When it comes to those that use commercial banking services, however, there are three observations that bankers should keep in mind, according to data from the 2016 CEB Survey of Business Owners.
Millennials’ businesses have more employees compared to other generational cohorts: While some may think that younger business owners have not had the time to grow and add staff, half of millennial business owners have 20 or more employees.
Compare that to just 30% and 14% of generation X and baby boomer/senior business owners, respectively (see chart 1).
Chart 1: Number of employees in respondents’ business Percentage of respondents; n=905 millennials, 645 gen X, 309 baby boomers/seniors Source: CEB 2016 Survey of Business Owners
Note: A respondent’s business may have been in operation before the respondent became the business owner.
Millennials use alternative providers because of long-standing relationships: When generation X and baby boomer/senior business owners turn to an alternative provider for something they regularly use, they typically do so because that provider is offering a lower price or is quicker at solving a particular problem.
Millennials on the other hand most frequently use alternative providers because they have a long-standing relationship with them. Price is also important, but it’s secondary to relationship (see chart 2).
This is a particularly surprising finding from the data because many commercial banking executives believe their customers use alternative providers for one-off activities, like time-sensitive loans.
Chart 2: Top three reasons business owners use alternative financial providers Percentage of millennial respondents; n=417 millennials Source: CEB 2016 Survey of Business Owners
Millennials are more likely to be swayed by social media: Recieved wisdom often has it that, as people spend more time online, they become cynical about digital marketing or learn to block it out, while inexperienced social media users are less discriminating.
Yet, despite their greater usage of social media and other digital channels, millennial business owners are far from jaded about or inured to online marketing.
In fact, millennial business owners are more likely than business owners in other generations to be influenced by social media when making financial purchases (see chart 3).
Chart 3: Influence of social media on the purchase process Percentage of respondents among those who used social media to do investigation or research in past 12 months; n=459 millennials, 287 gen X, 75 baby boomers/seniors Source: CEB 2016 Survey of Business Owners
Note: “Social media” includes websites or mobile applications offering social networking (e.g., through Facebook, LinkedIn, Twitter), blogs, and reviews of products services.