Deciding whether or not to use coupons (or, similarly, discounted gift cards like the ones offered through ShopMidMo.com) for a particular marketing campaign can be a big decision. It means more than simply determining whether or not you've got the budget to support the associated discounts and redemptions. Understanding coupon shoppers is just as important because you need to determine whether or not a customer who uses coupons is an ideal customer for your business.
In today's post, we'll be taking a look at who uses coupons, what kinds of coupons they tend to prefer, and which industries should be targeting these kinds of consumers.
Taking a quick glimpse at the demographics will give you an overall idea of generational spending power and help you key into whether or not there are good segments in these populations for you. Another important initial step to considering whether or not your business should utilize these marketing tools is to understand how each generation spends their money and utilizes offers. Once you understand this, you can determine if they're a part of your potential audience or not.
GenY and GenZ
These are the youngest generations. Depending on who you talk to, GenY is actually Millennials, while others see this generation as the gap between Millennials and GenZ, and who may inevitably be seen as leading edge GenZ. For the purposes of this post, we're referring to them as the latter, so that the two groups are seen as roughly 18 years and younger. GenZ more specifically refers to 10 years and younger.
Population Size
With a population of roughly 23 million, these generations are expected to be the last with a white racial majority in the U.S.. The end of GenZ has not been thoroughly determined.
Income/Labor Force
While this generation is not yet a part of the workforce — that is, except for a small percentage of the older ones, who would then only be an even smaller percentage of a part-time workforce — it's worth noting that GenY and GenZ are growing up in the worst U.S. economy since the Great Depression. Generally, they expect to earn a lower standard of living than their parents, but it's likely that they will have jobs that don't currently exist because of technological and social shifts and advancements.
How They Use Coupons/Gift Cards
According to a recent survey, 30% of consumers said they were more likely to buy more gift cards for kids in 2015, with the two most likely number of cards purchased being "1-4" (40%) and "5-10" (just under 30%), so the number of gift cards being spent by this generation seems to be on the rise. Most cards will be for big-box retailers (50%) with toys/games and entertainment not far behind (40% and 35% respectively). Online retailers such as Google Play or the ubiquitous Amazon are also high on the list (29%), but while flexibility is much sought after, open-ended "bank" gift cards (e.g., Visa) are not usually given to the majority of these generations. It's also worth noting that $50 tended to be the highest limit for gift cards, although a very small percentage (less than 5%) were willing to purchase a maximum of $75-value gift cards.
While coupons remain more in the realm of their parents' spending, it's expected that coupons will play into their perspective on spending, or rather, deal hunting, especially in terms of trying products or services. Remember that while these generations are considered to be digital natives, they still like or even prefer face-to-face or tactile engagement and offers.
Where They Shop
While much of this youngest generation does not shop in and of themselves, they do influence some 93% of household purchases, and the older groups also tend to be highly informed about their shopping choices. As gift cards would indicate, they prefer shopping online, especially through Amazon, however, in many cases, they prefer shopping online with brands that also have physical locations. They also prefer shopping with brands associated with causes they support, but more importantly, they'll avoid brands with causes they deem negative, especially violence and discrimination. Because they're young, they remain interested in "stuff" overall.
Are They Ideal Customers?
Depending on your business sector, the answer will vary. However, since these generations are overwhelmingly independent, if they're not ideal customers now, you ought to be keeping an eye on them. Industries that should target them:
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Apparel
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Electronics
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Games and apps
Millennials
While it wasn't so long ago that this generation was often maligned as the "me" generation or iGeneration, as the 18 to 34-year-old market segment, this generation has nearly fully come into its own. Some have already started families, and their children are generally a part of GenZ.
Population Size
At roughly 68.4 million, the ethnic breakdown is 57% Caucasian, 21% Hispanic, 13% Black, and 6% Asian. Only 3% are counted as veterans. By 2020, Millennials are expected to represent one third of all adults.
Education
Only 15% of men and 12% of women have failed to either enter or complete high school, whereas 34% and 37% respectively have some college, and 21% and 27% respectively have a bachelor's degree or higher.
Income
The median household income is just over $60,000, however, annual salary can vary widely by state, with the lowest income for men at $30,000 (Mississippi, New Mexico) and for women at nearly $25,000 (Idaho).
Labor Force Statistics
Millennials officially became the largest generation labor force when it surpassed GenX in Q1 2015 with 53.5 million people in the workforce. This number is expected to grow as trailing edge Millennials exit college, but furthermore, most immigrants tend to be working Millennials. Millennials are projected to represent 75% of the workforce by 2025. Millennials also make up just over 70% of those on active duty in the military and 40% of the reserves.
