Millennials are rising fast in the purchasing profession and shaking things up as they assume greater influence inside their companies.
The men and women purchasing supplies these days for U.S. manufacturers, healthcare companies and other industrial businesses don’t look or act like their counterparts did just a few years ago.
Millennials — members of the demographic cohort born between 1981 and 1996 — now constitute the largest single age group among industrial buyers in the United States, outnumbering for the first time their graying Baby Boomer and mid-career, Gen-X colleagues, according to new research from UPS.
The analysis, part of the 2019 Industrial Buying Dynamics Study, is based on a UPS survey of more than 1,500 buyers in the United States between 22 and 70 years old who purchase industrial parts, products or supplies for use in 15 industries.
This year’s study was the fourth such deep dive conducted by UPS in recent years to explore the evolving behaviors, preferences and perceptions of buyers of industrial products.
Things are changing fast. For context, millennials made up the biggest generational cohort participating in this year’s survey, accounting for 38 percent of the respondents.
Like their more seasoned co-workers, these new buyers have a detailed knowledge of the equipment, materials and supplies their companies need, and they take traditional purchase considerations like price, quality and availability seriously.
What’s different, according to the UPS report, is that they tend to identify and evaluate potential suppliers in different ways.
They prefer to conduct research via social media rather than through a sales representative. They are keen — whenever possible — to buy directly from other manufacturers rather than through third parties.
“Millennials are transforming what their older coworkers expect from sellers.”
Since the power and influence of these new industrial buyers will only grow in the coming years as the members of the Baby Boomer generation (1946-1964) retire, businesses that sell to them will need to adapt to meet their demands and preferences or lose share.
The good news is there’s still time. While millennials are ascendant, they still often lack the unfettered purchasing authority their more experienced Boomer and the Gen X colleagues enjoy.
But the window is closing quickly, in part, because the millennials are transforming what their older coworkers expect from sellers in areas like post-sales service and support.
The UPS study revealed three key ways these new buyers are changing the industry.
Millennials are changing channels.
Manufacturers and online marketplaces are in. Distributors and wholesalers are in … trouble.
Millennials do loads of desktop research before they buy, and they expect the websites of brand manufacturers to be the authoritative source for information on the products they’re researching.
And if they can stay on that website and buy the product directly from the manufacturer, they’ll do it – even if they have to pay a little more for the privilege.
That poses a big challenge for traditional distributors. And yet, the outlook for third-party sellers isn’t necessarily bleak.
Agile online marketplaces with customer-friendly, digital-centric processes score high with millennials and account for a growing piece of the procurement pie.
Their secret? High perceived price-to-value ratios and ease of ordering, as well as superior post-sales service and support.
Millennials are raising the bar — and influencing their older peers.
Support after the sale continues to be an important component of all business deals across all buyer generations and product groups.
But millennials are taking it to a new level.
In the most recent UPS survey, 87 percent of millennials said they were likely to shift business to a different vendor to get better product training and repair and maintenance after the sale.
They also want faster shipping, flexible returns and cancellation processes, and they don’t want to call up a customer service desk and wait on hold for 10 minutes and then talk to someone to get it done.
They want mobile apps that allow them to do that on the go. And their expectations are influencing their older colleagues.
In 2017, the last time UPS surveyed industrial buyers, 22 percent of the Boomers in the business said post-sales support was a critical component in the purchasing decision.
In 2019, that number jumped to 52 percent of the Boomers surveyed — a 30-percentage point increase in just two years.
Millennials are scouring the globe.
Robust international sourcing is on the rise, with the millennials surveyed by UPS saying they order nearly half their products internationally — far more than Baby Boomers or Generation X buyers.
“Successfully selling in today’s industrial marketplace requires greater customer analysis and customization.”
Sourcing from North America and Europe is generally based on quality and reliability; sourcing from Asia, Central and South America and the Middle East and Africa is generally based on product cost.
Survey respondents are also willing to pay more for faster service across borders — 26 percent expect orders in two days, while 81 percent say their orders sometimes require same-day delivery.
The message is clear: Successfully selling in today’s industrial marketplace requires greater customer analysis and customization than in the past.
Buyer expectations and preferences are undergoing a profound generational shift.
Sellers need to take a hard look at themselves and their customers and adopt new practices, new approaches and new tech platforms to thrive in the new landscape.
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