Pick any consumer-facing industry. The odds are good that right now its trade journals are churning out reams of pages and posting millions of bits bellowing about the latest demographically charged zeitgeist: the Millennial.
Their reporters and their blogosphere, egged on by business journalists at the major media companies, are wringing every drop out of this new generational pile-on, and there’s no end in sight. Worse, the business press riding this train is now urging its advertisers to climb aboard. Paradoxically, I’m joining the party with this contribution. But my advice is to stay on the platform and wait for the next “trend train,” because they run quite often.
The gaming and hotel industry in particular is struggling to decipher the code to unlock the vault holding those precious secrets of “Millennial marketing.” Major casino-resort operators and global hotel brands are scrambling to create “inviting experiences” and “experiential spaces” within and around their properties to better address the desires of this “vitally important group.” Entire new subcategories of brands have sprung from the wombs of Hilton, Marriot and other hospitality giants, all to better reach the new demographic on the block. They’re spending zillions to interact, intersect, immerse, inspire, engage, and hopefully, sell.
I surveyed three large casino resorts in three different regions of the country. On average the Millennial customer occupies 13 percent of loyalty program databases yet contributes just 5 percent of their casino revenue. This should not come as a surprise. Regional casino operators are largely dependent on slot machine or electronic bingo revenue; games that appeal more to an older demographic. Las Vegas strip operations, particularly those behemoths with brand-name nightclubs, restaurants and other non-gaming amenities, have wider gaps between their Millennial database membership and generated revenue. The increasing reliance on non-gaming revenue to offset disappearing gaming dollars is pushing the new construction to attract this growing customer segment. Subsequently, increased operating expense is now driving margins downward, and the proof is in the earning reports of all publicly traded Las Vegas-based casino companies. It’s a cycle that keeps on taking.
We would be wise to approach this marketing trend cautiously because the Millennial, a massive group representing 80 million people between the ages of 18 and 34, has little to no disposable income. This is to be expected of people early in their adulthood, particularly those starting families or at the dawn of their careers. Any consumer on a tight budget will seek out affordable room accommodations when they travel (driving the success of Airbnb), rent fewer cars (hello, Uber) and gamble less than wealthier customer segments. These are all reasonable behaviors to be expected from the Millennial and any other value-conscious consumer. However, this begs an obvious, if difficult, question: why should we work harder and spend more capital to engage and acquire more of these consumers, inevitably leading to further shrinkage of profit margins? Are hospitality and casino marketers trying too hard to seduce this group? On price alone, hotels can’t compete with Airbnb and transportation companies can’t compete with Uber. There’s no app yet that can replicate the excitement experienced by a rowdy group of gamblers whooping it up at a craps table, but just wait.
EXPERIENCE FOR ALL
Construction and maintenance of “experiences” is, of course, expensive, yet re-engineering your product and service to attract more young people is a good thing; don’t be discouraged from doing so if your operation can afford it. But let’s broaden our thinking. The simple fact is that all age groups crave new experiences, all age groups engage with their family, friends and their favorite brands on social media (using a mobile device), and all age groups will embrace a more “socialized” experience at your casino, hotel, restaurant or nightclub.
We have been bombarded with this gospel: the Millennial seeks out new experiences (especially when they travel) and, of course, the Millennial fully grasps the utility of our sharing economy. Being a digital native, the Millennial embraces the intersection of social media and mobile device connectivity intuitively and aggressively. But, news flash! So do the rest of us. The fact is you don’t have to be twenty-eight years old to enjoy local food, artisanal cheeses and craft beer and then hashtag it all.
Before you dismiss me as yet another Baby Boomer codger showing obvious contempt for the next generation of consumers, please consider this: The hospitality industry expends plenty of intellectual capital (and that other capital, cash,) devising clever tactics to reach into wallets, but in the process, often entangles itself in the weeds of data segmentation. What about Generation X, that previous flavor-of-the month and coveted demographic group we were all obsessing over just five years ago? You know, that group occupying the space between the Millennial and Baby Boomers? Did they lose their sex appeal after a brief tryst with marketers because they didn’t fit neatly into the post-Internet, technology-native narrative? This group is now entering their prime earning years. Are we taking them for granted? They’re just as likely to consume entertainment, news and information on Facebook while binge-watching their favorite Netflix episodes. They’re just as likely to enjoy “socialized spaces” with friends and families, while nose-down in their phones and tablets, eating artisanal cheeses and drinking craft beer.
I’m certainly not dismissing the importance of establishing brand loyalty early in life with particular customer segments, especially younger consumers. Tobacco companies wrote that marketing playbook two generations ago. Cementing desire early can equate to lifetime wallet access, and the Millennial will have money, eventually. (But wait, I skipped over the part about the Millennial having no brand loyalty. These broad assumptions about 80 million people can get really tricky.) But let’s set aside the slightly ridiculous notion that age-based marketing to adults is relevant in 2016. Why fixate on a demographic slice, albeit a big one, that has no money and no brand loyalty? Why, indeed?
Behaviors that describe the Millennial demographic apply to every adult age group today, and that’s the key. It’s not the age of our potential customer that we should fixate on, but the content they consume and share, and in what context they consume and share it. In other words, it’s all about behavior. How we consume media, entertainment and information today is very similar across all demographic boundaries. When was the last time you heard someone ask the question, “How many people are using smart phones?” Three years ago that was an important question to ask, particularly before setting about to build a strategic marketing plan. Today, that question is about as relevant as the term “Color TV.” Smart phone use is now ubiquitous, and the better question to ask is, “Should I sell my Apple stock?” (Well, too late on that one, unless you’re Warren Buffet.)
The future of the hospitality industry’s marketing success will continue to depend on good, demographic data, but the sheer size and age range of the Millennial group is problematic. The 18-year-old and 34-year-old consumers are worlds apart. But we can address this challenge when we embrace Marketing 3.0: understanding customer engagement management (CEM), which is entirely behavior-based, versus transaction-based customer relationship management (CRM). We should all ask ourselves the question, “How can we create brand experiences that inspire customer word-of-mouth?” We must build, and then sustain, conversational currency to enable brand advocates and continuously earn their loyalty. And conversation, which includes sharing, commenting and posting online, must be encouraged to grow organically, whether on Facebook for Boomers (who are the fastest growing subset of Facebook’s population) or Instagram and Snapchat for Generation X and Millennials.
But if you still insist on spending a million dollars to create a cozy spot for 28-year olds to text each other, go for it. But remember these words from New York Times media journalist, Sarah Lyall: “Is there a representative Millennial? No, just as there is no representative goat.”
Have fun out there.