Loyalty program participation among Generation Z and Millennials is alive and well, according to a new research report from CrowdTwist titled, “Gen Z vs. Millennials: The Changing Landscape of Loyalty.”
Loyalty360 talked to CrowdTwist Chief Customer Officer Emily Rudin to learn more about this illuminating research report.
What is the biggest takeaway (either positive or negative) from this report?
Rudin: The biggest positive takeaway from this report is that loyalty programs are valuable to younger consumers and can actually provide a competitive advantage for brands.
We found that loyalty program participation is not only high among Generation Z and millennials, but it’s also a deciding factor in brand selection and loyalty. We are even seeing Generation Z drive the success of loyalty programs in non-traditional industries such as media and entertainment.
What are brands doing well as far as connecting with these two important segments, and where do the challenges lie?
Rudin: We asked participants to name the loyalty programs they are currently most active in and explain what drives that participation. The results provided an interesting insight into the types of industries, brand names, perks, and values that resonate with each generation. From there, we were able to identify the brands that were successfully engaging both generations.
In the Top 5 for each generation, we saw Amazon Prime, Starbucks, and Sephora leading the ranks. These brands have been successful at sustaining high engagement and loyalty across the spectrum through their use of customer data. Each of these brands offers authentic personal experiences based on behaviors and preferences–they know who you are, what you’ve purchased, and what you’re likely to purchase next. We know that this is valuable to young consumers, our research even found that 75 percent of young consumer are willing to share personal information for a more customized brand experience. Starbucks, for example, is using this data to surprise and delight members with free food and drinks.
The challenges for brands lie in the inability to effectively capture customer data and turn it into meaningful engagement opportunities. We also found in our research that loyalty programs fail with these generations if the rewards offered aren’t compelling enough or if it takes too long to earn points.
What surprised you the most from the report?
Rudin: What surprised me most was that, despite being true digital natives, a higher percentage of Generation Z compared to millennials prefer to shop in-store. Brands have invested so much in their digital and mobile strategies in recent years to better reach the young consumers, but this research demonstrates that brands must be omnipresent and create a seamless consumer experience across all channels, in-store, offline, mobile and social.
On that note, it was also interesting to learn that while most millennials are very active on Facebook, only a small percentage engage with brands on Facebook. It seems that Facebook has a significant untapped potential for brands with a Millennial target audience.
How should loyalty marketers strategize around these key segments?
Rudin: When it comes to building out your loyalty program and strategy for millennials, keep it simple. The No. 1 reason millennials leave a loyalty program is because they find it too difficult to earn points for rewards. Start building in not only reward for spend but reward for engagement. Millennials are willing to play games, fill out a survey, and visit your company website to earn points with your brand. Incorporating these activities will help keep members engaged.
Finally, like Generation Z, millennials shop and engage with brands in-store as well as online. Ensure your loyalty program is multichannel and seamlessly integrated across digital and physical properties so that your Millennial customers can enjoy the same experience online and offline.
Generation Z expects much more from a loyalty program. Generation Z wants much more from a loyalty program than millennials. They want to save money, get additional perks, and earn rewards. They look for member-only discounts and coupons and perks like free shipping and free samples. Generation Z is active on all channels, digital, social and in-store. They expect to be able to check the availability of in-store items online and vice versa.
Growing up in the information age, Generation Z is more likely to research a product before purchasing. This means visiting your brand website, your social media channels, and your instore locations. Invest in creating a single brand identity across all of these channels. Beauty, media, retail, and grocery stores are key industries for Generation Z. Brands operating in these industries without loyalty programs run a high risk of losing business to competitors that do. After all, Generation Z is more likely than millennials to be loyal to a brand if it has a loyalty program.
How do brands create value and personalization?
Rudin: Brands can create value by rewarding for both spend and engagement, and making this experience as simple as possible. Simplify your rewards-for-spend strategy so that earning points for spend becomes frictionless across all channels.
Millennials, for example, love the fact that they can order and pay for their coffee using the Starbucks app. Consider integrating mobile payment and other commerce tactics like receipt scanning to ensure you’re making it convenient for members to purchase and be rewarded for each purchase. Integrate engagement activities that are appealing to both millennials and Generation Z, like games and surveys. Offer instant rewards to demonstrate value to consumers and keep engagement high. Both generations like to save money on purchases consider enabling automatic rewards to apply discounts in real-time.
Brands can personalize the customer experience by using behavior and preference data. A one-size-fits-all approach doesn’t always equal a good customer experience. Brands need to consistently gather data about their consumers across all channels and use tactics like machine learning and predictive analytics to predict future behaviors, identify customer needs and wants, and create better marketing experiences.
Fortunately, as our survey results attest, millennials and Generation Z are much more willing to volunteer their personal information in exchange for these customized experiences. Encourage this willing audience to participate in surveys, complete profile updates, and connect with your brand socially. You can also use this data to celebrate member milestones and special occasions such as birthdays and Mother’s Day by rewarding members with a gift, such as bonus points, a sizeable discount, or free samples. These tactics drive brand engagement and loyalty.