Transaction Truths: Adapting for the Evolving Consumer

Gary Jackson

For the past few years, we have all seen how consumers continue to define e-commerce through their quick adaption of new technologies to make purchases, their proclivity to shop online more and more, and their demands to buy what they want, how they want, where they want. This is not anything new to those of us in the e-commerce industry. And for the most part, many merchants have kept pace with the changes and even thrived because of them.

But what about looking forward? How can merchants keep up with the rapid changes being driven by both technology and consumers? And how can our industry address the millennials?

Interestingly though, millennials are quite loyal. More than half — 60 percent — of the survey respondents said they are often or always loyal to brands from which they currently purchase.

Not Your Parents’ Consumers

Like it or not, millennials are going to be (or are?) the consumers shaping things. And they definitely seem to have their own methods and attitudes when it comes to making online purchases. According to an article in Forbes in which 1,300 millennials were interviewed, only one percent of those surveyed said a compelling advertisement would make them trust a brand more. One percent. That doesn’t exactly instill confidence for expecting big things from some traditional branding and marketing tactics. It seems millennials believe advertising is all spin, not authentic, and regularly avoid banner ads on Facebook and news websites.

Now, our industry does indeed differ from mainstream e-commerce. And perhaps the impact will not be as great, but those percentages are worth noting.

Interestingly though, millennials are quite loyal. More than half — 60 percent — of the survey respondents said they are often or always loyal to brands from which they currently purchase. It seems the quicker you can build a relationship with them through things like communications, social media, and customer service — the better you will be in the long run selling to them. In fact, 62 percent of millennials say if a brand engages with them on social networks, they are more likely to become a loyal consumer. And we’ve already been seeing how loyalty plays into our own industry.

For years, things like cross-sales for complementary products and services, or automated up-sales to existing customers have been a key driver for business growth. So it seems like our industry is on the same page as millennials when it comes to loyalty, even if the “traditional” adult consumer has been getting older. Oh, and as far as that technology thing goes, 87 percent of millennials use between two and three tech devices at least once on a daily basis. Making sure your content and payment options are accessible from any device is more important than ever.

Changing Behaviors

While the millennials are an increasingly important market segment, they do not represent the entire market. Not yet, at least. For a more encompassing look at online consumers, let’s refer to the 2015 U.S. Consumer Payment Choice Study issued by TSYS. Unsurprisingly, this study also paints the picture of a quickly evolving payments industry. For instance, while debit continues to be the preferred method for all transactions (online and offline), the percentage of survey respondents that favor it slipped down to 41 percent from 43 percent in 2014, and from 49 percent in 2013.

However, and this is one of the key distinctions within the study, when it comes to online purchases, 43 percent of respondents stated credit card is the form of payment they use most. That compares to 30 percent using debit cards, and 14 percent using PayPal.

Correspondingly, credit cards remained the payment method deemed most safe for online transactions among respondents, ranking ahead of PayPal and debit cards. Ideally of course, you are leveraging a system that allows you to offer multiple payment types based on consumers’ personal and regional preferences.

Time Stops for No One

At the start of this article, we looked a bit at some of the ways millennials are shaping, and will shape, the e-commerce industry. What becomes significant is not necessarily what they’re doing now, but what they will be doing. No, there is no crystal ball over here in the CCBill offices — I wish! However, the TSYS study sheds light on some interesting trends when it comes to consumers’ ages and income levels.

Let’s face it. We’re all getting older. There’s just no stopping the clock or calendar. And while millennials may be shaping markets as they become a powerful consumer segment, here are some things worth noting. According to the TSYS study, as people age their preferred method of payment changes. It tends to be heavily skewed toward debit cards for those aged 18-34, then actually switch to credit card for those aged 35-44. Similarly, as people gain more income over the course of their lives, credit card becomes a pretty dominant favored method of payment, with a preference rate as high as 60 percent.

And? What's it All Mean?

There is no doubt consumers will keep evolving. And there is also no doubt markets will continue to change along with them. As our industry in particular faces the rising numbers of millennial consumers, perhaps it’s time for a re-examination of some commonly used marketing and advertising tactics. As direct engagement becomes a more impactful way to reach the millennials, things like social media and even direct email communications take on more importance.

I’m not advocating abandoning traditional advertising altogether, though. I think it does and will remain an important piece in any branding strategy. Maybe just not the only one to leverage. And as far as how to reach more consumers, affiliate engagements or business-to-business partnerships can provide another welcome revenue stream.

Finally, as technology has already provided us all with multiple devices for buying, accessing, and viewing content, it’s important to keep your payment options in concert with the consumers. Offer them all of the options they want. How they want them. And where they want them.

Yes, it’s almost 2016, and quite a few of us in this industry are not getting any younger. But that doesn’t mean the millennials, or any other population segment, are going to never engage with the brands we represent. We do, however, have to try and reach them. Just as we have been doing with other consumer groups. And who knows? There could be a whole new world of opportunity just around the corner.

Gary Jackson, managing vice president of sales for CCBill, brings 18 years of experience in the online media and commerce markets to the adult industry, having built from scratch four successful sales organizations for a number of software and ISP startups. Since joining CCBill in 2006, he has been a champion for expanding business opportunities for the industry, as indicated by CCBill’s diversification into dating and tangible markets, as well as expanding the CCBill billing automation platform to adapt to changing consumer buying habits.