Terry’s topic is one that has been in the news a lot lately. Recently, I published a posting on the subject based on The Economist’s conclusions about the current state of ESG as a standard by which investments are measured beyond the traditional financial performance indices.
In this posting, Terry looks specifically at technology companies and the challenges they face in attracting and retaining younger generations as investors. As always your comments are welcomed.
Whether publicly traded technology companies have verified sustainability plans in place or have been accused of greenwashing, environmental, social, and governance (ESG) standards continue to trend upward. A record $649 billion was poured into ESG-focused funds worldwide in 2021.
As investors continue to put money into technology companies making a difference, there is a misconception that a majority of investors belong to younger generations. New research shows the distribution in ESG-motivated investment: 54% are Gen Z and millennials, 42% are baby boomers, and 25% are Gen Xers.
From combatting climate change to expanding diversity in the boardroom and instituting more corporate equitable policies, technology companies need to understand what Gen Z and Gen X care about. If any sector of the global economy is sensitive to ESG it should be technology with its appeal to younger audiences. That’s why the recent acceleration of widespread reporting on ESG principles and practices is creating a shift in power, money and jobs from baby boomers to millennials and Gen Z, in which passive investing, COVID, social injustice issues, the Great Resignation and talent shortages are all contributing factors.
Despite there not being an exact right way to go about a company’s ESG strategy, contributing to fighting climate change, specifically the threat of global warming, seems to be the most concerning for Gen Z and millennials. Social and economic equity throughout the entire corporation, however, seems to be just as significant because of widespread coverage of this subject in the news, blogs, videos and on social media.
Even if not investing in ESG-based funds, millennials and Gen Zers are seeking to join companies declaring their ESG credentials. Gen Z talent today makes up 46% of the full-time U.S. workforce, where governance factors, such as flexible healthcare plans, mental health programs, and charitable and social-cause support are part of the corporate culture. For Gen Z mentorship and employer engagement are key concerns in choosing the workplace in which they want to be.
Young investors like young employees look for ESG principles and practices in corporate reports. The lack of ESG transparency, on the other hand, has a negative impact on their views about technology companies.
Rating ESG practices presents a challenge. Ratings require proxy advisors who make this their specialty. One such is Institutional Shareholder Services (ISS). How much do younger generational investors value ESG scores when considering employment or investment? The data shows they gravitate to technology companies with ESG scores 25% higher than the average.
Unfortunately, ISS and similar proxy ESG advisors are not terribly transparent about the way they analyze and score corporate practices. The result is these proxy advisors continue to mislead young investors about ESG funds that reflect an actual company’s “do good” ratings. That’s why there is a call to make ESG ratings and calculations transparent. Proxy advisors, however, are resisting calling their methodologies and calculations proprietary. So what began as a public relations and marketing effort by corporations to show employees and customers they are responsible actors, is now functioning in a similar way to credit scoring. Credit scoring proxies, however, have established credentials earned over decades. ESG proxy advisors on the other hand are still figuring out the essentials. But companies who refuse to include ESG in reporting may find themselves increasingly out of synch with those with investment capital.
If a technology company’s ESG rating by proxy advisors, like ISS, does not appear transparent to younger generational investors, the best approach for corporate boards is to think about utilizing all the digital channels available to engage this demographic.
One example of interacting digitally with millennial and Gen Z investors can be through virtualizing annual general meetings (AGMs). According to a packaging software company, Lumi, it received a 70% increase in the number of participants attending AGMs in 2021 compared to 2020 through virtual access.
Moreover, technology companies can also think beyond virtual AGMs by inviting directors to regularly contact younger shareholders or messaging them over social media to maintain their interest while getting their feedback. It is a vehicle that can be used to shape corporate programs and policy development while performing valuable outreach to younger investors and potential employees. Generating this type of authenticity counters proxy advisor ratings that may inaccurately reflect a company’s ESG credentials. Younger investors today are more “greenwash” sensitive than ever, to the point that they seek independent confirmation of corporate environmental and social responsibility, reward those that pass muster, and walk away along with their investment dollars from those that don’t.
Is it easier to get youth to invest in the technology sector today because of a growing interest in corporate ESG reporting? Yes. But that doesn’t mean youth loyalty comes automatically. Technology companies need to continuously demonstrate their ESG credentials to keep the loyalty of this new generation of shareholders.
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If you haven’t noticed already, Millennials are a force to be reckoned with. There are more of them than anyone else, and they have money to spend. For business owners, the question shouldn’t be “Can I sell to Millennials?” Rather it should be “How do I sell to Millennials?”
Generally speaking, Millennials like to call the shots when it comes to their consumer experience. This independence applies to other aspects of their lives as well. Despite the practical concerns they face, many Millennials are now their own boss (and this is because e-commerce platforms and businesses like Amway allow them to be their own boss with greater ease than ever before). They know how to market to their own age group better than anyone else, and they have a drive to create and build.
Millennials and Baby Boomers are quite different in many ways. Understanding the differences can help business owners tap into this emerging market. Selling to Millennials is about meeting their immediate needs. If you’re a Millennial yourself, you already know this. But you don’t have to be to find success in reaching this audience. So this is what you need to know with a Millennial buying audience.
