Generation Z refers to those born between the mid-to-late 1990s to early 2010s, and they are set to be the biggest consumer group in the market. Businesses are looking to find ways that can effectively attract Gen Z. In this article, we are going to explore how A.I. can be a solution to Gen Z marketing, especially on improving customer engagement.
The Potential of Gen Z Consumers
According to Sarah Weiss, the author of the book “InstaBrain: The New Rules for Marketing to Generation Z”, Gen Z is expected to account for 40% of U.S. consumers and is set to be the most financially powerful generation in the coming years. As teens, Generation Z already accounts for $830B per year in the U.S., which is 7% of total consumer spending. They are considered to be one of the smartest customer groups in recent years because they are the first generation to grow up with access to the Internet. They are experienced in gathering information and filter brands and services for their most suitable needs (Weiss, 2019). This unique advantage has made them very influential in their households, as 93% of parents today say their children influence family and household purchases, and 70% of parents ask their Gen Z children for advice before making a purchase (Goldstein, 2020). Therefore, businesses should prepare a specific marketing strategy for Gen Z to capture this enormous amount of potential.
What do they want?
Every generation has its own consumer needs and behaviors, and with how tech-savvy Gen Z consumers are, they expect a shopping experience that is efficient and accurate. A study has suggested that the attention span of Gen Z is only 8 seconds, but instead of this being a lack of focus, this is an 8-second filter for them to decide if the product is the right fit for them (Fromm, 2018). Therefore, businesses need to make use of these 8 seconds to capture Gen Z's attention using the right methods. Marketing strategists often suggest businesses use materials like short videos or images, as they are easier to read in a short period. It is also important to note that Gen Z is often using multiple digital devices at the same time, therefore it is important to have multiple promotion channels on smartphones and tablets as well.
Gen Z also places particular value on brand image and their relationship with consumers as they are strongly engaged with social causes and activism. According to research by Facebook, 61% of Gen Z say they would pay more for products that are produced ethically and sustainably (Facebook IQ, 2019). They are also willing to stay loyal to brands, as studies show that 66% of them will stick with the brands that they like and buy from them for years (The Shelf Team, 2020). The marketing campaign of Nike, one of the biggest sportswear companies in the world, has prioritised diversity, inclusion, and social causes, targeting the new generation of buyers, instead of older generations that already had a belief of what the brand stood for (Dorsey & Villa, 2020). Therefore, businesses should focus on building a close relationship with their Gen Z customers.
Building “Hyper-Personalised” Customer Relationship
91% of consumers are more likely to shop with brands that recognize, remember, and provide relevant offers and recommendations (Accenture Interactive, 2018). In recent years businesses have introduced many different ways to build personalised relationships with their customers, such as tailor-made subscription boxes and personalised playlists on streaming service platforms. Gen Z also sees personalisation as one of the deciding factors to make purchases, as 62% of Gen Z say that they are more likely to pay more for products or services when a company or brand provides a personalised customer experience (Telus International, 2019). Therefore, further improving the personalisation of relationships with Gen Z customers should be the priority of businesses’ marketing strategy.
Based on our research, we believe that A.I. is going to be the key agent to empower businesses to unlock their customer engagement potential and achieve a “Hyper-Personalisation” relationship with their customers. We have briefly talked about this concept in our previous articles, in essence, “Hyper-Personalisation” refers to targeting each customer’s interests and expectations with A.I.-driven automation (Maayan, 2020). The A.I. connects various kinds of customer data, including demographic information and purchasing history to tailor marketing content and match the customers’ desires and requirements. One of the biggest challenges of implementing this concept is collecting and analyzing large amounts of data, hence businesses should choose the right technology platform to perform all of the required functions, such as data collection, prediction, and recommendation.
However, being able to collect data and recommend products or services is only part of the concept. To perform “Hyper-Personalisation”, the relationship between customers and businesses should be as close as possible, and most importantly be able to understand the customers like an actual human assistant. According to research, customers are still being creeped out by various technologies, and personalisation is one of the technologies that is the creepiest (RichRelevance, 2019). Although people are accepting these changes gradually, and Gen Z generally has a higher acceptance of new technologies, personalisation executed in a wrong way may backfire.
How does NLP help?
