'Generation Gap' by Matt Mitchener - Mortgage Professional Australia (May, 2012)

How do different life stages impact what - and how - you should offer your customers? Matt Mitchener explains ways to effectively segment your market by generation.

When marketing mortgages to potential customers it pays to remember that one size does not fit all, particularly
when it comes to different generations - Baby Boomers, Gen X and Gen Y.

There are compelling reasons for mortgage brokers to adopt different marketing strategies for these three 'generations' to ensure what they are offering is relevant to their customers' circumstances. Much is made of the generational gaps, sometimes to comic effect. For mortgage brokers, it's probably better to think about marketing the right products, not so much to a generational 'profile' but more to a customer's stage of life.

For instance, Gen Y are more likely to be the ones starting out on home ownership; Gen X - roughly 30-50 years of age - have often got children and are looking to upgrade their home, while Baby Boomers are either in or close to retirement and require a different suite of products to make them financially secure.

Of course, these are extremely broad generalisations, but for the sake of simplicity in targeting, it's important to recognise some of the stereotypical features of the various generations, how they like to be communicated with and through what media.

Gen Y

Starting with Gen Y - or the Millennial Generation as it is sometimes known - it's clear this is the generation that has been shaped by the rise of instant communication technologies - email, texting and instant messaging. They use new
media through websites such as YouTube and social networking through Facebook, LinkedIn and Twitter. According to demographers, expression and acceptance is highly important to this generation. They find comfort in online communities and recommendations.

When it comes to communicating to them, they are the dot point generation - it has to be fast, quick and bold. Tweets are restricted to 140 characters, so in comparison any communication should not be longwinded. Keep it hard and fast. Use media such as emails and SMS, and don't take up too much of their time.Target them with alerts such as the major banks raising their loan rates or any other important information that can be sent quickly over the digital highway.

Gen Ys are typically first homebuyers, and generally look for a fixed rate loan or a discounted variable in the first year. They are concerned with their ability to repay with fixed repayments, as budgets are generally tight, especially if they are starting a family. For them, it is all about rate, affordability and certainty. Competitive three-year fixed rates tend to attract their attention and features like the ability to take a repayment holiday also appeal to this group.

From a broker's point of view, it is also important to remember that although it may involve a lot of work to hold their hand through the initial stages to get them over the line for a fairly lean reward, if you do a good job, you can keep them for life.

Some brokers completely dismiss them as too hard and not rewarding enough, but the message is to stick with them and realise the potential rewards of taking them through the next two stages of life.

Gen X

Gen X is characterised as individualistic, technologically adept, flexible and great valuers of the work/life balance. It has been said they dislike being micromanaged and embrace a hands-off management philosophy. Like their younger brethren, they are comfortable using emails, laptops and smart phones. Like Gen Y, media such as emails and SMS are very effective for reaching this demographic.

The 30-40-year-old borrowers are looking for flexibility, such as paying in advance and having offset account and redraw. They are at a point where they want a bigger home and maybe looking at a pool or extension or holiday home. They are starting to feel relaxed about money, so are enticed by offset accounts, redraw, credit cards linked to the mortgage, and split loans.

Baby Boomers

Now to the Baby Boomers, many of whom are in or close to reaching the age of retirement. They are workcentric, hard working and motivated by position, perks and prestige. Many in this generation like to criticise the generations that follow in their path for their lack of a work ethic.

The Boomers are independent and self-reliant. They are not afraid of confrontation and won't hesitate to challenge established practices. Use print to reach Baby Boomers - they are used to 10-page documents they can sit down and read at their leisure and feel more comfortable with comprehensive information.

Because of their stage of life - 50-60 years of age and beyond - they are looking for products that are going to give them taxation benefits, such as interest only, or for self-managed super loans to buy investments. They are about saving for retirement and looking for safe investments - nothing too risky. They look at interest only 10-year loans and even reverse mortgages to set themselves up for their last years.

How to segment

It often pays to simply keep in touch. Brokers make hundreds of dollars in trails from each customer each year, and it can repay immeasurably to invest just a few dollars to remain top of mind. It certainly pays to build a profile of your clients and compile a detailed database, regardless of age profile.

This should be a regular habit every time you talk to an existing client or recognise a potential one. There are some increasingly sophisticated IT platforms that can help sort clients by their date of birth, location, preference to loan types, likes and dislikes.

Get this right, and you can build a customer for life as they progress through the years. This also creates the opportunity to offer further products and services that can fit smoothly into their growing requirements - as well as making your marketing more cost-effective.

Gen Y

++ Typical life stage: first homebuyer
++ Key products: fixed-rate loans or discount variable
++ Best media: e-mail, SMS

Gen X

++ Typical life stage: Upgrading, renovating or expanding
++ Key products: offset accounts, redraw, credit cards linked to the mortgage, and split loans
++ Best media: e-mail, SMS

Baby Boomers

++ Typical life stage: preparing for or in retirement
++ Key products: interest only, self-managed super loans, reverse mortgages
++ Best media: Print

Matt Mitchener is the Marketing Manager at Vow Financial

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