Millennials Shop Local
Maybe you think this is a tired cliché, but in truth Millennials really do like shopping locally. The reasons for this are many. Shopping locally develops a sense of community (a sense of community which many feel was lost with the sub-urbanization of North America), helps perpetuate a persona of individuality by avoiding brand name stores, and helps individuals live a quality of life they believe is more in keeping with who they are. Or perhaps it’s simply because shopping local is everything their parents do not do!
Millennials Love E-Commerce
Amazon. Etsy. Netflix. Hulu. Uber. The list goes on and on. Despite a penchant for visiting local bricks and mortar shops, Millennials love shopping online. And that is because for everything that isn’t an Americano or Cafe Latte, it usually is more convenient to buy directly using their phone or laptop. That includes taxi rides and television. Millennials are drawn to e-commerce because they value its convenience and competitive pricing. Online retailers tend to offer both values in spades. Millennials often are more brand-loyal than one might think, and strong online presence goes a long way to reach their demographic.
Millennials Love Deals
When Millennials were adolescents shopping at a dollar store would have been embarrassing for many. The 1980s and 1990s were perhaps the peak of American consumerism focused on material acquisition. But that is no longer the case. Today Millennials are happy to shop for a deal and have no qualms with letting others know. Though Millennials may happily drop $100 on a new pair of Nike Pegasus sneakers, they are just as happy to buy essentials for $1 a piece. Though Millennials can be loyal, they also seem to realize that brand loyalty can go too far. In many of their minds it doesn’t matter what brand of toothpaste you buy.
Millennials Crave Instant Gratification
Amazon Prime offers free two-day shipping. Uber and Lyft allow Millennials to hail a cab directly using a smartphone. And services like AirBnB let Millennials book a room for a night in homes across the world, and they can do this on the same day they want to check in. Needless to say, Millennials like instant gratification. As a business owner or corporate executive, understanding helps to refine your products, services, and delivery methods. If you own an e-commerce business, for example, an emphasis on fast delivery may be more important than competitive pricing.
Millennials Value Authenticity
This concept may be the most tenuous to grasp. That’s because authenticity is a completely subjective metric. Despite this it’s a goal easily reached. If you break down how to be authentic into specific action steps, they are rather simple:
Millennials like businesses that are philanthropic, that fulfill a need within the marketplace, develop new technologies or ways of doing things, and that solve problems in clever ways. They also like businesses that are open and upfront. Any business can do this but many don’t. And when they don’t they likely miss the Millennial market.
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Millennials are in the midst of becoming the largest, most powerful consumer demographic in history. With buying power in the trillions of dollars, there is no doubt that Millennials are more than capable when it comes to making consumer purchases. But are they willing? Well, look no further than smartphones, tablets, video game consoles, and young people’s dining preferences as proof that Millennials are happy to spend their hard-earned cash. Yes, their habits may differ than yours, assuming you’re a Baby Boomer or Gen Xer, but suffice to say, Millennials enjoy spending money. And yet, for many businesses, the question remains: how do you sell to them?
The answer is complex and multifaceted. If it could be summed up with three simple steps, there would be no issue! Unfortunately, it is not quite that easy. But here are three tips that might just provide you, if you are in sales and marketing, with a magic formula.
1. Get Their Attention
Millennials don’t like advertising. They recognize ads for what they are, sales pitches for products and services that in most cases, they don’t need. If you are a marketer, this fact creates a dilemma. How do you market to someone who hates marketing?
The short answer is: get their attention!
How do you do that? First, you must be where they are. That means ditching television and other traditional advertising channels altogether. Though Millennials do still sit down in front of a TV (though increasingly to watch Netflix, and other download broadcast services), they spend much of their time doing this through mobile devices including smartphones, tablets, and laptops. Knowing this, you as a marketer should tailor promotional initiatives around these channels, not the old tried and true ones that worked for the previous buying generation.
That means social media, video, blogging, search engine optimized web presence, and other inbound marketing channels. Your marketing website must be mobile-responsive. And you need to incorporate lots of online resources because Millennials are tech-savvy. The key is to make it easy and interesting to find you. Once you’ve done this go to the next step.
2. Engage Them in the Buying Process
Getting a Millennial consumer to buy something is often a hopeless endeavor. But what if the buyer simply doesn’t know they need a product you have built and want to sell them? It’s a matter of education rather than coercion. This is most effectively done by engaging them in a conversation – either literally via social channels, or figuratively through your marketing outreach. Your marketing is no longer about shouting from the rooftops. You are now into relationship building.
Though the prior Generation we deem “X” is more often thought of as being cynical, it is actually Millennials who are the most distrusting of big business. Overcoming this lack of trust goes a long way towards earning Millennial loyalty.
How does a business do this?
Whatever approach you take, being authentic, Millennials value this above all else, sets you apart.
