During the Launch event at The Phocuswright Conference last week, Affirm’s Sara Wyman presented what seemed like an easy, self-evident concept: buy your travel package now, pay for it later. Her company earned an impressive nine out of 10 recommendations from the judges, especially when it was revealed that Affirm had more than 1,000 partners for its services.
But Wyman’s most interesting reveal about her company involved its demographic: the clear majority of Affirm users fall in the millennial category (that is, those who were born from 1980 to 1994). So how was the company able to capture this much-coveted market, and how can other travel tech companies follow its lead?
One of the best ways that travel tech companies can capture the millennial market is to understand the demographic trends. What do millennials value when they travel? How do they pay for their travel? What will create the best user experience for Generation Y?
“Unlike their older counterparts, millennials don’t even own a credit card, let alone use it to pay for big-ticket purchases like travel packages,” says Wyman. And understanding something that simple – that millennials need what Affirm is offering – has been the key to its success.
To that end, other travel tech companies can read up on the millennial travel trends, and capitalize on them. Some factors to be considered include, but are certainly not limited to, the following:
1. Smartphones and social media are important. This, perhaps, is the most self-evident trend about millennials, but the numbers are staggering: 64% of millennials use their smartphones to research, and engage, with their travel experiences. 49% of Millennials use smartphones when planning trips, and 35% book journeys on them.
What’s more, millennials engage with apps while traveling moreso than any other age group – 94% of them engage with Facebook, 71% engage with Instagram and 15% of them engage with Twitter. This suggests that, if any travel tech company is interested in engaging with millennials, it needs to have both smartphone and social media integration. (The success of such companies as Bravolo, BringFido and TripIt with the millennial market is evidence of that.)
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2. Millennials will pay more to get more. When it comes to the millennial market, consumers are willing to pay more to get more. 40% of millennials will increase their year-over-year travel budget (compared to 30% of Gen X-ers and Baby Boomers), and more than half of all millennials say they will not book a hotel if it doesn’t have the amenities they want.
3. Millennials are more likely to engage with content. 74% view destination content, 68% travel activities, 60% accommodations, 51% deals, 48% cruises, 37% flights and, finally, 24% car rentals.
For Wyman, understanding the millennial market has not only shaped the way Affirm puts its offerings out there, but it shapes the way they do business. “We have a proprietary underwriting model that uses machine learning to identify creditworthy individuals," she says. "Unlike other providers who make the decision based only on an applicant’s FICO score, Affirm does a holistic review of each applicant, leading to 126 percent more approvals than industry averages."