Marital Status
Most Millennials have yet to marry (68%), although a solid 28% have tied the knot. However, roughly 7% identify as LGBT, and as that self-reporting is largely viewed as unreliable and underestimating that percentage, the statistics related to LGBT partnerships is probably also underreported. Expect to see these numbers adjust as the marriage equality movement sees more success.
How They Use Coupons/Gift Cards
Millennials still largely prefer email offers, brand and retailer mobile apps, and coupon code sites (42%, 36%, and 39% respectively). Another 77% search for coupons using their smartphone, and are willing to use mobile coupons as applicable, while another 80% will actively search for coupons after hearing about the offer through social media. Even so, 73% find coupons in print, and 70% actively search in retailer circulars. Furthermore, 34% use print-at-home coupons.
Their frugal nature — emphasized by the fact that 70% monitor their budgets closely — means that they're more loyal to needs than brands, and will shop with a different retailer if it means getting a deal. Most want personalized offers and will provide personal information to get them, and Millennials tend to use coupons most for baby and toddler products, groceries, household goods, and health and beauty supplies (66%, 60%, 55%, and 49% respectively). It's also largely understood that when Millennials start to use coupons, it has more to do with age and experiential factors (e.g., moving out) than other gender, ethnic, or financial breakdowns.
When it comes to gift cards, the more generalized the card, the better. Millennials greatly prefer general-purpose cards rather than cards from specific stores (60%), but that also largely depends on the retailer. Big box stores that offer a wide variety of product types are also successful, especially Walmart and Amazon. Furthermore, at 33%, Millennials are the group with the highest preference for digital gift cards because they're so easy to use.
Where They Shop
Shopping is largely seen as a treat, and Millennials are kings of stacking deals (including coupons) to get the most bang for their buck (or gift card). They prefer brands and products that come across as authentic and unique, especially when locally sourced, hand-made, or artisan, and when supporting causes they agree with; they want to save, but they don't want to sacrifice quality, either.
Are They Ideal Shoppers?
Without question, the answer is yes. However, you'll need to do market research to ensure you're marketing to the right segment of this large population. Industries that should target them:
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Apparel
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Automotive
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Urban Realty
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Organics
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Athletics
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Infant and toddler supplies
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Experiences
GenX
Better defined by their attitude than their age, this group is generally understood to be 35 to 50 years old. They tend to have started families if they're going to have them, and their children tend to be older, stretching from GenY to Millennials.
Population Size
This generation has only barely fallen behind Millennials with nearly 65 million, but it's also expected to continue growing and isn't expected to peak until 2018 when the population will reach nearly 66 million. The large majority remains Caucasian (61%), and while its percentage of Hispanics lags behind Millennials at 18%, it remains close in terms of African Americans and Asians (18% and 12% respectively).
Education
While this generation lags behind Millennials in terms of graduating high school (29%) and has a much higher percentage of those that never entered high school (5%), it also proffers a higher percentage (33%) of members that have achieved a bachelor's degree or higher. This may be a simple reflection of the age difference, given the number of Millennials that are still in college.
Income
Median family income is somewhere between $71,000 and $73,000, depending on who you talk to, but even so, they are also considered to have less wealth than their predecessors did at the same age.
Labor Force Statistics
GenX is the second-largest working population at 52.7 million, and only recently fell behind Millennials. They'll probably remain a close second for some time to come, given their age and likely additions through immigration. They make up 33% of enlisted, active-duty military personnel as well as 23% of reserves.
Marital Status
The marriage percentage among GenX-ers is closer to Boomers and Silents at 65%, although it outnumbers both of the older generations in terms of singles that never married (19%).
How They Use Coupons/Gift Cards
Only 30% of GenX-ers search for coupons using their smartphone while shopping, yet they also trail behind Millennials in using newspapers, circulars, and direct mail as a source of coupons (69%). What's more, they prefer gift cards to specific brands, stores, and restaurants.
Where They Shop
GenX-ers are much more likely than Millennials and younger generations to maintain brand loyalty. The fact that they're likely to be supporting both elderly parents, as well as their own children (most of whom are young adults), may seem like this limits their spending power, however, it makes them influential across many more industries that they are otherwise only tangentially connected to. As with younger generations, they value transparency and authenticity. Many plan to travel for pleasure as well as for work and a hefty percentage (50% of upscale, 33% mass market) plan to purchase luxury items.
Are They Ideal Shoppers?
