Are you targeting the right generation of spenders this year? Forbes says there is a 70% chance of a recession in 2023, and the cooling down is not good news for businesses dependent on consumer spending. What’s more alarming is some businesses won’t recover, while many will take up to a decade to bounce back.
A pessimistic global outlook has everyone on tenterhooks. You may be wondering who your customers will be this year.
During a recession, spending tends to decrease across all generations. However, certain spending categories may be affected differently. For example, older generations may continue to spend on necessities such as healthcare and groceries, while younger generations may cut back on discretionary spending such as dining out and traveling.
Additionally, some generations may be more likely to delay major purchases such as homes or cars. It’s worth noting that the effects of a recession on spending can vary depending on the recession’s specific circumstances and the person’s financial situation.
Your business can get ahead of poor trading this year by analyzing customer spending habits. Use the information discovered to plan your marketing strategy to get more sales from the generations who typically keep spending during recessions.
How Do The Generations Spend?
If 2021 is anything to go by, the average American adult spends $60,000 a year. Some generations spend more than the rest. World Economic Forum says Generation Xers are the biggest spenders.
If you’re a GenX, you are in your fifth or sixth decade. Most of your spending is on housing due to owning your own home. While you’re typically in good health compared to your more senior peers from the Boomers (people born between 1946 – 1964), your generation spends the most on healthcare.
GenX spends more on everything else, from food, transport, clothing, and entertainment.
Is your business targeting its offerings to GenX? Generation X, on average, spent just under $84,000 in 2021. However, Forbes says their spending is not all on themselves. GenX is the sandwich generation, supporting both their children and their parents.
How To Market To GenX
Marketing to Gen X during a recession will likely require a different approach than during a strong economy. Here are a few marketing strategies that may be effective.
Gen X is known for being fiscally conservative and cost-conscious, so emphasizing the value of your products or services may be particularly appealing to them during a recession. Gen X is tirelessly searching for ways to improve its quality of time. Does your offering save them time while not putting a big dent in their cash flow? If so push this USP in your marketing, and Gen X will take notice of it.
During a recession, people may be looking for stability and security. If your brand can provide that, be sure to highlight it in your marketing messages.
Gen X is known for being skeptical of marketing messages, so it’s important to be authentic and transparent in your marketing efforts. Use real experiences and stories in your marketing messages.
Digital Marketing Stables Are Your Friend
Gen X is the first generation to grow up with the internet, so they are very comfortable with digital marketing channels. Plus, they trust and use email more than their younger peers.
Email marketing is cost-effective, direct to the consumer, and measurable. Keep the email marketing messages on topic and your intentions transparent. Ensure the landing pages are relevant to the email content and one or a maximum of two clicks to the shopping cart.
Gen X will do their research and visit sites recommended by Google. Your site must be optimized, and your content dynamic and on-topic to meet Google’s EAT assessment.
Listen To Feedback
During the recession, being in touch with your audience and listening to their feedback is important. It will help you to adjust your marketing and content approach accordingly.
Use Online Reviews
Online reviews will help you to build trust and credibility in your brand. Not all review sites are trustworthy so avoid paying for reviews. It’s hard to get it wrong with Google Reviews, and Gen X will use it, so your business should too.
Focus On The Long-Term
A recession may be a short-term setback, but it’s important to have a long-term perspective when marketing to Gen X during this time.
Millennials are the next generation with good purchasing power, spending just over $69,000 on average in 2021.
Millennials, also known as Generation Y, are typically defined as people born between 1981 and 1996. Their spending power has changed in various ways in recent years.
One way that millennial spending power has changed is that they have become a larger proportion of the overall consumer market. As they have entered their prime earning and spending years, businesses have increasingly targeted their products and services toward millennials.
Another way that millennial spending power has changed is that they have different spending priorities than previous generations. For example, they are more likely to prioritize experiences over material possessions, and they are more likely to spend money on travel and dining out. They are also more likely to invest in home-sharing, ride-sharing, and other sharing economy services.
Fewer Savings, More Debt
Additionally, millennial spending power has been affected by the economic conditions they have faced.
Many millennials entered the workforce during the Great Recession, which has impacted their financial stability and ability to save and invest. As a result, they are less likely to own homes and are more likely to still be paying off student loans.
Overall, the millennial spending power has changed in recent years, with the generation becoming a larger proportion of the overall consumer market, having different spending priorities, and being affected by the economic conditions they have faced. Should marketers bother with Millennials? Yes. Spending is still part of their DNA.
Marketing To Millennials During A Recession
Marketing to millennials during a recession may require a different approach than during a period of economic growth. Here are a few strategies that may be effective:
Can Not Do Without
With less purchasing power, a recession has new challenges for businesses targeting Millennials. Your offering needs to be in the ‘can-not do without’ category.
Millennials will find the money they need for something they want. Remember, they are driven by experiences, so your product or service will need to translate into deeper experiences while helping people save money or make the most of their limited resources.
Utilize Social Media Marketing
Many millennials are always active online, so social media is the most effective way to reach them. They respond to influencer marketing and collaborations like Instagram collabs.
Highlight Social Responsibility
Many millennials are concerned about environmental and social issues. If your company has a strong commitment to sustainability or social responsibility, make sure to highlight this in your marketing.
Millennials, like their older peers, Gen X, also value authenticity. Be transparent and authentic in your messaging and approach; this will help you build trust with millennials who value honesty and transparency.
Be open to changes and be flexible in your approach. With the uncertainty of the recession, it’s important to be ready to pivot and adapt your marketing strategy as needed.
Don’t assume your customers will always be the same. Customers change their spending habits and requirements. Your business can improve its sales and conversion rate by analyzing buyer behavior and changing its marketing strategy and message to appeal to new audiences.
Gen X and Millennials are the largest demographic groups spending their hard-earned money, but they, too, look for more value from their purchases during a recession.