In 2000, Netflix founder Reed Hastings went to the then-CEO of Blockbuster John Antioco and offered 49% of his company for $50 million. Antioco saw Netflix as a very niche company, so he turned the offer down believing physical stores were enough to satisfy customers. The net value of Netflix today is nearly $144bn, while Blockbuster was forced to file for bankruptcy in 2010. Netflix has accredited a large part of their success to their pivot to a streaming platform which was influenced by feedback and preferences from Millennials. Today, startups have a new generation that they must turn to if they hope to survive in the future: Generation Z.
Generation Z’s range has yet to be clearly defined, but for the sake of this article, we will restrict it to those born from the mid 1990s to the mid 2000s. Although the common perception of this generation is focused on their screen addictions, the reality is that their new ideals and pragmatic approaches will change the way startups offer and market their products/services. With an estimated 32% share of the global population, startups need to be prepared to focus and adapt to this new wave of market evolution.
Appealing to Gen Z
If a startup wishes to design a product or service that appeals to this consumer group, it must take a look at the world from the iGeneration’s perspective. This study on Gen Z states that, “Some 60 percent of Generation Z say they want to change the world for the better, a major step up from the 39 percent of Millennials who say the same.” This is reflected in their purchasing habits with 55 percent of Gen Z choosing brands that emphasize eco-friendly and socially responsible practices. Ethical behavior is a key motivator for this generation as they also value companies that highlight their dedication to data privacy. This IBM study found that only 21% of this generation is comfortable sharing information more personal than purchase history and contact information, but this number jumps to 61% when companies highlight their secure storage and protection of personal data.
Another Gen Z aspect that could benefit startups is the fact that they rely on their mobile devices. With 75% of Generation Z selecting a smartphone as the device they use most, a business can attract this consumer group by optimizing its mobile experience. This can include creating a mobile-optimized website theme, simplifying the checkout process, and creating content with mobile devices in mind (e.g. vertical/portrait-style videos). The iGeneration has been early adopters of each of these features with apps like Snapchat and Amazon reaping the benefits of implementing them. Good news for startups is that the study from Vision Critical mentioned above also reports that, “By and large, iGen is a cohort of early adopters. They prefer and expect connectivity, and are impatient when the world lags behind them.” It could be reasonable to assume that Gen Zers are trend setters, so the next challenge focuses on how businesses market to this type of group.
Marketing to Gen Z
With each generation, businesses have had to reassess their marketing strategy based on both the newest technology and consumer preferences. We’ve seen the transition from ads in the newspaper to the radio to the television and now online. When marketing to Generation Z, the most important piece of information to remember is that their attention span is no more than eight seconds–less than that of a goldfish. This means that all content must be “snackable” in the sense that the message is short and to the point. Studies from Altitude, a business strategy consultancy, suggest that this eight second attention span is actually an advanced information filter designed to optimize their search in a world with infinite information and limited time. Getting through this filter requires catching their attention and providing immediate access to information regarding the product or service. Therefore, content also needs to be interactive so that the consumer can learn more if he or she desires. This is best accomplished through social media platforms which raises a new marketing challenge: selecting the platform that fits the business.
Generation Z uses different social media platforms for different purposes. For example, Response Media found that Gen Zers use Instagram to post their aspirational selves, Snapchat to share real-life moments, and Twitter to receive news. This survey discovered that Instagram is the most popular for brand discovery while Youtube provides the best product recommendations with its micro-influencers. These influencers have quite the impact on Generation Z with 70% of teenage YouTube subscribers stating they relate to YouTube creators more than traditional celebrities. This is great news for B2C startups because many micro-influencers will promote a product for just three samples–one for them and two for a giveaway or competition with their followers. This all proves to reduce cost and ease the marketing process as long as the businesses are willing to adapt.
Even though the oldest of this group is only around 22 years old, it’s important to remember that people carry their younger ideals well into adulthood. This is why much of the older generations love Facebook because they remember a time where you didn’t connect with people unless you called or saw them in person. Nonetheless, it will be very difficult for a startup to survive if it doesn’t focus on the future consumer market and the ideals they bring with them. Even if the whole generation annoys you, keep them in mind when deciding how to offer and market your product/service. I promise it will pay out in the long run.