We have talked about the importance of Natural Language Processing (NLP) multiple times in the past, and essentially NLP is to humanize the relationship between customers and businesses’ A.I. system. Even though customers are benefiting from A.I. in many ways, the A.I. should be acting as naturally as possible to avoid “creeping out” the customers. Hence, NLP is going to be a crucial tool for Gen Z marketing campaigns. Under the “Hyper-Personalization” marketing concepts, the marketing tools from the businesses should be efficient, proactive, and tailor-made. For example, chatbot is a very common marketing tool nowadays, and it will be useful to tackle Gen Z’s need for fast and responsive customer service. According to a report from Marchex, Gen Z consumers are 60% more likely than the average consumer to hang up the phone if it is not answered within 45 seconds (BusinessWire, 2016). Chatbot works 24/7, and they can provide useful information almost instantly. With how comfortable Gen Z consumers are with smartphones, and over 70% of Gen Z prefer to communicate through texting (Steingold, 2017), chatbot marketing will be the most suitable customer service tool for Gen Z consumers.
Businesses can also utilize chatbots to engage consumers proactively and in a personalised manner. When businesses collect all of the various customer information, they will be able to seek out the target customers for any specific products or services. When the customer has arrived at the businesses’ landing page, the site’s chatbot can immediately engage the customer and assist the person’s needs. Furthermore, when the customer is physically near a certain place, the store’s chatbot would also be able to send private messages to the person automatically to notify and recommend the products or services in the area. Last but not least, the chatbot itself can be personalised as well, as users can customize the chatbot in terms of its languages, tones, and attitudes that they prefer. These functions are achievable with the help of NLP, because it allows the computer to understand the user’s needs and preferences through text and language, and it is going to be an essential technology to accomplish “Hyper-Personalisation”.
There should be no question that Gen Z consumers are going to be extremely impactful to the market. Businesses need to be ready to provide the appropriate “Hyper-Personalised” customer experience for these customers, and they should look into using various A.I. technology such as A.I. analytics and NLP-powered chatbot to accomplish this innovative marketing strategy.
Accenture Interactive. (2018). Personalization Pulse Check. Accenture. https://www.accenture.com/t20161011T222718__w__/us-en/_acnmedia/PDF-34/Accenture-Pulse-Check-Dive-Key-Findings-Personalized-Experiences.pdf
BusinessWire. (2016, December 15). Generation Z Consumers Most Impatient, Quickest-to-Curse, Yet Most Likely to Call Businesses of Any Demographic, Marchex Study Finds. businesswire.com/news/home/20161215005275/en/Generation-Consumers-Impatient-Quickest-to-Curse-Call-Businesses-of%C2%A0Any
Dorsey, J. & Villa, D. (2020, September 22). Zconomy: How Gen Z Will Change the Future of Business―and What to Do About It. [Kindle Edition]. Retrieved from amazon.com
Facebook IQ. (2019, October 23). Gen Z: Getting to Know the ‘Me Is We’ Generation. Facebook. https://www.facebook.com/business/news/insights/generation-z
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Goldstein, J. (2020, February 25). What Does Gen Z Want From Retail?. Forbes. https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2020/02/25/what-does-gen-z-want-from-retail/?sh=26045e9f661b
Maayan, G. (2020, March 12). AI-Based Hyper Personalization: A Primer. Dataversity. https://www.dataversity.net/ai-based-hyper-personalization-a-primer/#
RichRelevance (2019). Creepy or Cool?. [Online PDF] https://richrelevance.com/wp-content/uploads/2019/06/RichRelevance_CoolCreepy_US.pdf
Telus International. (2019, August 20). Infographic: The power of personalization and Gen Z. https://www.telusinternational.com/articles/power-of-personalization-gen-z
The Shelf Team. (2020, December 10). WHAT MAKES THEM BUY: GENERATION Z BUYER BEHAVIORS. The Shelf. https://www.theshelf.com/the-blog/generation-z#:~:text=Gen%20Z%20commands%20a%20remarkable,advice%20before%20making%20purchase%20decisions.
Steingold, D. (2017, October 18). Survey: Most Millennials, Gen Z Adults Prefer Texting Over Talking In Person. StudyFinds. studyfinds.org/millennials-gen-z-communicate-texting/
Weise, Sarah. (2019). InstaBrain: The New Rules for Marketing to Generation Z. [Kindle Edition]. Retrieved from amazon.com