Marketing debit and credit to millennials

In Latin America + the Caribbean

Types of consumers: silent 5 percent, boomer 11 percent, gen. X 24 percent, millennials 36 percent and new gen. 24 percent.

As we pointed out in Marketing to millennials in the U.S., this customer segment makes up a quarter of the world’s population, and they will dominate the global workforce by 2025. In Latin American countries (LAC), one in three consumers is a millennial¹.

Latin American millennials have yet to reach their peak spending years, so there is a huge opportunity for financial institutions to offer credit and debit products to this growing segment.

Visa Performance Solutions can help issuers develop successful engagement and retention plans to create strong, lifelong banking relationships with millennials.

The payments landscape

Consumer payments volume in LAC over 2012-2017 is estimated to grow at a compound annual growth rate (CAGR) of 10 percent, making it the second fastest growing region behind Eastern Europe². But in LAC, only 39 percent of the population over 15 years of age has a formal banking relationship⁴, and card penetration is directly related to banking relationships.

Even in relatively advanced countries for payments like Brazil, almost half of the population still doesn’t have a banking relationship. Cash is used for 60 percent of purchases⁵. The opportunity for financial institutions is even more pronounced in Argentina, Colombia and Mexico.

Consumer payment volume in Latin America

An increase in household disposable income is driving higher spending, and card payments are estimated to grow by 10 percent as consumer spending is growing rapidly³. Credit card purchases are increasing and projections indicate that credit spending will continue to increase⁵.

Millennial attitudes and spending behaviors

Financial institutions need to understand the motivations, attitudes and behaviors behind the purchases that millennials make so they can establish good relationships now to secure millennial business in the future.

Millenials aren’t a homogenous segment and their needs vary by age, so you should approach them with unique products tailored to their lifestyles and attitudes. They are optimistic, digitally savvy, and they like to travel.

Although many find themselves currently in a challenging financial situation, they’re optimistic that their financial situations will improve in the future. They are also optimistic that both technology and education will lead to personal success as well as a positive change for society⁶.

Younger millenial vs. older millennial behaviors

Younger millenials born between 1991 and 2000 are early adopters who are extremely connected to technology, and more likely to use it for leisure rather than for business purposes. Older millennials, born between 1980 and 1990, have the highest spending power in this generation. They have rapidly evolving needs, as many quickly transition into full-time jobs, create new families, and buy homes.

Millennials also like to travel. In 2014, the average millennial spent up to 25 percent more on cross-border travel than older generations⁷.

Since millennials have significant cross-border profiles, it’s important for banks to create unique products that establish top-of-wallet loyalty from an early age.

A 2013 study of spending patterns in Brazil also revealed that younger millennials spend the least amount of money mostly on smaller-ticket transactions (using both debit and credit).

Their annual spending is gradually increasing as they gain spending power and momentum. And in a recent study, we found that a significant number of Brazilian millennials exhibit affluent spending behaviors⁷.

Compared to the U.S., Latin America has a younger base of online shoppers. In Mexico, the median age of online shoppers is only 30; in Brazil it is 32, whereas in the U.S. it is 43⁸.

Total Annual Spending per Card, by Generation⁷

Issuers should use online channels to target millennials as they are a digitally connected generation driven by technology in their day-to-day activities.

Solutions to attract millennials in Latin America + The Caribbean

To be successful, issuers need to drive relationships and products that are digital, customized and relevant to millennials. We can help you pair insights with data, technology and tactics to attract and retain customers. We offer digital self-help tools and customized solutions for issuers, acquirers and merchants.

Product value proposition

Learn how to incorporate the most valued services and features to meet millennial priorities related to security, time optimization, money management, and planning and support for social causes.

Upgrading cardholders

Optimize high-value cardholders by offering them upscale products. By developing a profile for each segment based on specific traits, activities and triggers, we can help you implement an upgrade strategy that anticipates the upcoming needs and behaviors of millennial cardholders. We can also help you fine-tune this effort by changing the scores that are used for determining which customers qualify for upgrades. This will also help strengthen and develop enduring relationships with millennial customers.

Our Premium Product Optimizer, a self-help, web-based tool, can help you drive these efforts.

Communication and promotion strategy

We will create a complete set of marketing materials including a digital communication strategy and promotional offers and to encourage the use of credit and debit cards as the preferred payment method.

Acquiring customers

Our spending analysis identifies average consumer behaviors by using a combination of merchant categories. The purpose is to create specific association rules to encourage card usage. For example, you can focus on department stores, clothing and restaurants rather than supermarkets and drugstores. E-commerce spending can also be an important piece of the strategy as it is more appealing to these cardholders.

Strategic cross-sell

Enhance existing cross-sell practices with strategic cross-sell tactics to address millenials’ preferred communication channels and generate greater response rates from campaigns. We can also help develop an effective acquisition strategy for younger millennials who haven’t yet reached their peak spending years, including the development of a multichannel marketing plan.

Find out more about Visa Integrated Marketing Solutions and how we are using social media and digital channels to acquire new cardholders.

Millennial business retention plan

Develop a strategy for proactive retention and credit line management to retain millennial customers. As millennials grow older and more prosperous, their needs and expectations will evolve. Be proactive in identifying when cardholders move to the next step and offer upgraded products, credit lines and loyalty programs.

References

¹ The Deloitte Millennial Survey, 2014.

² Source: U.S. Census Bureau International Database, 2014.

³ Euromonitor International, Assessing the Payment Landscape in Latin America, 2012.

⁴ World Bank, 2011; Demirguc-Kunt and Klapper, 2012.

⁵ Euromonitor International, Assessing the Payment Landscape in Latin America, 2012.

⁶ Telefonica Global Millennial Survey, 2013.

⁷ Visa Performance Solutions LAC, 2014 – study based on a sample of VisaNet transaction data warehouse for the Brazilian market.

⁸ Forrester Latin America Online Retail Forecast, 2013 To 2018.

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Marketing debit and credit to millennials

In Latin America + the Caribbean

The payments landscape

Consumer payment volume in Latin America

References

Contact Visa Performance Solutions