Of course! GenX crosses all sorts of demographics, from working professionals to families with kids who know what they want. They understand their needs in the context of the 21st century, from technology to laundry and most anything else. Industries that should target them:
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Realty
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Insurance
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Electronics
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Active gear and vehicles (e.g., campers, ATVs)
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Electronics
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Travel
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Children's education (schools, tutors, college savings)
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Health and wellness, including mental health
Boomers
This generation, normally between 51 and 70 years of age, has been the one leading the U.S. market (among other cultural aspects, such as politics) for the longest. Now in their golden years, this generation is retiring, but that doesn't weaken their spending power.
Population Size
Boomers remain the largest generation at just over 74 million, however, they reached their population peak at nearly 79 million in 1999 and are expected to dwindle to a mere 16 million by mid-century. Perhaps unsurprisingly, they feature the second largest percentage of Caucasians (72%) and saw only a little growth in minorities over the Silents (10% Hispanics, 11% Blacks, 5% Asians). Just over 20% of this generation qualify as veterans.
Education
The level of educated men in the Boomer generation closely parallels GenX (32% graduated high school, 26% received some college education, and 31% achieved a bachelor's degree or higher), but general education statistics for women tended to be better than their successors overall (31%, 29%, and 30% respectively).
Income
Despite the fact that the median income is just shy of $66,000, there are a significant number of Boomers that are retiring, thus living off of life savings and other fixed incomes. Even so, it's only those with a million or more in investable assets that live on the expected 6% or less withdrawal rate. Boomers are much more likely to live frugally for a year or more and then binge spend chunks of money for very specific purposes.
Labor Force Statistics
Only 32% of men and 42% of women are retired among Boomers, putting the majority of each largely in the employed category (65% and 56% respectively, or about 44 million). While the military doesn't differentiate between leading-edge GenX and trailing-edge Boomers, only 6% of active-duty personnel are 41 years and older, while only 17% of reserves fit the same age bracket. Conversely, 26% of active-duty officers suit that age bracket, while 46% of selected reserve officers do.
Marital Status
Boomers feature the highest percentage of married couples at 66%, however, they also have the highest divorce rate (19%). The percentage of widowed members is only 5%, a testament to robust and healthy lives.
How They Use Coupons/Gift Cards
Boomers prefer to use direct mail and newspapers (65%) to find coupons as well as print-at-home options (67%) over mobile coupons or coupons downloaded to a loyalty card (46%). Like GenX, Boomers also prefer to use gift cards for specific locations rather than big-box locations or open-ended pre-paid cards.
Where They Shop
Believe it or not, leading-edge Boomers are opening their wallets more than trailing-edge Boomers, and while the latter has a focus on regular needs and retirement investments, leading-edge Boomers are spending more across the board, from home improvements (42%) and household goods (38%) to travel (30%), leisure activities (23%) and personal care products (53%).
Are They Ideal Customers?
In most cases, the answer is yes. Even though the trend is for saving and binge spending in chunks, when they do spend, Boomers are willing to drop the money. Industries that should target them:
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Financial advisement
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Family weddings, especially grandchildren
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Automotive
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Travel
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Home improvement
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Health and wellness, including health insurance
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Experiences
Silent Generation
This generation, among the smallest even in its heyday, is now 70 years of age and older. Most concerns are health and family-related, such as senior living communities or assisted living, and in a number of cases, it's caretakers doing the shopping for them.
Population Size
At a mere 27 million, 78% of the Silent generation is Caucasian, with only 8% each representing Hispanic and Black minorities. Perhaps unsurprisingly, 47% of Silents are veterans.
Education
Almost the same percentage of men only graduated high school and have achieved a bachelor's degree or higher (31% and 32% respectively), while most women only graduated high school (38%) or attended some college (24%).
Income
Median household income is just over $40,000, and less than 10% of Silents were in poverty in 2013, down from the 35% of 1959.
Labor Force Statistics
Most Silents are retired (81% of men, 88% of women), although a small percentage largely consisting of trailing-edge Silents remains in the workforce (18% of men, 12% of women).
Marital Status
The majority of Silents remain married (60%), although a significant percentage are widowed (25%).
How They Use Coupons/Gift Cards
Unfortunately, not many businesses market to this generation anymore. It's possible that this is because while they are, many times, one of the richest generations, that doesn't translate into spending. With increases in life expectancy, they need to make pension and retirement funds last for longer than they were originally intended for.
Are They Ideal Customers?
This is hard to determine, and as the generation continues to decline, the answer is most likely "probably not." The key to determining whether or not this demographic is an ideal one for your business will be through market research.
Now that you understand more about who uses coupons and gift cards, you can better evaluate their role in your marketing strategy. Remember, coupons and discounted gift cards don't work the same way, and where one may not be appropriate for your business, the other may provide numerous opportunities.
