More than three-quarters of Australian SMEs don’t have deliberate strategies to appeal to Millennials or Generation Z customers, despite declaring that growing their market share will contribute most to their financial performance in the coming three years, the latest American Express SME Pulse research has revealed.
This comes at a time when these two generations combined represent more than half of the Australian population.
SME’s lack of targeting is in stark contrast to big business who are increasingly tailoring their approach to engaging this influential set of customers. Among larger businesses in Australia, 90 per cent are using deliberate targeting strategies to reach Gen Z, according to American Express research.
The research suggests that the younger market may be a strategic blind spot for SMEs; with the majority (90 per cent) of these businesses saying they are confident with their company’s current strategy, higher than the global average. Yet while the majority of SMEs may not be tailoring their marketing effectively, 60 per cent say that their customers are now demanding more tailored products and services.
According to Martin Seward, American Express Vice President of Global Commercial Services Australia and New Zealand, SMEs have an enormous opportunity to increase their relevance and market share by changing the way they engage with customers of different ages and interests.
“It’s all about knowing who’s looking at your business and buying your products and employing different marketing strategies based on what you learn. Making those stronger connections typically starts with data,” Seward said. “Though many SMEs don’t know where to start or view cost as a barrier, the good news is that today, technology that can help is more accessible than ever and the longer-term benefits can be significant and well worth the upfront work and investment.”
The desire to improve technology capabilities is strong among Australian SMEs, with four out of five saying they intend to implement the latest technology over the next three years. However, the American Express SME Pulse also reveals that over a third of SMEs currently feel they are ineffective at applying the latest technology in their business. This is also a potential barrier preventing them from using social media, digital marketing and omnichannel retailing known to be popular among younger consumers.
Tips for small businesses
Seward suggested that there are easy strategies that small businesses can employ to target younger audiences more effectively:
- Strategic channel selection. Understand what channels they use to connect with businesses like yours. Millennials and Generation Z are significantly more likely to want to connect with you online, so look for opportunities to make your business easily accessible through these channels and ensure you are responding regularly and in a timely fashion.
- Personalisation is key. Understand what these customers want and what messages resonate and tailor your approach to match. This audience wants to have a meaningful relationship with service providers and, despite popular belief, are more willing to pay a premium for a better service.
- Be transparent. Millennials and Generation Z are open to forgiving a business for mistakes if they are open and honest about this. If something goes wrong, take responsibility and be clear with how you will make amends.
- Be creative. Younger demographics are selective about what information they want to see from brands and businesses. Use images and taglines that stand out to grab their attention.
- Encourage user-generated content. Younger audiences are more likely to purchase a product if their friends are posting or talking about it. Show off the great experiences your customers have to appeal to the fear of missing out.
