Gen X and how best to get them to do business with you
Brokers who are able successfully market to the notoriously stubborn Generation X will reap the rewards and greatly pad their bottom line. So what makes a Gen Xer tick and how best to get them to do business with you
Members of Generation X were described as sulky and disillusioned in their youth and resenting of 
authority figures. Now, Gen Xers are notoriously resistant to the marketing and sales tactics that worked on their predecessors the Baby Boomers leaving mortgage professionals wondering how best to tap into the lucrative market.
Having grown up in the information age, Gen Xers are sophisticated consumers that are used to conducting their own research and holding out for the best deal available. This means that it is hard if not impossible to 'sell' them into committing to a product so it is important to consider these influences when developing a marketing plan.
While definitions of exactly who belongs to Generation X vary, members of this group are generally thought to be born between 1961 and 1981. Gen Xers were brought up on MTV and are described as being resentful at the world they have inherited from the Baby Boomers.
They grew up in households characterised by the highest divorce rate in history and many had to split their time between two families. They were also denied the job security that their parents had, leading to the realisation that they were seen as expendable commodities in the business world. These two factors played a large part in forming the collective feeling of distrust in institutions and a certain reluctance to commit to long-term arrangements.
These characteristics are mirrored in Gen Xers' consumer behaviour with more of them opting for a pre-paid mobile phone contract than wanting to be tied down to an annual contract. It is also the case with home buying behaviour. Gen Xers are more likely than their parents to move homes and either upgrade when times are good or downgrade when times are tight.
Gen Xers were the first group of people to have computers in schools and early in their working career. As opposed to Baby Boomers, Gen Xers are comfortable trusting information found online and are skilled at separating that which is true from all the misleading information on the internet.
This has developed into a reluctance to pay for expert advice where it would traditionally have been sought. Even doctors' advice has been replaced by Gen Xers looking up their symptoms on medical websites and going to the doctors simply to ask for the drugs that they feel they need. This can pose a challenge for mortgage brokers as they seek to prove their worth against the backdrop of a number of loan comparison sites.
In the book Generations, written by Hugh Mackay, Gen Xers are described as the options generations. This reflects the fact that flexibility, freedom and individuality are core aspirations for Gen Xers, which the savvy mortgage professional can use to their advantage. They are fond of finding a unique deal and will often be happy with trying new products where they see a significant advantage.
Mortgage matters
There are distinct differences in the generations in how they view mortgages and what aspects of each product appeal mostly to them. These preferences are strongly influenced from the common events that have shaped their lives and have been identified by market research.
A study conducted by Fujitsu found that Gen Xers and their predecessors are much more likely to use a mortgage broker than younger generations. The business and technology consulting company found that different groups have quite different attitudes towards banks and brokers and recommends that industry players target their strategies for maximum effect.
The study also found that members of Generation X are far more rate sensitive than their contemporaries and are therefore more interested in securing a fixed rate loan. This could be reflective of the fact that Gen Xers tend to be rather pessimistic or at least embody the saying 'expect the worst, hope for the best.'
Rate sensitivity was calculated by determining the number of respondents that said they were able to quote their current mortgage and credit card interest rates. Fujitsu found that 88% of Gen Xers surveyed claimed to be able to quote their mortgage rate compared with just 55% of Baby Boomers and 24% of Generation Y respondents. Interestingly only 23% of Gen Xers were able to quote their credit card interest rate compared with 29% of Baby Boomers.
The research also revealed differences in the types of property that the two generations were buying. While Baby Boomers have gobbled up property in the investment market, Gen Xers tend to be predominantly interested in owner-occupied mortgages. Baby Boomers were quick into the housing market in their youth and many of them have paid off their owner-occupied home loans so are looking at new mortgages to buy investment property.
For Gen Xers, the investment in extra properties by the Baby Boomers has priced them out of the housing market for longer with most not purchasing a home until they are in their mid-30s. This is another point of contention between Baby Boomers and their children as Gen Xers see the spike in investment property as a way of keeping the nation's wealth in the hands of the older generation.
X Marketing
There are a number of things that have to be considered when attempting to market to Gen Xers. In order to gain their trust, and therefore their business, it is important that they do not see the communication as fake or as trying to fool them.
"They've grown up at least through their business life through the internet and seeing the decline of the expert with information available at their own fingertips without needing to consult professionals," says Mark McCrindle of McCrindle research.
