McDonald’s sales are slumping. Net income for the third quarter 2014 fell 30% from a year ago. The world’s number one fast-food retailer is struggling to maintain market share against fast-casual restaurants such as Chipotle which are enjoying explosive growth. The once-heralded marketing behemoth is having its lunch eaten by young upstarts with a new concept.
McDonalds is struggling, in large part, because they are not connecting with Millennials. They don’t even rank among their top ten favorite restaurant chains.
More than maintaining market share, McDonald’s is struggling to remain relevant to a group of customers that is critically important to them. Millennials have different tastes and values than their parents, and McDonalds isn’t cutting the mustard. Millennials are rejecting many traditionally successful brands. Retailers from Coke and Gatorade to brewers and media companies are struggling to understand and respond to these market changes.
“Every retail brand had better be repositioning their offerings and shopping experience to cater to the generational onslaught of the Millennials, who will soon to put to shame the once vaunted purchasing power of the Boomers,” admonishes Robin Lewis, co-author of The New Rules of Retail.
The estimated eight million Millennials are still eating at burger chains, but much like bank visitors, they are simply going less often. Millennial traffic has declined 16% since 2007.
As a generation, Millennials tend to be confident, self-expressive, liberal, upbeat and open to change according to Pew Research. They are also the best educated and most digitally comfortable generation. Millennials want to serve their family healthy meals. They are more nutritionally conscious. And Millennials place a high value on social responsibility, sustainability, and local — themes that have frustrated McDonalds and banks alike.
Connecting with Millennials is a riddle McDonalds struggles with. Once heralded for its marketing prowess, the mighty McD’s seems lost with Millennials. The burger giant has juggled CEOs and CMOs in search of the right strategy to shore up sagging sales.
Reality Check: If a strong brand with massive marketing muscle wrestles with Millennials, it’s hard to imagine how the banking industry will find success.
Right now, Millennials are attracted to big banks for their array of cotton-candy electronic services, but as virtual banks grow and Apple and Pay Pal encroach into banking, there’s little doubt the digital generation will watch banks disappear in their hybrid’s rear view mirror.
The challenge of marketing to Millennials is matched by the difficulty of communicating with them. Millennials are the most sought-after segment today, but they also the most elusive demographic; they are notoriously difficult to reach.
According to Experian Marketing Services, theirs is the first generation where digital media consumption exceeds traditional media. A huge portion of their time is spent on mobile devices texting, listening to music, shopping, socializing, watching videos and gaming.
While Pandora, Facebook, SEO and display networks are some obvious digital choices for reaching Millennials, banks should also consider complementing these channels with interactive options. For instance, here are a few of the initiatives rolled out by Liberty Bank for Savings ($827 million in assets):
Family Fun Festival — A series of free musical and magical performances held in the lobby on Saturday mornings to attract the parents of children aged 4-11 — a key demographic.
Concerts — Music crosses age, socioeconomic and ethnic boundaries. The sounds of Indie, Caribbean, Latin and Polish music in the lobby brought diverse audiences and helped break the staid perceptions of the bank.
Seminars — Coupon clipping and money management seminars appeal to the thrifty and financial needs of Millennials.
Historical Bike Tour — Biking is big with Millennials so we partnered with Logan Square Preservation Society to create a historical bike tour of the community and sponsored a photographic retrospective. Both underscored the bank’s local origins.
Movies — A review of website analytics found that the most common activity of homepage visitors was watching movies. In conjunction with a local theater, the bank sponsored two free family movies, plus a preview screening of Hunger Games: Mockingjay – Part I which triggered considerable buzz.
Farmer’s Market — Capitalizing on an interest in organic food and healthy eating, the bank manned a booth at a popular farmer’s market and sponsored a pedicab which gave free rides to shoppers.
Community Meet-ups — Liberty advertises on a hyper-blog which covers news, retailers and entertainment in the area. A few times a year they arrange community meet-ups where readers and area activists get together socially. The bank will be hosting in the lobby of one of its branches
Liberty Bank for Savings goals for these events are three-fold:
1.Position the bank as a family institution — a shift from the ‘old bank’ perception acquired through years of catering to the pre- and post-retirement crowd.
2.Start prospects down the buying path by getting them in the door, introducing them to bank personnel and letting them experience the friendly, personal service provided all customers.
3.Collect email addresses and product referrals for future cross-marketing efforts.
The events are more than marketing channels, they are branding opportunities. They help convey the personality of the bank. They demonstrate that the bank isn’t “all business.” And the local events set Liberty apart from megabanks down the street.