From houses to cars, with more and more young people preferring to share or rent as opposed to owning, what effect is this having on businesses and the business landscape?
Jan Döring: Millennials – the generation born between 1980 and 2000 – are transforming our economy and forcing many companies to rethink their traditional strategies and business models in order to cater to what has been a distinct shift in interests and values. Not wanting to be bound and restricted by consumption, rejecting unnecessary rules and constraints and wanting to experience the world on their own terms, Millennials prize their freedom above all else. Increasingly, they are turning to services that allow access to products without the burden of ownership, and fuelling today’s ever popular ‘sharing economy.’
A recent survey we conducted at Prophet also backs this up. Speaking to over 1,000 18 to 34-year-olds, almost 70 percent replied that business models that allowed for ad hoc product or service consumption, without commitment, increases that all-important feeling of freedom they so desire. And 55 percent said that money doesn’t play a huge role, instead their concern is in living a simple, friction-free and convenient lifestyle.
How are companies responding to this shift to ‘sharing’ and need for freedom?
Jan Döring: Many companies still seem to me to be at a loss as to how they should cater to this. Few really understand the needs of Millennials and are not really willing to adapt their business models accordingly. For instance, no strategic thought is being given to their offering or how to engage this target group with a differentiated customer experience. Car sharing is certainly a pioneer and a good example of how companies are testing out new business models to meet the needs and expectations of young city dwellers. These urbanites don’t want to own their own car; it’s restricting.
When identifying Millennials as a target group, a focus on freedom should be at the forefront and reflected across all touchpoints. It is important that ‘signature moments’ give these young consumers the feeling of being free. Ikea’s recent acquisition of TaskRabbit is a good case in point of a traditional player looking to bolster its digital service capabilities and cater to a younger, tech-savvy audience who don’t want to invest in the technical tools (or time) to assemble furniture. No drill? No spanner? No problem! For a one-off cost this on-demand platform can deploy a ‘tasker’ to help. The proliferation of such digital native app-based companies is growing and they truly exemplify convenience, flexibility and freedom at its finest without any contracts or commitment.
What do you see as the economic effects of this change?
Jan Döring: By assessing and adapting your current business model now is the only way to ensure successful growth in the future. This is a trend that is here to stay and businesses need to react. For sure, there might not be any quick bucks to be made but what’s much more important is that a company and its brand(s) remain relevant in the long term by responding to the zeitgeist of the next generation.
In our survey, 72 percent of the participants would like companies to develop even more alternatives to buying in order to offer as much flexibility as possible for consumers. I can imagine such sharing or rental models in many industries, however, every manufacturer and every brand has to think carefully about how to create a convincing customer experience for Millennials within these new business models, which can be experienced at relevant touch points and thus ensure enduring enthusiasm and loyalty to the brand.
Is the ‘sharing’ economy making us more conscious in our choices?
Jan Döring: Millennials at least see it that way. 70 percent of the participants we spoke to found the sharing of products ‘socially meaningful’, because in their eyes it solidifies a feeling of togetherness. We should therefore accept that this generation want to live and consume in this way, which means companies need to provide appealing and appropriate offers. This also includes companies defining an overarching ‘purpose’, a driving force and shared experience of value and belief that binds the customer to the brand.
What do brand owners need to consider in order to develop an experience for their customers that offers this much-desired level of freedom?
Jan Döring: Freedom is a broad term and highly subjective, but there are some clear questions brand owners should be asking themselves:
- Are you truly putting your feet in the shoes of the consumer to try to understand what freedom means for them – e.g. is it about flexibility or authenticity?
- Evaluate your own customer experience and journey mapping. Do you have any ‘pain points’ or restrictions that could be felt by a freedom-seeking Millennial?
- Are there any ‘signature moments’ that can be integrated into the existing customer experience? Are the ones that exist tangible and addressing the needs of the target group?
Explore further the importance of the customer experience for your brand.