For starters ...: you can't' ignore the young-adult market (sometimes called the 'starter market'). The age group 15 to 25 spends $460 billion annually. But don't expect them to follow the same banking behavior of their parents. To connect with them, you'll have to alter your marketing mind-set.

What's more disruptive to a financial institution than millions of baby boomers retiring at the same time? Having no one to take their place in the teller lines and at ATMs, that's what. That recurring nightmare finally pushed Boone County National Bank of Columbia, Mo., into cultivating the youth market in their three-college town, despite years of a love hate relationship with students.

"We always wondered if it was really worth our time to market to them," says Mary Wilkerson, vice president of marketing. "But we found that we had a very heavy skew toward older customers. We wondered how we could continue to grow and build our customer base when they were aging so significantly."

Attempting to attract urbanite 20-somethings to what she calls a "stodgy, old-fashioned, big marble bank that old people come to to put CDs in" was a big leap for the marketing department.

"We have no objection to that image because people who have a lot of money want us to be safe and predictable," explains Wilkerson. "But we quickly realized we had no clue where and how to find new customers who will stay with us, not just at 22--but when they're 42 and 52."

Indeed, there is no easy way to buttonhole this $460 billion dollar youth market, made up of high school and college students, young married couples with children, single "blue-collar" workers and post-graduates living with their parents. This upcoming "starter market" is a different breed from the old "moneyed" set, and it calls for a whole new marketing technique.

"You're talking about two generations, the end of Gen X and the start of Gen Y," explains Ann A. Fishman, president of the New Orleans-based, Generational Targeted Marketing (GTM) firm. "This is generational marketing, which is not selling, but matching what you do with what they need." (See table, "A Field Guide to the Younger Generations.")

Ask the students themselves

That's one reason why Wilkerson went to the source to develop the bank's marketing plan. When University of Missouri marketing professor, Dr. Ken Evans, who had been doing the bank's customer surveys for years, asked for ideas on a "real-world" project for his marketing services class, Wilkerson was ready.

"I said I need to "know how to capture the younger market so that it makes sense for the long term, not just student loans or checking accounts," recounts Wilkerson.

And that's what the class did. The student suggestions were so oil target the bank implemented some of them immediately.

"The students presenting it were also in the demographic, and that had credibility for the bank; it resonated with their own needs," says Dr. Evans. "And it was backed up by the data they found in the focus group.

Evan's class facilitated focus groups by bringing in both bank and nonbank individuals in that demographic. They looked specifically at three different issues:

1. How to effectively create bank communications for the target market.

2. Web-related problems.

3. Product concerns.

Students first identified that it would be useful to approach the problem with a lifecycle strategy. They then designed some Web-related communications around lifecycles.

"Our website was a nightmare, it was just glorified brochure ware," Wilkerson says. "Now we have a fabulous website that took in a lot of what they told us about functionality, visibility and navigation."

Learning about this group's enormous need for relationship building also helped dispel the fear Wilkerson and her peers had that students would go online and never enter a branch.

"To them, online is just a doorway, its not in place of human relationships," explains Wilkerson. "They told us to put the budgeting tools online and put up retirement calculators; they'd use that stuff, but take it a step further and say 'If you want to talk to Bob about this, here's his number.'"

Other changes involved:

Customer loyalty program restructure

Heavily weighted to the Certificate-of-deposit crowd, the bank restructured with more emphasis on products that would appeal to the younger customer, such as a car loan and convenience products.

Younger faces in advertising

One big comment from the students was "We don't see ourselves in your advertising." The bank now tries to feature younger, and a variety of different faces in ads. One ad campaign meant for incoming students featured a wild looking young guy with face paint. The caption read, "We were going to offer free body piercing, but our lawyers wouldn't let us do it. Get this free backpack instead."

"Every bank in town was offering to give something away, and we thought, ugh, not another free checking ad," describes Wilkerson. "So my ad agency came in with this ad tucked in a folder and sheepishly gave me a 20 minute justification, but right off I loved it.

Members of the board just gave her a funny stare, but Wilkerson claims everyone under the age of 50 responded.

They encountered some surprises in the student report as well:

"We thought they didn't read newspapers and magazines, but they do; they just read them online," says Wilkerson, realizing this was a good way to reach them.

Also, there is an expectation among this age group that your business be culturally diverse and accepting of diversity.

"One recommendation was to give the impression of being very diverse whether you are or not," warns Wilkerson. "Anything that smacked of old line, white male, 2.5-children family, is viewed with a huge vein of skepticism."

While they haven't shifted their core business, Boone County National Bank has definitely carved out a piece of the marketing budget to cultivate these young consumers. According to Wilkerson, it will take another three or four years to determine whether they've actually built the relationships and captured that market.

