Royal Caribbean CEO explains why he won't reinvent his business to please millennials
- Royal Caribbean CEO Michael Bayley said in the cruise industry, millennials tend to exhibit preferences similar to those of other parents once they have kids.
- While making broad assumptions about members of a given generation can lead to faulty conclusions, millennials do tend to show some characteristics more frequently than other generations.
- Some of those characteristics, like a higher willingness to pay premium prices and lower brand loyalty, could have long-term consequences for businesses.
Much has been made about how millennials are killing off industries and reshaping the way businesses operate.
But Royal Caribbean CEO Michael Bayley isn't preoccupied with appealing to them. In an interview with Business Insider, he said they resemble any other parent once they grow up and have kids.
"We're multi-generational, and contrary to what millennials think, there's other people in the world," he said. "Once a millennial gets married and has kids, you become just another dad, like every other dad."
Bayley was referring specifically to cruise ships, but his point raises a question that's essential to the idea of evaluating people on generational lines that can be blurry and somewhat arbitrary: Do generations have discrete preferences, or do people of certain age groups tend to have preferences that are constant over time?
Millennials are more willing to spend on experiences
It's not that simple, according to Bo Finneman, an associate partner at McKinsey & Company.
"Generation is not always the best proxy for attitude," he told Business Insider. "By the sheer nature of trying to generalize across either millennials or Gen Xers or boomers, I think you inherently make a good degree of fault in those assumptions," he said.
That being said, some characteristics do tend to express themselves more frequently in some generations than others. Among millennials, some of those characteristics bode well for Royal Caribbean.
According to research compiled by McKinsey, millennials are more willing to pay high prices for premium goods and services that older generations, and they tend to exhibit a stronger tendency to spend on experiences as well. That's good news for cruise lines in general and Royal Caribbean specifically, as its cruises tend to be a bit more expensive than other mass-market options like Carnival and Norwegian.
Millennials like doing research, but favor reviews over ads
But other millennial preferences - some of which have been spurred in part by technology - will force all businesses to make adjustments. According to Finneman, millennials tend to seek a large amount of information while researching products and services and favor third-party reviews and testimonies over advertising.
"They're really focused on doing research to spend their dollars in the most wise way possible," Finneman said.
Millennials are also more willing to switch between brands than older generations, which puts companies in a bind: They may eventually find themselves in a world where their customer base is less stable and less likely to be influenced by their marketing efforts.
That doesn't mean that millennials will send establishes industries into extinction, but it does mean that companies, like their consumers, will have to learn to become flexible.