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Understanding Generational Differences: Why More Data Should Mean More Value For Customers

  • Written by  Julie Smith and Alex Chang, Point B
Understanding Generational Differences: Why More Data Should Mean More Value For Customers

You have likely heard a lot about Millennials — roughly 80 million Americans ages 23 to 41 — and perhaps a bit less about Generation Z — roughly 70 million Americans ages 7 to 22. Chances are, though, you have heard from Gen Z more than you realize.

These younger generations are sharing vast amounts of information. Not surprisingly, they are actively engaged on social media sites and feeds. Up to 60% of Millennials on Twitter tweet every day, 96% of Gen Z teens are on YouTube, and almost 70% of Gen Z is on Instagram. As social media provides an opportunity for conversation, both generations share freely — photos, jokes, current events and their thoughts on a wide variety of topics, as they seek ways to connect and feel known, loved and respected. These younger generations say they feel more connected by virtue of participation and feel they are getting something in return.

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As many as 75% of Millennials and Gen Z are willing to share personal information in exchange for a personalized experience, according to research from CrowdTwist. Customized experiences are important to Millennials and Gen Z, so much so that the majority of participants surveyed are willing to provide brands with additional personal data.

Consumers are willing to provide information that goes much deeper than demographic data or even preferences; they are now willing to share locations, behavior and even facial “prints” in exchange for value. In fact, 49% of restaurant customers and 62% of hotel guests approve of the use of facial recognition technology, according to a recent Oracle consumer study. Up to 70% said that suggesting items based on past experienceswould improve their experience or that they would like to have this option.

But here’s the rub: consumers now expect something in return. They want to receive better, more personalized experiences, not just ads. The social contract-turned-commercial says that if I provide you with a better understanding of me, then I get better service, selection, curation or something in return. Gone are the days when companies marketed to this coveted demographic of consumers. Gone are the days where conversation with consumers is enough. Attention is not enough. Now, these savvy, younger consumers expect real value for sharing their information.

What does that mean for companies? How can you provide real value to consumers?

Sometimes this looks like customer product co-creation. Coca-Cola and Nike do a great job letting customers pick exactly what they want from a universe of options with the Coca-Cola Freestyle and NIKEiD. Betabrand, a largely e-cCommerce brand with a physical presence in San Francisco, takes a slightly different approach. Customers provide feedback to influence the product not just for themselves, but for everyone. In soliciting ideas for new products and product extensions, crowd-funding production of new concepts and voting on new design ideas, Betabrand makes the customer (member) feel part of the company. They have a direct influence on the products everyone can buy.

While customers may not require participation in your product creation, they do want you to consider their particular needs when developing your product selection. As Micah Solomon writes in Fortune, consumers “feel that they’re at the center of your world…all that matters to the customer is the customer and the people whom the customer cares about.” Customer data can be immensely powerful in helping your customer feel that your shopping experience is designed around them, and a lack of understanding can make them feel they don’t belong.

Imagine going to a store and finding nothing in your size. Old Navy recently introduced extended (plus) sizes in stores, meaning the chain now offers women’s clothing in 74 sizes and eight lengths. Understanding who shops at your stores, what they buy there, what they order online and even what they buy from your competitors enables you to provide the product array shoppers need to not just convert on a transaction, but to feel a sense of belonging with your brand.

Beyond products, customers are looking at curation and tailored service to know that you understand them. Nordstrom’s personal shoppers, and even many of their associates on the floor, get to know their customers — their needs, tastes and existing wardrobe — and can tailor not just the product set, but the experience. Is this a customer with limited time that wants to come into a full dressing room and try on as many items in an hour as possible? Or a customer that wants to walk the full floor and receive consultation as they select items? The Nordstrom customer knows the service will be tailored to their needs. On a related note, Nordstrom recently purchased MessageYes, presumably as a way to extend service to customers on the go.

What’s standing in the way? How can you create a sense of belonging?

Many companies are just starting to get their arms around customer data. They are starting to collect and stitch together transactional and demographic data to create a customer insights data platform. They are working to understand the individual consumer as they transverse the company’s channels and navigate through their direct marketing. Companies struggle with siloed data and organizations that are designed around channels or technology rather than customer behaviors.

The problem retailers are having isn’t just that their organization, data storage and analytical capabilities are siloed. It’s that the way they think about using the information is siloed too. For most retailers, the entire data and analytics struggle is built around the desire to drive another visit, a higher average transaction, or trial of a new channel.

What does the consumer get from this? Perhaps recommendations, but it’s hard for the consumer to see how they benefit, and quite easy to see the value to the company. This can feel one-sided to the consumer. What if consumer data and analytics were finding their way into operations, product development and design, assortment, buying and planning, or customer service? This would deliver real value and drive the behaviors that contribute to your bottom line. Consumers who encounter better service, experience an easier/faster interaction and see more relatable products will buy more.

Great! Let’s just provide better experiences and collect more data (and sell unicorns and rainbows). Sounds easy…but feels very hard. Creating this flywheel of customer data collection and delivering value is not easy, but you do not need to solve everything to get started. So where do you begin?

  1. Get out of your self-generated silos. Determine where your customers’ input, either one-on-one or in aggregate, can improve the customer experience (i.e. higher service, lower friction, speed, better products, etc.) and drive better business results (revenue, costs, etc.). As many as “43% of marketers agree that they are not lacking data; rather, they are missing the ability to transform data into real-time action,” according to the 2017 CMO Council Study.
  1. Determine what data would help you get there, and how that data directly affects the individual consumer experience, not just your bottom line. Can you draw a straight line from data collection to application from a consumer’s perspective? We all know consumers won’t give you their data just so you can make more money — what’s in it for them?

Neutrogena is doing just this. Earlier this year, the company revealed its new Skin Scanner. Using a combination of sensors, this iPhone add-on gives users a magnified image of their facial skin and syncs with the Skin360 app. The app will then show a person’s skin health over time and suggest how they can improve it using Neutrogena products. This is a clear example of how providing personal information provides distinct value to the consumer by identifying their unique needs.

  1. Develop a data analysis and collection strategy. Determine how you are going to analyze key, relevant customer data and then develop your collection plan. There is a wealth of data on these consumers, but you don’t need all of it — and certainly not right away.

Nearly any business can use its core transaction data to provide value to its customers. Retailers can offer personalized recommendations to improve consumer engagement, and/or offer curated purchase options to reduce information overload and increase customer satisfaction. While more complex customer models (e.g., next best action) can be attained with data from life-event patterns and social media interactions, businesses should employ a data collection and analytics strategy to quantify their expected return on their analytic investments.

Finally, get started. Consumers don’t expect you to be perfect — they just expect you to be authentic and focused on helping them be more successful navigating their customer journey and brand experience.


Julie Smith and Alex Chang are consultants with Point B, an integrated management consulting, venture investment and real estate development firm. With more than 20 years of experience understanding and addressing consumers evolving needs, Smith has led marquee retailers through strategic planning, omnichannel strategy development, consumer engagement initiatives (both digital and in-store), cross-channel loyalty program development and execution, and ecommerce strategy and deployment. Chang’s expertise spans project leadership, information architecture, user experience design, web design, system development and usability evaluation.

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