Arnon Dror: The Millennial Industrial Buyer
In a recent advertorial by UPS in the Wall Street Journal, Simon Bhadra, senior manager of UPS Customer Segment Marketing, said that Millennials are more demanding of suppliers than their Gen X and Baby Boomer counterparts. Arnon Dror weighs in on the story and the phenomenon.
“There’s a tendency to think Millennials care only about the e-commerce and digital channels their suppliers offer. And don’t get me wrong, those are extremely important,” Bhadra says, “but the data shows more millennial buyers expect a broader range of services from suppliers than their Gen X and Baby Boomer peers.” Image Source: wallstreetjournal
In other words, not only are millennial industrial buyers gravitating towards online marketplaces and user-friendly website, for their own convenience, but they also put a premium on important after-sales and customer service capabilities of their suppliers that greatly stand to benefit the companies that they work for as well.
Arnon Dror states that according to the UPS Industrial Buying Dynamics Study cited in the article, 85 percent of the generation who grew up with Apple Care and the Best Buy Geek Squad expect returns on items while 79 percent also expect their suppliers to provide training and onsite maintenance and repairs. Meanwhile, 78 percent take their expectations further with recycling services, while 74 percent at least expect disposal services.
Companies with younger purchasing staff on average may be delighted to know that 35 percent of Millennial buyers expect suppliers to respond within the day compared to 24 percent with the same expectations amongst Gen X buyers, and 25 percent of Baby Boomer buyers.
“Possibly more surprising than high expectations for service may be that more millennial buyers say they’ll shift share of spending to get access to those services,” Bhadra says. “In fact, just over two-thirds of Millennials say they’re likely to shift share of spending for post-sales service [69 percent] compared to 56 percent of Gen X buyers and just 22 percent of Baby Boomers.”
Arnon Dror says the shift in buying priorities represents a focus on the value chain rather than the initial costs. Millennials don’t like to be held hostage by unreliable suppliers, even if it means pinching a few pennies here and there like the generations before them. These days, in addition to price, quality, and timeliness of deliveries, more and more weight is being assigned to added services and support. Millennials also put a premium on trusted relationships and loyalty with suppliers.
This makes Millennial buyers more likely to take advantage of the robust service offerings of larger suppliers, such as 24-hour customer service, global warehousing and distribution services, and other less tangible value-added services.
Although this all sounds good in paper, Arnon Dror reminds that this new generation of buyers has yet to be truly proven in real-world scenarios where the literal bottom line is profits. In manufacturing, for instance, companies rely on economies of scale to make a profit, and the convenience of customer service does not always make up for the added costs involved. In such cases, Dror cautions, buyers to beware.