Does your brand connect with tomorrow´s customers?

For years, many large brands targeted Baby Boomers, evolving with them as their spending rose and their needs changed. Today, we face the next demographic transformation—as 70 million Millennials increase their spending and influence.

Within seven years, this group is expected to control a full 50 percent of disposable spending. But as—or more—important than their economic power are their vastly different needs and behavior. A recent Lippincott study examined how over 700 brands connect with consumers of different generations. John Marshall, a Lippincott senior partner and director of the brand strategy practice, explains what brands are winning, and why.

Q. Marketers have been adjusting to generational shifts since the “Mad Men” era. What makes Gen Y so elusive?

A. This time around the shift is dramatic; in the past it has been more gradual. Those who grew up with the Internet in high school are extremely different. Obviously their media consumption is fundamentally different. Less than a third describe themselves as “dependent on TV” vs. over a half of everyone else. These are people who grew up with the Internet, and have plenty of power over how they choose to consume and interact with media. The old marketing model—a factory where messages are created and then pushed out to a highly receptive audience—doesn’t connect with them.

They’re not always listening to campaigns and pitches. Yet we as marketers are still pouring hundreds of billions of dollars into an outdated paradigm. Very few brands have gotten their heads around the implications of this generational chasm, or learned how to get their story out there.

But perhaps most importantly, Gen Y is not just the audience, they are the channel—and they know it. They have 2x the propensity to recommend (or recommend against) brands as your average customer. Half of the comments on the web come from people under 25. This is a very big deal.

Q. How do you establish a brand story that’s relevant to this audience?

A. If you look at the data of 750 brands, some really interesting things pop out. In any given category, winners with the younger generation share common approaches.

The brand stories that resonate best with the next generation tend to appeal to higher-order values—enlisting Gen Y in a larger struggle. Brands they love tend to represent a belief or a cause: Google isn’t just about search but winning the battle for control and simplicity, Dove’s not just soap but triumph over superficiality. Secondly, there is a critical opportunity with voice—the brands that break through talk in a human and authentic way. Chipotle’s disarmingly direct and candid ad copy is a classic example of this. Gen Y wants to be talked with and not talked to, and this requires a shedding of the corporate monotone that plagues many marketers.

Q. So the storytelling is different, but what about the brand experience. Is one more important than the other?

A. Innovative brand experiences matter a huge amount. Brands that break out from the pack for under 35’s often seem to share what we call the “rule of discovery.” Brands that resonate the most actually make it easy—and exciting—for customers to discover something new. Costco does really well here, as its constantly changing merchandise mix creates a treasure hunt mentality. In-and-Out Burger dominates QSR with unique elements discovered in the experience, such as a secret menu. Related to this is the “rule of constant news” providing a constant stream of innovations, new experiences that keep the brand in the conversation. Obviously Apple and Nike are the hallmarks. These rules emanate from a simple truth: today you are not the force that spreads the message, your customers are. So providing them with something exciting and simple enough to talk about—that is the challenge in breaking through. “Look what I found at Costco!” That’s worth a lot in terms of media impressions.

And finally, perhaps the most important rule we have noticed is what we call the “rule of radical innovation:” delivering a product or experience that is not just different, but surprisingly different. That conveys an entirely unique and fresh approach. There is a reason that the Wii, the Dyson vacuum cleaner, and the Smart Car have so much higher resonance with under 35’s. They surprise and delight with a new angle on the world; they show the courage to try a new approach, and this really strikes a chord.

At the end of the day, building a brand to a demanding, highly informed, hyper-connected, short attention span audience is the ultimate test. If your story and experience are simple, emotional and highly newsworthy, they’ll do the work for you. If it is not, the risk of wasting money starts to go up exponentially. It can be a bit of a “winner take all” situation where if you get it right you can really distance yourself.

Q. Do mature brands stand a chance?

A. Absolutely. Some of the highest scorers in our index have been around for decades, but continue to craft a story and customer experiences that seem relevant right now—Intel, Old Spice, and Craftsman tools stand out in the data as Gen Y favorites. But the other thing we are seeing more of is the establishment of new strong sub brands that can represent new equities like Xbox from Microsoft or Xfinity from Comcast.

Q. So likes don’t matter. What does?

A. Uncovering what potential customers think a design means. How would they expect this company to treat customers? What does the design convey? Does it belong to a company that is warm and friendly? Brisk and efficient? Modern or traditional? This feedback will show us whether something new is in keeping with the brand’s core personality and its evolving storyline.

Q. What are the implications of this for my brand strategy?

A. We’re seeing the implications cutting across all aspects of brand building: not just marketing planning, where the leaders are really rethinking the media mix to make more meaningful connections. It affects product strategy, challenging you to pursue innovations; it could impact brand positioning, as you question whether yours is anchored in a simple, retellable and values-based story. It extends all the way to portfolio planning: addressing tough choices about whether to reinvest in the parent brand or build new and relevant sub brands into the portfolio.