Research: How Gen-Y consumers use word of mouth and social media to make purchase decisions

While the battle for the hearts and spending power of Gen-Y rages on, some interesting studies have come out that bring new marketing information to light. It’s clear that while Gen-Y is heavily entrenched in the digital age, word of mouth marketing is still king of the hill.

A “like” isn’t the same as a recommendation

A new study by Sitel fielded in January, 2012 shows that only 28.7% of this demographic make purchase decisions based on what friends “like” on social networks. Compare that with 46.9% influence of in-store promotion and 44.3% of word of mouth, and it’s clear that interactions in the physical world still reign supreme.

Gen-Y won’t merely be influenced by what pages their friends have visited, but by the products their friends are sharing information about.

But, social media can help start the conversations

Social media is best served to initiate conversations between company and consumer. By creating a one-on-one conversation in the virtual space with a Gen-Y customer, you can begin to transfer that into the physical world by getting them into your store (or onto your website).

Having a constant engagement with your Gen-Y customer will establish a relationship in their mind, and through that relationship, they will spread the word about your company.

As the above statistic shows, this is where WOM will do the legwork for you. Gen-Y’s view shopping as a social experience and trust their peers’ opinions above all else. You can use social media to draw Gen-Y’s attention to your company, and then sell to them directly.

Mass tweeting or posting deals on your site, for example, isn’t going to have nearly the same amount of impact as having Gen-Y in your store communicating with your reps. But, if you alert them that your store is going to be having a sale, Gen-Y is more likely to bring a friend if they decide to go. You’ve now doubled your numbers of possible Gen-Y customers, because you understood how they wanted to be marketed to.

Creating a strong word of mouth marketing program with Gen-Y is vital

The proof is out there: 81% of Gen-Y consumers use Facebook every day. According to this same study, 63% of affluent Gen-Y consumers engage with brands via social media. And 78% of consumers trust peer recommendations of electronics and apparel (Nielsen, 2009).

This mindset shows why WOM has such a big impact on Gen-Y and how much value they place on the opinions of their Gen-Y peers.

Your challenge is to strike a balance between engaging Gen-Y in social media and in the physical space.  The focus has to be on converting Gen-Y into vocal champions of your product. Because as the research shows, even with so much time spent online, having a Gen-Y consumer preaching to their friends will be your biggest converter to gaining new Gen-Y customers.

With $200 billion in spending power, Gen-Y has to be an integral part of your target market. If you are able to reach them, they’ll use WOM to reach their friends — and that will make you successful.

About Dan Schawbel

Dan Schawbel is the Managing Partner of Millennial Branding, a Gen-Y research and management consulting firm that publishes data, analysis, and insights on Generation Y (born between 1982 and 1993) workforce management and consumer trends. Subscribe to the Premium Gen-Y subscription portal for exclusive content and whitepapers.

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Comments

  1. Dennis Jenders (@djenders)

    Nice post Dan. Enjoyed seeing some stats on this vs. anecdotal evidence. Have you seen attempts at moving Gen Y from social media to purchase that are more successful than others?

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