Insurance that matters to Millennials
Baby Boomers. Gen Xers. Millennials. When determining buyer behaviour, it’s all too easy to pigeonhole vast swathes of the population by assigning them generational labels.
And yet, we can discern some common behavioural patterns that separate the members of one generation from the next.
The label ‘Millennial’ is used to describe individuals born between 1981 and 1996. All have come into adulthood during the course of this century – with profound implications for our economy.
Just as Baby Boomers are entering retirement and Gen Xers are relaxing into middle age, Millennials are becoming a driving economic force. They now represent just under half of the total workforce population and one of every three dollars spent.
Though they are often maligned as ‘living for the moment’, the truth is that Millennials just have different priorities when it comes to spending their money. Given that Millennials will shape insurance purchasing behaviour for at least the next two decades (until the next generation come along), it’s important to understand how members of this generation make their purchase decisions.
Millennial buyer behaviour
It’s fair to say that the young adult population of this country face financial headwinds unlike any we have seen before, whether it be higher house prices or increasing education costs. In response to this squeeze, they have adopted a cautious approach to spending.
In a recent report entitled How Millennials Manage Money fintech company Afterpay found that Millennials are prudent spenders – and certainly no less financially responsible than their parents. Though they may have postponed the idea of home ownership, they are still willing to spend wisely when it comes to education, health and lifestyle.
Necessity has made them conscious of the need to extract maximum value for money and they are prepared to shop around for the best deal to suit their circumstances.
Millennials are also harnessing new technology so they can better manage their finances. According to Afterpay, 93 per cent compare prices online and about 75 per cent read product reviews and research products on the go before making a purchase worth $100 or more2.
This is a generation that has grown up on technology and who seek affirmation of their choices via their social network and online search. They connect dots in ways that are intuitive to them, but not so to other generations. They are also used to accessing information straight away on their smart devices and no matter where they are.
Implications for insurance sellers
If Millennials are truly savvy about their spending and are prepared to shop around for a good deal, what are the implications for insurance sellers?
Research commissioned by Allianz suggests that two important considerations apply when appealing to prospective customers, both of which are directly relevant to reaching Millennials.
The first is the need to provide value. When customers perceive that they are receiving a good deal, they are prepared to consider insurance beyond just the lowest premium offer.
Let customers know upfront about the potential costs of buying a vehicle during the wider vehicle negotiations, so that customers can assess the overall deal. Young customers are focussed on understanding what they can get for their budget so highlighting the key product features can help them feel more informed about the benefits of each product.
The net effect is to make customers feel valued. This is important for any generation, but especially so for members of the Millennial generation, for whom feeling valued equates to perceiving good value for money.
Second is the importance of creating opportunities to start a conversation. For a generation familiar with having information at their finger-tips, making direct comparisons between products and wanting to make a decision at their own pace is second nature. Introducing insurance early is important.
Curiously, the Allianz research3 found that younger customers, aged between 18 and 34 years, are more likely to feel overwhelmed by the car-buying journey. As a result, they’re the group most likely to read through brochures and are looking for more support from dealership staff with their decision making. Take a moment to introduce yourself and let them know you can help them with questions about the product, this can be a massive step in the right direction.
And the advantage of getting it right? Millennials are all too eager to spread word about their good customer experience among their online networks.
2How Millennials Manage Money, 2019 (https://bit.ly/3Bg9Q7A)
3InMoment Allianz Dealer Journey Insights & Opportunities report
This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 (“Allianz”). Information contained in this article is accurate as at 30 August 2021 and may be subject to change. In some cases information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way. Any opinions expressed constitute our views at the time of the issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.