Millennials may be the demographic with the greatest potential for borrowing, but one marketing expert is warning credit unions they may be missing out by focusing too much on younger generations.

According to Bryn Conway, principal for BC Consulting LLC, in Washington, D.C., credit unions must keep their messaging on target by understanding generational differences.

“I have been in credit unions for a long time and spoken at many credit union conferences,” she told the audience at CU Direct’s recent DRIVE conference in Texas. “Every conference has at least one session on reaching out to millennials. That’s great, but credit unions need to continue to take care of existing members so they can reach Gen X and baby boomers.”

Bryn Conway, principal for BC Consulting LLC, who spoke during the 2018 CU Direct DRIVE conference near Dallas.
Bryn Conway, principal for BC Consulting LLC, who spoke during the 2018 CU Direct DRIVE conference near Dallas.

And you’d better believe CUs are relevant to this demographic. After all, noted Conway, the average credit union member is 48 years old.

There are approximately 75 million baby boomers – those born between 1946 and 1964 – in America today, ranging from 54 to 72 years old, she reminded, and that they hold a whopping $7 trillion in buying power. On top of that, many have good credit and aren’t afraid to borrow.

“They want to manage a payment rather than pay cash for a car,” she explained, adding that boomers make up $90 billion in annual auto sales, exceeding younger generations by nearly 30 percent.

“Have a program to help them buy a classic car and fix it up, or a luxury car, or a sports car,” Conway suggested. “When marketing to a baby boomer do not put a minivan in the ad.”

Beyond the basics like cars, she advised, baby boomers think retirement is travel, fitness and fun. They want to do everything they couldn’t do when they were raising kids. Conway said CUs should offer boomers “simplification and adventure.”

The average baby boomer has $200,000 in home equity, which they are willing to use to fund travel, relocation or a retirement career. Conway said boomers will spend $1.9 trillion in the next five years on homes.

“They will be downsizing the square footage, but upsizing the view from the suburbs to a house on a lake,” she said. “They are already your members, so message them by recognizing they see themselves as 10 years younger than they are. Don’t message them about sitting on the porch because they are not cool with that. They are vibrant, vigorous and vital.”

Independent and in debt

At 49 million consumers between the ages of 38 and 53, Gen X makes up about 23 percent of the adult population in America today – a generation Conway said is fiercely independent, having lived through multiple recessions and bubbles, and is the first generation to acquire significant student loan debt.

“They are in their prime earning years, and they are seeing baby boomers exit to that house on the lake,” she said. “They need homes and cars for their expanded families.”

As such, CUs should market houses to Generation X, she said, noting many need not just mortgages but refinancing for homes and outstanding student loan debt.

“Loan demand for Generation X is second only to millennials, even though they are half the size of the millennial generation,” Conway said, adding more than half of Gen Xers are not brand loyal. “They go after opportunity, so look at their credit report and ask for their business. You will get it.”

The new boomers?

The oldest millennials may only be 37, but Conway noted that this generation’s worldview is closer to that of the baby boomers than Gen X. And they are the most diverse demographic in America today, she added, making up 42 percent of the adult population.

On top of that, they’re in debt. Millennials are highly educated, but they’ve paid dearly for their schooling, with more than half holding an average balance of $25,000. For the college class of 2016, the average student loan debt is $37,500, which Conway said is “really impactful.”

“Millennials have delayed marriage [until almost age 28] and they don’t buy a home until 33, so there is pent-up demand,” Conway said. “They aren’t that young anymore. They have $1.3 trillion in spending power.”

That spending power, however, isn’t being utilized with cash. Most millennials prefer to pay with plastic – and if they do carry cash it’s likely to be less than $5.

“This makes mobile payments and rewards a must have,” Conway said. “Millennials are scared of credit cards, so they carry a debit card. However, they are willing to switch to a credit card if the rewards are better.”

When messaging any product to millennials, CUs should focus on social media and, believe it or not, direct mail.

This generation is actually the most likely to respond to direct mail, she said, because receiving something via postal mail is a novelty to them. But Conway said CUs still need to make sure they are sending a relevant message.

“Don’t send what you send to everyone else, because they are special. Be relevant, concise and understandable,” she said. “Only 20 percent of millennials find financial content interesting. They want expert advice, they want to be told how to survive a financial crisis, and they want local. They are really good savers. They want a future that looks nice. They are all about their community.”

How should CU prepare for the transfer of wealth from baby boomers to the next generation? Conway said credit unions need to “court” their boomer members, starting now.

“Remember, [boomers] want to put their stamp on everything, so they will want to do it their own way,” she advised.

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