Millennial. Gen Z. Gen X. Does a week go by when you haven’t heard at least one of these terms? The catchphrase “OK, Boomer” is used by young adults on social media to mock the attitudes of an older generation. But to what extent are these generations different from one another, apart from the date ranges in which they were born? To what degree should companies cater differently to consumers in each generation? In short, how useful are these labels?
,” while more than 400 LinkedIn users described themselves solely as a “Millennial expert” or “Millennial consultant.”
Why would companies invest so much money and effort in this topic? On the surface, there’s compelling economic logic. The net present value (NPV) of a brand is theoretically higher if it can enfranchise consumers when they’re young, thereby capturing more dollars over their lifetimes. But do generational marketing labels help companies achieve that, or are they wasting their money on lazy thinking?
The Perceived Differences
To hear many in business and in the media describe them, you’d be prone to believe that each generation is from its own planet. That they think, act, shop, and work differently. Google images and Pinterest, for example, have myriad tables that neatly summarize their traits:
And The Atlantic cited a YouGov survey showing that 64% of people either strongly or somewhat agree that there are meaningful differences in the personalities and characteristics of people in different generations.
The Actual Differences
What you won’t find are many statistics that back up the assertions. Instead, you might hear “25 percent of adults aged 25 to 34 years old report being vegan or vegetarian.” Is this number high or low? How does it compare to other generations or from the same one in years prior? That’s left unstated, as the stats are usually one-offs.
When we compare consumer expenditures across generations – say, in the travel category – the differences are nominal, except for Boomers’ penchant for ocean cruises. And you know who uses Uber, besides Gen Z? Everyone!
At least one study debunks the notion that those within generational cohorts think and act the same. BBH Labs in the UK measured the size of the average majority viewpoint across 419 lifestyle statements, and calculated group cohesion scores (i.e., the degree to which each cohort answered the questions alike, as compared to the UK national average; higher numbers indicate greater cohesion) and got these results:
+0.2 Gen Z
+1.3 Average of Gen Z, Millennials, Gen X, Boomers
Lest you think these numbers significant, here are the cohesion scores of other groups:
+2.9 People who floss
+4.5 Orangina drinkers
The study sheds light on the paradox that for every fact about a generation, there seems to be a corresponding counter-fact or data point that bucks conventional wisdom:
- “[Gen Z and Millennials] don’t believe in brands, but queue for hours outside” the Apple store.
- “According to the European Social Survey, it’s actually Baby Boomers who are most likely to have boycotted a company in the last 12 months, with Gen Z about half as likely.”
Alright, so consumers aren’t so predictably different across generations, but surely employees are, right? Well, a meta-analysis by Harvard Business Review found that “…20 different studies with nearly 20,000 people revealed small and inconsistent differences in job attitudes when comparing generational groups.”
Considering there’s little evidence that proves generations are meaningfully different, why do generational labels get so much media attention? Like with horoscopes, people are intrigued by categorizing groups along different lines to understand them better. In reality, the names and accompanying descriptions are largely interchangeable. Could the media attention itself lead people to see differences that simply aren’t there?
There are some areas in which the generations are legitimately different. Younger generations were “born digital” and thus tend to be more fluent in all things internet, especially social media. And “Boomers enjoyed significantly improved incomes in middle age, earning around 25% more compared with the (prior generation) when both cohorts were 45 to 49 years old. But Gen Xers had 5% lower real incomes than Boomers (at the same age) … and Millennials earned 5% less than Gen Xers.” Driven by higher housing and education costs, this wealth gap impacts consumers’ budgets and attitudes.
- Recognize that generational labels are oftentimes just buzzy shorthand for different age cohorts. Unless accompanied by statistically significant evidence of differences, assume that someone is trying to sell you something like a research report; that it’s marketers marketing to marketers. As The Atlantic quoted the author of an upcoming book on the topic, “someone will create this sense of difference in order to give you a solution to that difference.”
- Use generational marketing as a means of consumer segmentation only to the degree that your business is age sensitive. For instance, investment companies’ retirement target-date mutual funds, ocean cruise lines, or AARP-type categories like prescription drugs, eyeglasses, and hearing products.
- Segment your consumers in more meaningful ways than a simple age demographic to better cater to their needs and grow your revenue. For example:
- Urban, suburban, exurban, or rural
- Hobbies, lifestyles, values, and beliefs
- Level of desired customer involvement: Do-it-Yourself, Do-it-For-Me, or Do-Some-of-it-For-Me (for investment advisors and home improvement companies)
- Shopping preferences: Online, in-store, and/or BOPIS (Buy Online, Pickup In-Store)
- Degree of customer newness, loyalty, frequency of purchase, and purchasing habits
Each person possesses a unique combination of traits. Their age may be the least interesting – and differentiating – part of them. While there’s a clear benefit to segmenting consumers – and the digital age is making it increasingly possible at an individual level – doing so by generational labels seldom makes sense.