A Field Guide to the Younger Generations
The Youth market is not a younger version of you.
To reach these consumers, you'll have to understand their attitudes,
lifestyles and values.
Ready to "relate?" Consider these points,
developed through ongoing research by Ann A. Fishman:

Who They Are      Generation X                Generation Y

Age               22-42 years old             Three-21 years old

Characteristics   Independent and             Second largest group of
                  self-reliant. These are     young people in our
                  children of two-career      nation's history.
                  and/or divorced parents.

                  Huge need to belong.        Have money. They started
                  They surround themselves    working at an early age;
                  with support systems.       had access to parents'
                                              credit cards and
                                              allowances.

                  Big impact on older         Savers. They save for
                  generations. Most           big-ticket items.
                  computers are bought with
                  Gen X advice

Internet          Gen X website fits all.     Gen X website will do
                  Make it clean and clear     well, but ask for input.
                  with good graphics and      Raised with an
                  light on copy. You have     interactive mentality,
                  seven seconds to win or     Gen Y wants you to ask
                  lose them.                  their opinions online.

Marketing         No hype. Just truth. Gen    Marketers dream group.
                  Xers were raised in front   Gen Y is used to
                  of the TV and know every    responding to marketers.
                  marketing trick you do.     Tap into their desire to
                  Give them the truth and     help you out.
                  the facts.

                                              No spin 5 also key.

                                              Word of mouth is a very
                                              big deal.

Loyalty           Not brand loyal. You        Brand loyal very early.
                  must deliver the            Begin bonding at five
                  marketing promise. One      and are fully bonded at
                  burn and they're looking    15. Childhood accounts
                  for a new bank.             work well. Offer ideas to
                                              help them become
                                              financially savvy as they
                                              are.

Respect           Treat them like family.     Young, but demand
                  You are an important part   respect. Role models for
                  of their support system.    Gen Y women are strong,
                  Can they count on you?      sexy and savvy, like
                                              Mulan, Lara Croft and
                                              Buffy the Vampire Slayer.
                                              Support sports and
                                              they're on your team.

Sidebar

starter market

The Youth Market: Points to Ponder

Today's youth market may be educated and have money, they feel financially insecure, according to a new report by MarketResearch.com called "U.S. Youth Market: Deciphering the Diverse Life Stages and Subcultures of 15-24 Year Olds." That may explain why high school students across the country regularly fail at personal finance. Not only that, the latest survey by the Jump$tart Coalition for Personal Finance Literacy reports that high school seniors are doing progressively worse than their peers did five years ago.

The nationwide survey was designed to gauge 12th graders' knowledge in personal finance basics, such as income tax, credit cards, retirement and savings accounts. The average score in the 2002 survey was 50.2 percent, a failing grade by typical school measurements. The average scores in the 2000 and 1997 surveys were 51.9 percent and 57 percent, respectively.

Dr. Lewis Mandell, dean of the University of Buffalo, School of Management, conducted all three surveys. Mandell claims that despite the availability of personal finance courses, few teens receive any kind of useful or practical training.

"Teaching practical application of personal finance is a societal priority," claims Mandell. "The fact that there are so many choices, there are so many scams, and there is so much freedom out there is frightening. It's like letting kids drive without driver's education or any kind of license exam. I don't think we can do this."

The best news to come out of the last two surveys is the teens' response to a pretend stock market game. More "than one quarter of the students participated in the game where students "invest" hypothetical money in simulated Wall Street trading. Teens who played the 10-week game did better on the survey (52.4 percent) than kids who took an economics or money management class.

"There's an emerging consensus that the advantage of the stock market game is that it's very involving, interactive, hands-on, practical and fun," explains Mandell.

Sense an opportunity here? Why not start cultivating the next crop of potential customers by creating an online stock picking game and marketing it to teens? You'll be doing society a favor by helping to educate a group that sorely needs it, and creating brand awareness for your bank.

Here are some other findings in the 2002 survey:

* The average score for Caucasian students was 53.7 percent, compared with 50.6 percent for Asian Americans, 44,8 percent for Hispanics, 42.1 percent for African Americans and 45.5 percent for Native Americans.

* More students have their own credit card (12.1 percent, versus 9.2 percent in 2000, 7.7 percent in 1997).

* Over one third (35.9 percent) of the 2002 students have an ATM card, compared with 31 percent in 2000 and 31.5 percent in 1997.

* Nearly 75 percent of the students have a savings and/or checking account with a bank. The 25.7 percent of the students without any bank account scored lower (46.1 percent) than those who have a savings account (51.7 percent), a checking account (50.5 percent) and tooth savings and checking accounts (50.2 percent).

Janet Bigham Bernstel specializes in writing about marketing and financial services industry issues. She works in Jupiter, Fla.