving force of your immediate and future business success.
Although we see trends where Millennials are living at home or that Millennials are renting more than buying, this massive generation cannot be ignored. This generation represents 32 percent of homebuyers, according to the National Association of Realtors. They also outnumber both the Gen Xers and the Baby Boomers, making them THE most influential group of consumers.
Based on size alone, this generation cannot be ignored. In addition, building product manufacturers cannot discount Millennials’ love for excitement, community and passion for adopting the latest trends.
More importantly, this influential group is entering the perfect time to become homebuyers. The low interest rates and high rents are a dream combination for turning renters into buyers. At the same time, the majority of Millennials are in the child-bearing stage of life and are actually looking to purchase more space where their families can grow.
While the financial crisis shaped this group’s buying behavior so that they are more cautious with their money, this does not change the fact that they have billions to spend. Building material manufacturers have to step outside of their traditional, comfortable marketing strategies and instead focus on more unique and creative digital campaigns and tactics in order to tap into the wealth that this generation has to offer.