Marketing Credit Cards to Millennials, Part 1: Playing by Their Rules
Influenced by familial advice, rewards programs and experience as well as perceptions, Gen Yers view credit cards with both caution and practicality. They’re beginning to think about mortgages and retirement, and with that in mind are selectively acquiring credit cards — which they readily admit have a negative stigma surrounding them. Some worry that having a wallet full of credit cards might hurt their credit; others have learned that using too many store cards can lead to excessive spending and debt. Clearly, marketing credit cards to millennials poses a challenge. So what’s the best way to reach out to this demographic?
An acquired taste
First, let’s take a look at the numbers: data shows that millennial ambivalence toward credit cards wanes with age. According to The Coming Credit Card Boomlet, a June 2014 Aite Group report, the percentage of younger credit card–carrying millennials steadily increased from 32 percent in 2009 to 59 percent in 2013 — a 27 percent jump. In comparison, 76 percent of older Gen Yers had a credit card in 2013 — up from 67 percent in 2009 — just slightly higher than Gen Xers at 70 percent and baby boomers at 72 percent.
Saying no to social media
No matter their age, millennials prefer not to interact with financial organizations on social media, opting instead to keep their social and financial matters separate. This stems from their concerns about fraud and identity theft. They’re very reluctant to enter personal information online and prefer to do their own online research for banking information, credit card offers and rewards programs. That said, when marketing credit cards to millennials, it’s fine to prescreen them. They also don’t mind such offers as credit line increases — as long as you also offer rewards.
Trended data tools
Despite credit card ownership in this demographic nearly doubling over the course of three years, Gen Yers, especially younger ones, are often overlooked by financial marketers because of their age and limited credit history. Traditional credit modeling resources often fall short in evaluating their potential credit performance: They simply don’t provide a complete picture about millennial payment habits or spending patterns. Fortunately, there are new tools available that help provide a dynamic, multidimensional view of consumers over as long as a 24-month period. These trended data tools can help identify and capture more Gen Yers by pairing traditional credit indicators such as past credit performance with unique attributes that drill down to help reveal a consumer’s:
- Account activity, focusing in on those with greater activity potential;
- Credit use over time;
- Potential for balance transfer within a specified time frame;
- Candidacy for line increases and likelihood of staying current;
- Likelihood of opening a new account within a specified time frame; and
- Debt capacity without becoming past due.
By using deeper insights into how millennials view and use credit cards over time, credit card providers can better capture and retain this next generation of customers. In part two, we will further explore how to appeal to this demographic through the elimination of superfluous processes and streamlining interactions with technology.
Image source: Big Stock
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