The latest American Express SME Pulse research reveals that more than 75 percent of Australian small businesses don’t have strategies in place to appeal to millennials or Generation Z (1).
This is despite the fact that growing their market shares in this target area will dramatically boost their financial performance, even within just the next three years.
These two generations – millennials, or Generation Y, born between approx. 1981-1996 and Generation Z, born between approx. 1996-2015 – represent key small business demographics as combined they represent more than half of the Australian population (2).
Clearly there is a huge blind spot that small businesses in Australia are not capitalising on. However, this isn’t something that big businesses are happy to miss out on.
Big businesses are increasingly tailoring their marketing approaches to these generational audiences, recognising the crucial importance of doing so in their future business success.
Among larger businesses in Australia, 90 percent are using deliberate targeting strategies to reach Gen Z, according to American Express research (3).
This research actually shows that most small businesses surveyed (90 percent – higher than the global average!) are confident with their current strategies, which implies they aren’t aware that this is a problem for them – in other words, it is a true blind spot.
Although this new reports highlights the fact that small business may not be tailoring their marketing effectively to these key markets, 60 per cent are actually recognising and receptive to the feedback that their customers are now demanding more personalisation in products and services.
In terms of how small businesses can go about engaging with these critical audiences, and level up with the big players, Mark Seward, American Express Vice President of Global Commercial Services Australia and New Zealand, shares his insights.
“It’s all about knowing who’s looking at your business and buying your products and employing different marketing strategies based on what you learn. Making those stronger connections typically starts with data,” Seward said.
“Though many SMEs don’t know where to start or view cost as a barrier, the good news is that today, technology that can help, is more accessible than ever and the longer-term benefits can be significant and well worth the upfront work and investment.”
The American Express SME Pulse sheds further light on this topic of using marketing tech, showing that four out of five small businesses do intend to implement new tech in the next three years.
Contradictory to this embracive approach to tech, small businesses generally feel that they are ineffective in this implementation process. This lack of confidence with using new technologies is definitely a potential barrier that’s preventing them marketing channels such as social media, digital marketing and omnichannel retailing. Of course, these happen to be the marketing channels that are well-known to be popular among younger consumers, namely millennials and Gen Z!
Small business case study
Jared Fullinfaw, founder and Managing Director of The Print Bar, a T-shirt printing company, is trialling new marketing practices all the time in order to appeal to millennials and Gen Z.
Jared said, “As consumer demands shift and the desire for tailored products and services increases, especially among our younger customers, it is crucial, as a small business that we tailor our marketing strategy effectively.”
As a creative company intrinsically, Jared says that it’s the same creativity applied within their T-shirt design that is the key to grabbing the attention of the younger audience.
“Social marketing is a creative outlet for our team and also encourages creativity from our clients.
“Think memes, GIFs, creative visuals and even sponsored short-form video social challenges which we’re currently exploring via the app TikTok.
“Basically, we want to be connecting with our audience using the tools they love to use. Not only can we use social media to target Facebook and Google ads to our desired audience, we have fun along the way.”
A final summary of tips for small businesses wanting to appeal to younger audiences
Seward suggests there are easy strategies that small businesses can employ to target younger audiences more effectively:
- Strategic channel selection.
Understand what channels they use to connect with businesses like yours. Millennials and Generation Z are significantly more likely to want to connect with you online, so look for opportunities to make your business easily accessible through these channels and ensure you are responding regularly and in a timely fashion.
- Personalisation is key.
Understand what these customers want and what messages resonate and tailor your approach to match. This audience want to have a meaningful relationship with service providers and, despite popular belief, are more willing to pay a premium for a better service.
- Be transparent.
Millennials and Generation Z are open to forgiving a business for mistakes if they are open and honest about this. If something goes wrong, take responsibility and be clear with how you will make amends.
- Be creative.
Younger demographics are selective about what information they want to see from brands and businesses. Use images and taglines that stand out to grab their attention.
- Encourage user-generated content.
Younger audiences are more likely to purchase a product if their friends are posting or talking about it. Show off the great experiences your customers have to appeal to the fear of missing out.
- In October and November 2018, Oxford Economics surveyed senior executives at 3,000 SMEs ranging in size from 10 to 250 employees across 12 countries and 16 industries. Telephone interviews were used to explore opportunities and threats, business prospects, strategies, investments and how SMEs could be better supported by changes to regulation, financing and government support.
- Source: https://www.livepopulation.com/country/australia.html
- The 2019 Global Business & Spending Outlook was conducted by Institutional Investor Thought Leadership Studio (IITLS) and is based on a survey of 901 senior finance executives from companies around the world with annual revenues of $500 million or more. All survey responses were gathered in November and December 2018. IITLS estimates the margin of error for this population to be approximately +/-3% at a 95% level of confidence.