Forget millennials. Here’s the generation most impacting your bottom line

By this time next year, Generation Z will outnumber millennials globally, accounting for nearly 32 percent of the population. While millennials have recently been in the spotlight for having unreasonable expectations and supposedly “killing” industries, it’s consumers born after 2000 that are likely to have more of an impact soon.

With the oldest members (ages 18-20) of this massive generation now in the market as consumers, there a few things companies should keep in mind as they try to woo this digital-savvy demographic.

Be prepared for a harsh critic

Younger consumers have never had a reputation for being particularly optimistic when it comes to satisfaction. Gen Z customers appear to be overwhelmingly negative in their response to new products and services; in fact, almost every variable the ACSI measured in 2017, including loyalty and perceptions of quality, proved Gen Z ranked the lowest.

Most notably, these young consumers were 10 percent less satisfied than the Silent Generation, and 4 percent less satisfied than millennials, who have a reputation for being critical consumers. To overcome this trend, companies will need to work harder to prove the worth of their products and services over competitors’ offerings to young shoppers. Growing up with digital conveniences like Amazon and phones that also function as wallets has fostered higher expectations for convenience and value among Gen Z.

Customers that don’t know how to properly complain

Aside from the general negativity associated with Gen Z consumers, an underlying problem is that these consumers often don’t productively complain about their dissatisfaction. Our data consistently shows customers who complain to the provider of a product or service generally have a better experience, in part because they have an opportunity to see the issue resolved and also because they feel their issues are being heard.

Yet, instead of calling or emailing customer service, Gen Z tends to take to social media to express their frustrations. This becomes problematic when consumers tweet or post without tagging or messaging the company directly. Not all corporate structures have the resources to search for and respond to indirect customer complaints on social media. As a result, they have fewer opportunities to address the customer’s experience directly, salvage customer satisfaction, win back the customer’s loyalty, or manage their reputation. Customers, in turn, miss out on a chance for resolution.

For example, earlier this year 20-year-old celebrity Kylie Jenner complained about the newest Snapchat update to her 25.4 million Twitter followers, many of whom belong to Gen Z. The tweet received over 73,000 retweets and 5,000 replies, many of which conveyed the tweeter’s plans to delete Snapchat altogether or to stick to other social platforms until an update was made. In the aftermath of Jenner’s post, Snapchat, Inc. lost $1.3 billion of its market value.

While a single tweet from a celebrity isn’t typically enough to influence satisfaction overall (and we can’t say Jenner’s tweet was solely responsible for Snapchat, Inc.’s stock plummet), the example shows the impact Gen Z could have on company bottom lines.

A problematic generation, or a problematic age?

Before companies across the country redirect their concern over the impact of millennials toward Gen Z, they should think back to being an 18-year-old shopper. The “problem” with 18-20-year-old consumers may not be that they belong to a digital generation raised with more conveniences, but instead that they’re too young to be a well-informed buyer. Perhaps it’s time to consider that this might happen again … and again and again, as each new generation reaches the early stages of adulthood.

Members of the Silent Generation and Baby Boomers tend to be the most satisfied customers because they’ve spent years shopping, which has shaped them into a much wiser customer than they may have been in their late teens and early 20s. More practice in purchasing leads to better habits, including research before buying, which ultimately leads to a higher level of customer satisfaction. They also tend to have more disposable income and therefore less stress associated with each purchase, whereas younger consumers with less income may be more significantly impacted by their purchasing decisions, and could be more critical of companies because of that added burden.

The fact that Gen Z ranks the lowest in satisfaction should still be taken as a warning sign for companies. But before scrambling to please the youngest consumers entering the market time and time again, it’s worth considering that the real answer to achieving satisfaction in the younger generations might be to give them some time.

Great Customer Service Harder to Find in Federal Agencies

Just two years ago, customer service was a strong point for the U.S. federal government, with citizens giving the courtesy and helpfulness of staff a rating of 80 out of a possible 100 points. The American Customer Satisfaction Index—which applies the same rigorous, scientific methodology to measuring satisfaction with both private and public sector organizations—deems scores of 80 or above as excellent.

This once-excellent customer service has diminished since 2012, down 6% according to the ACSI’s annual report on citizen satisfaction with government, but without the benefit of other aspects of agency performance—such as the critical website channel—improving to anywhere near the 80 mark. In fact, website satisfaction has failed to improve at all—staying flat at a benchmark of 72 in 2014, or 3% below its 2012 level. Other aspects of the citizen experience have downgraded further. The process of applying for and receiving services falls to a low score of 68, while the clarity and accessibility of information provided by agencies drops to 69.

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As in the private sector, customer service is often the first casualty of cost-cutting and poor service leads to less satisfaction. The overall score for citizen satisfaction with federal government is down for a second year, reaching a new low of 64.4.

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The downturn in citizen satisfaction comes amid cutbacks in agency budgets and fewer federal workers. As reported in January, reduced funding for the IRS could mean longer wait times for callers this tax season, delays in refunds for paper filers, and perhaps even a total agency shutdown later in the year.

If cuts are going to be made to the people delivering the services, then part of the solution is paying more attention to websites. ACSI data show that citizens are much happier when services are offered electronically. In the case of the Internal Revenue Service, satisfaction is dramatically higher for taxpayers who file electronically (76) than for those who file on paper (56).

Read more »

Federal Computer Week: Satisfaction With Fed Customer Service Worst Ever »

The Washington Post, Federal Eye: Index Shows Americans Increasingly Unsatisfied
With Federal Services »

MarketWatch: Americans Hate the Federal Government Now More Than Ever »

Federal Times: Satisfaction With Agency Services Continues to Fall »