He says that the first thing a mortgage professional has to do is try to understand their target audience and recognise that Gen Xers are quite different from the Boomers who went before them. He says they want to be able to do it themselves on everything including financial planning and decision making.
"The challenge for those financial services and mortgage professionals is to connect with this generation that are used to doing it themselves," McCrindle says.
He says that brokers need to overcome the fact that Gen Xers think they can do it themselves and are naturally resistant to paying for something that they believe they can do just as effectively with a little research on the internet.
McCrindle says that if mortgage professionals can be in the space where they're offering professional advice and direction, they can breakthrough the prejudices of the group and will likely be able to win their business and loyalty.
"We're dealing with a cohort that is a little older by the time they're getting into mortgages," he says. "Those traditional markers of financial independence of getting a home and a mortgage are getting pushed back."
This results in the Gen Xer being a more sophisticated consumer by the time they are ready to buy a home. They are not just out of college and looking to be swayed by a smooth talking salesman, rather they want to go with someone they trust and will inevitably make sure that they check on the credentials of anyone they trust with such a big decision.
McCrindle says that the internet can be an effective medium in reaching the target audience. However, he points out that brokers cannot use the linear approach which was so successful in appealing to Boomers.
Despite staying at home longer than any other generation before them, Gen Xers have more of a connection with their peers and less with their families. This can be used to build a trusting relationship and often a referral can be the most effective tool of generating business from this distrustful group.
"Business often comes through referrals from another service provider," says McCrindle. "The strongest of all channels is the age old word-of-mouth or referral or viral marketing if you like."
Viral marketing
Viral marketing was a term created in response to effective advertising to Gen Xers. It was coined by Harvard professor Jeffrey Rayport in a December 1996 article for Fast Company magazine titled "The Virus of Marketing."
It refers to marketing techniques that take advantage of pre-existing social networks to promote awareness of a particular brand or product. It is so named because the message is self-replicating like a virus.
While originally applying to marketing campaigns that created a 'buzz' causing people to tell their friends about them, the rise of the internet means that the message can be delivered to the social network electronically.
Because viral marketing relies on people voluntarily passing the message on, it has to be rewarding in that it is funny or clever. Viral promotions generally take the form of video clips, images or interactive Flash games. However, since Gen Xers are inundated with different messages, it is imperative that the message be short and effective as well as clever or funny.
A more advanced strategy of employing viral marketing is to specifically target people with a high level of social networking potential (SNP). Previously, that would involve looking at trend setters who are often in the media such as sports stars and celebrities. However, with the explosion of social networking sites such as Facebook and Myspace, it is now possible to see how many 'friends' a person these people are considered to have a high SNP.
Emotional decisions
McCrindle says that Gen Xers have departed from the cold, logical processing of sales information and are more driven by emotional factors than their predecessors. This can play an important part in appealing to them for business purposes.
"If you look at drivers that influence decisions with Xers there's a slight move away from the rational cognitive pathway of influence more towards the emotive and almost experiential pathways," he says. "In other words, the strength of a relationship or the influence of someone they respect or know is going to often carry over a sale and win the day more than something that is proven true through pie charts or graphs and statistics."
McCrindle says that there has been a whole shift in marketing over the past decade from the traditional logical sales process to this more emotional one. This has happened because as the years wear on, Gen Xers gain more and more buying power and become the focus of the marketers.
As every broker knows, the most valuable asset they possess when it comes to developing business is their relationship skills. Gen Xers can be hard to win over but once they are, they are in for the long haul. As that trust develops, brokers have the opportunity to not only meet their home loan needs but also give them advice (if they have the qualifications to do so) on many other financial products.
The result of this is that it is important that the people in your referral network are of the highest quality. Because Gen Xers often find it harder to trust and expect to be let down, it is vital that any advice you give them - including sending them to someone else - is of the highest quality.
The flip side of that is that once you have gained their trust they can be very loyal customers and will happily tell their friends and family if you have shown them that you are willing to go the extra mile.
To get Gen Xers in the door in the first place it is important to tailor your marketing so that you reach them where they are spending the most of their time. A sophisticated or humorous online campaign can be a cheap and effective way of capturing your target audience's interest. The key to marketing to Generation X is to be honest and sincere - they do not take kindly to being 'sold' to.