3. Give Them What They Want
At the end of the day, a business must adapt to the needs and wishes of the next generation if it hopes to have long-term success. Ivory jewelry and whale oil lamps don’t win you fans in 2016. If you want to win over Millennial consumers, you must give them what they want. So companies like T-Mobile with services like Binge On streaming. Millennials love this type of service because it fits with behavioral norms where and Millennials stream music and video to their mobile devices,. The T-Mobile twist is to ensure Millennials can do this without cutting into their mobile data plan which would cost them money. Instead T-Mobile offers them an enormous carrot. Use us and you can stream music and video for free, whether on your mobile network or on Wi-Fi. It is novel, unorthodox and it works?
So What’s Next? How Will Selling and Marketing Differ with Generation Z?
What will Gen Z – the generation that follows Millennials or Gen Y be like? They will be the byproduct of multiple generations that have witnessed a series of technology revolutions. First the computer, then the Internet, then mobile computing and smartphones. Needless to say, it’s anyone’s guess what technologies will define this coming generation’s buying behavior.
Think about this. Millennials were raised on processed foods and yet have embraced organic and farm-to-table produce with unrivaled enthusiasm. They were raised on cable TV, yet increasingly shun it. Gen Y has been raised with multiple cars in every driveway, yet many report they have no interest in owning one. If the children of these Millennials rebel in the same way as they have, does that mean Generation Z could become Baby Boomers Version 2.0? Only time will tell!
In Part 2 of Selling to Millennials and Generational Change we will look at the fate of the “bricks & mortar” world of retail. Does the evidence show that Millennials are abandoning traditional stores like JC Penney, Sears and Nordstrom. Will they just as quickly abandon Big Box retail stores that have become predmoninant in the last two decades? Is Amazon not just today but the future for Millennials and the Gen Z that follows?
In today’s guest blog our contributor, Alex Clark-McGlenn, writes about the paradigm shift brought about by the confluence of technical innovation and a generational mindset. If you don’t believe this is true just get on a bus or subway car and watch what people do. In a recent IBM thinktank they describe the behavior aptly….”people tethered to their devices.” This is the means by which they see the world and this is the tool of choice for changing it.
Alex is studying for his Masters of Fine Arts in creative writing at the Northwest Institute of Literary Arts. This is his first contribution to Techso Mogro blog. He has been published in eFiction Magazine, Inkwell at Evergreen, Slightly West Literary Magazine, and appeared in Smokebox Literary Magazine. Alex resides in Bellingham, Washington.
I hope you enjoy his contribution today and welcome your comments.
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Social media is all about connections. From keeping up with friends and family to your favorite celebrities and sports teams, social media keeps you connected with the world. But how can social media bring about social change? Well, it’s happened before and with continued technology advancements, new and different social media platforms are becoming available for people to connect in meaningful and important ways. Here are just a few examples.
1. FireChat and the Hong Kong Protests
FireChat is a new, internet-free chat app that allows users to communicate peer-to-peer without an internet connection. This app is available for Android and iPhones and bills itself as “off the grid,” because of its peer-to-peer functionality. So how does FireChat work without a cell signal or internet connection? With Bluetooth technology, of course. However, when using the “nearby” mode, you will only be able to chat with others close to you. And though this may sound limiting in this way, a message can spread through a crowd like wildfire.
In 2014 FireChat was instrumental in the organization of the Hong Kong protests where pro-democracy citizens staged peaceful protests in the city centers. Protest organizers encouraged protesters to download the app when they began to suspect the Chinese government would shut down cellular phone towers in order to try and limit the communication between organizers and the protesters. In just 24 hours, 100,000 people in China downloaded the app.
2. Multiplatform Revolutions
While social media is a great way of organizing and spreading the word when other means of communications are being cut off, certain social media platforms are also helpful for civilians. Sites like Twitter and Facebook haven’t just lead to the ousting of dangerous dictators in countries like Tunisia and Egypt, but can also inform civilians about their neighbors and people they know functioning in underground movements.
Back in 2012, during a torrid time in Egypt, protest organizers used Facebook to plan rallies, Twitter to communicate and coordinate with protesters, and then YouTube to inform the rest of the world about their actions. In a globalized world, public opinion is everything—so showing the world their efforts at making their country a better place helped protesters garner massive amounts of support.
3. Tips for Creating Social Change
While protesters in countries like China, Egypt, and even Yemen have used a variety of social media platforms to bring about social change, they were in situations that dictated the use of these platforms in organic fashion. While this kind of use can’t be replicated, there are things you can learn from how protesters have used social media in the past.
Craft a Clear Message: When creating real social change, your message must be clear and concise. However, even a great idea and clear message with concise wording might not gain traction immediately. This is okay. Don’t be deterred by a lack of results. It takes time for concepts to take root in a social group’s mind. But once there, and if it is a good one, people will follow.
Be Approachable: While a clear goal can give people faith in the fact that your cause will bring about worthwhile change, being approachable and open to suggestions is a must. Remember, platforms like Twitter and Facebook aren’t only for pushing your message. They are two-way conversation platforms. Listen to those who care about the issue you are addressing and incorporate their ideas.
Start the Conversation: Just because you’re using social media in order to bring about social change doesn’t mean you have to dumb down your message. Whether it is 140 characters, or a one-minute movie, be articulate and don’t skirt the big issues.
