[vc_row][vc_column][vc_custom_heading text=”9 Ways Small Businesses Can Appeal to Millennials With Student Loan Debt”][vc_single_image image=”426″ img_size=”full”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
AUGUST 26, 2016As college students head off to school across the nation, it’s getting harder for retailers to ignore student loan debt. America’s student loan debt—which is currently more than $1.2 trillion
, according to the Federal Reserve—may put a damper on spending for years to come.“Many young people are facing a college debt load that feels like an elephant is standing on their chests,” says Joseph Michelli, author and CEO of The Michelli Experience
. “They watch a large portion of their income pass through to service their student loans. Not only are they feeling the pinch in terms of greatly reduced discretionary income, they see their repayment terms as eternal.”
Student Loan Debt Affects Everyone
Student loan debt is everyone’s problem, believes Michael Houlihan, founder of Barefoot Wines. “What if you gave a back-to-school sale and nobody came? That’s what retailers face this year as many college students and graduates face the frugal realities of their college debt,” he says. “Just like the stock market and housing sector collapse in the last recession, a major segment of the economy is beginning to buckle: 20 to 30-year-olds saddled with high levels of student debt, who have started cutting back on retail spending when this would historically be their most productive and strongest time to contribute to our economy.”
Businesses who build relationships with debt-burdened customers have to think less about driving higher sales per transaction and more about how to maximize frequency of visits over a customer’s lifetime.—Joseph Michelli, CEO, The Michelli Experience
This massive student loan debt, combined with the increased cost of living, can have an incredible effect on the buying power of the millennial generation, notes Alyssa Selogie, digital marketing and social media strategist with Madison Consulting
. “Because the amount of expendable income is often minimal among the younger generation, businesses have to compete more and fight harder to attract new customers and maintain current ones.”While the student loan debt does cut back on the younger generation’s buying power, Selogie believes that these economic conditions may benefit small-business owners over their big-box competitors. “Small businesses are able to adjust and change directions [more quickly],” she says. “Additionally, millennials seem to prioritize value and experiences over consumer goods or cookie-cutter services, which may make a local small business seem more attractive.”
Marketing to Cash-Strapped Millennials and Generation Y
Today’s student-loan-burdened generation may not be as quick to open their wallets. But you may still be able to get some of their limited business by keeping these tips in mind.
Be aware. “As business owners, it’s critical to understand the sensitivities and realities of the customers we serve,” says Michelli. “This goes well beyond the emotional and practical pain of monstrous student loan payments. It really is at the core of how we should approach all business decisions. What are the unique wants, needs, desires and concerns of core and emerging customer segments? How do you take their experiences [and] challenges, and present your offerings and their benefit in a way that addresses their needs?”
Empathize. Empathy for the financial struggles that the younger generation faces may be an effective marketing strategy for a small business, notes Rafael Ilishayev, co-founder of goPuff
, an on-demand delivery app. “Empathy is not just emotion; it leads to effective business strategy. Small businesses that curate relevant advertising and social media, offer friendly service and don’t feel corporate will indubitably connect to the younger generation in a much more organic way.”Get creative. There may be an opportunity for small businesses to get creative in their marketing and customer outreach, believes Selogie. “Targeted ads with messaging related to the struggles of student loan debt, especially those that are able to put a comical spin and positive light on it, could do well,” she says. “Millennials are aware of the uphill battle they face, so a sale or promotion that makes them laugh or is entertaining will certainly catch their eye.”
Make it convenient. “Buying power in 2016 is not just a matter of price—it’s a matter of speed and availability,” says Yakir Gola, goPuff’s co-founder. “Small businesses that cater to millennials must adapt to any financial environment and not only offer competitive pricing, but a competitive experience. What they ask of the client in price they must return to the client in time and convenience to create meaningful, lasting relationships that transcend today’s taxing financial environment.”
Avoid overselling. “Small-business owners can demonstrate their awareness of the needs of millennials by welcoming ‘budget friendly’ purchases and not trying to oversell in ways that would further ensnare those customers in a credit trap,” says Michelli.
“Many millennials will flee businesses that encourage them to ‘go ahead and get it…no matter how much it will put you in debt,’” she continues. “I recommend small business respect budgets and the sensibilities of the next generation. Businesses who build relationships with debt-burdened customers have to think less about driving higher sales per transaction and more about how to maximize frequency of visits over a customer’s lifetime.”
Go the extra mile. You may want to cater to a millennial’s desire to make everything an experience and get a great value for the money being spent, says Selogie. “When someone is living on a budget, especially one constrained by debt, there is a greater need to justify any non-essential expenses,” she says. “Adding extra levels of customer service to enhance the experience a shopper or patron encounters; having a strong presence on mobile devices and social media; and keeping branding, marketing and decor all young, fresh and simple will all increase a small business’s chance of appealing to the younger generation.”
Be real. Millennials don’t have extra cash to throw around, and “when we do, we are smart about it,” notes Tyler Drew
, owner of Anubis Properties. “If your business and your business practices are anything less than pristine, we will find out. We know when we are being overcharged or underserved, and we can review your business online before we even step foot through the door. Our money, and more importantly, our time are much more valuable to us. If you are charging more for a service, we want to know what we’re going to get out of it.”Watch pre-planned marketing. “We are the first generation to be directly targeted for products,” says Drew. “I know a badly marketed product when I see it, and I am much more likely to purchase from smaller, privately owned shops than big box stores. I want to know that a human built whatever product I am buying and that my money is going to a decent cause. I’d rather have a personalized experience, not a cookie cutter one.”
Assist employees with student loan debt. If you have valuable employees burdened with student loan debt, instead of paying to further their education, consider offering to assist in paying off the student loan debt, suggests Alexander Joyce, president and CEO of ReJoyce Financial LLC
. “For a young person starting a career, freeing up income and planning the future is high on the priority list. This is something that will win you loyal employees.”
For more tips on how to keep customers engaged, access 4 Growth Hacks for More Engaged Customers, with insights from CEO of Growth Hackers, Sean Ellis.
Read more articles on customer engagement.
Photo: iStock
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