Earning The Loyalty Of Millennials And Gen Z

0aaaSourabh Tambe AllianceData

Younger consumers, which can be segmented as Gen Z (8 to 20 years old), Young Millennials (21 to 28) and Older Millennials (29 to 36), represent the largest generation in the market today, as well as the first to grow up in an always-connected world.

That means they have come of age — or are coming of age — at a time of unprecedented choice and convenience, creating a view of brand loyalty that is more complex and fragile than previous generations.

Building relationships with these consumers requires getting loyalty right in their eyes. Here are five keys to accomplishing that, based on our research.


Rethink Loyalty

Traditionally, brands have used transactional metrics to measure loyalty, such as frequency, monetary impact and recency. However, younger consumers have a more multi-faceted relationship with brands than other consumers. Understanding the motivating factors outside of transactional history helps drive shopping behavior and loyalty.

One way to think about loyalty in regard to these consumers is through a continuum that begins with functional brand attributes and evolves to more emotional attributes. As more emotional elements of loyalty are introduced, the relationship changes, moving beyond the transactional to the aspirational.


Deliver On Expectations

Price and quality are the top influencers for all younger consumers. That doesn’t necessarily mean they are always looking for the lowest price. They recognize the relationship between price and quality and seek brands that deliver value, even if they can’t shop more aspirational brands as frequently as they would like.

Failing to meet their expectations can carry a steep price, considering their potential lifetime value to a brand. One in three say there is nothing a brand could do to win them back after a bad experience.

To keep younger consumers happy — and ultimately loyal — remember that beyond price and quality, they expect good service and a great experience.

One other factor to consider: these consumers have entered the market at a time of increased discounting and have been trained to expect discounts. Our research into younger consumers shows that 71% of Millennials and 56% of Gen Z seek out a discount or coupon before making a purchase, while almost half (48%) of customers ages 16 to 24 seek out a store associate when shopping to find out about special offers, promotions or discounts.

Become Mobile-Savvy

Mobile e-Commerce is continuing to grow — but  when it comes to younger consumers, mobile engagement can extend beyond e-Commerce. They are 34% more likely to use “brick-and-mobile” — relying on in-store apps to enhance their shopping experience — than other segments.

Brick-and-mobile apps provide the flexibility to combine e-Commerce, social media and location-based services, such as on-site couponing and product locators, into one platform that brings value to customers and the brand. These apps can also serve as an always-on customer service portal that augments in-store sales associates, helping ensure customer service levels remain high during periods of heavy traffic.

Create A Coherent Brand Experience

While the stereotype of younger consumers is that when it comes to shopping they are exclusively digital, the reality is much different. Our research shows that Gen Z and Millennials are extremely comfortable online or in-store. Not only do they value the in-store experience, they expect a consistent experience from brands, regardless of the channel. They view their experiences at the brand level, not within specific channels, so a cohesive experience across channels is becoming essential to building the trust that fosters loyalty. Ultimately, the customer is the only channel that matters.

Inspire Via Social Media

It will come as no surprise that younger consumers are engaged with social media — 35% say they keep up with brands they love via social media — but the extent of that influence on shopping can still be eye-opening: 55% have made purchases via social media channels, and our assessment of trends on the horizon for 2019 shows that social shopping is going to be more important than ever.

That influence appears to be strongest with the youngest consumers: 34% of Gen Z are influenced by bloggers and YouTubers on what to purchase, compared to 29% of Young Millennials and 26% of Older Millennials.

Digital technology can also help inspire young consumers in their search for the perfect holiday gift. Powered by artificial intelligence, machine learning and predictive analytics, tools like chatbots and smart speakers are evolving to serve up better, more personalized product recommendations.

Among the many changes retail is currently experiencing, it’s easy to overlook the impact of this potentially powerful generation of younger consumers. But brands that take the time to understand how they view loyalty and meet their expectations across channels create the opportunity to build lifelong relationships.


As Senior Director of Alliance Data’s Analytics & Insights Institute with more than 15 years of experience in the retail space, Sourabh Tambe is an expert in using data-driven insights to inform marketing decisions, developing custom statistical models to fit the needs of retail brands, and evaluating each stage of the customer journey. Tambe provides strategic insights to retail brands, as well as sales and customer reporting, credit sales and application forecasting.

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