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Study: Young Consumers Are Demanding Loyalty from Brands
Here are four rules of loyalty from millennials and members of Gen Z, according to a recent survey from Alliance Data.
Columbus, Ohio--With technology providing so many options at their fingertips, millennials and Generation Z are looking at brand loyalty in new ways, according to a recent survey.
In its study, “The Rules of NextGen Loyalty,” Alliance Data looked at how Gen Z and millennials engage with brands and define loyalty.
The study, conducted by Alliance Data’s Analytics & Insights Institute, used a combination of qualitative and quantitative research methods to delve into what brand loyalty means for older millennials (those born between 1982 and 1989), younger millennials (born between 1990 and 1997) and Generation Z (born between 1998 and 2010).
Both generations have grown up with instant access to information and brands, which has greatly influenced their decision-making. Yet they haven’t abandoned the more traditional forms of engagement, and are finding ways to combine the digital experience with in-store visits, Alliance Data found.
Here are four rules of “NextGen” loyalty the firm discovered as a result of its study.
1. Loyalty is earned.
Because today’s younger consumers have so many options available to them with instant access to information online, they also can be more selective when it comes to where and how they shop.
They’re comfortable doing so both online and in-store and expect a consistent experience from brands across all channels.
According to the study, 63 percent of young consumers agree that since they have so many choices of where to shop, a brand must show them loyalty to earn their business.
For 43 percent of Gen Z, that means a brand must be accommodating to their needs. The same is true for 34 percent of younger millennials and 33 percent of older millennials.
Fifty-five percent of older millennials said they rarely purchase something different if they like a brand, and 53 percent of younger millennials and 51 percent of Gen Z said the same thing.
Brands need to recognize the unique motivations of Gen Z and millennials as the first step in building brand connectivity and earning their loyalty, Alliance Data said.
Price and quality are the top influencers for younger consumers when deciding among brands, but once those two factors are removed, selection and convenience are the most important factors.
Gen Z and older millennials also value consistency in product while younger millennials value rewards programs.
2. Loyalty is complex.
Loyalty has been viewed, traditionally, as one-dimensional.
But Alliance Data
found that consumer loyalty to brands falls within a range of characteristics, from functional to emotional, and said that a brand rethinking its approach to loyalty requires understanding that true loyalty comes from a combination of factors within the spectrum.
For all three age groups surveyed, trustworthiness, honesty and reliability are at the core of loyalty in general. But when it comes to brand loyalty, there are a number of other factors coming into play.
For millennials, it’s also based on rewards, quality, discounts, reliability and coupons, among other things. For Gen Z, brand loyalty is described by the terms quality, reliability, discounts, and rewards.
Other notable aspects popped up for all groups like helpfulness, free shipping and convenience.
3. Loyalty is fragile.
Younger consumers expect great service and a great experience across all channels, and if those expectations aren’t met, they won’t hesitate to take action and voice their opinion.
In fact, 76 percent of younger consumers only give brands two to three chances before they stop shopping with them. One in three consumers, meanwhile, said nothing could be done for a brand to win them back.
Alliance Data said that to keep these consumers happy, “remember that beyond price and quality, (they) expect good service and a great experience.”
Not surprisingly, the demographics surveyed are also heavily influenced by social media. Thirty-five percent keep up with the brands they like on social media. 34 percent of Gen Z members, 29 percent of younger millennials and 26 percent of older millennials said they are influenced by bloggers and YouTubers on what to purchase.
This means they’re also more likely to be influenced by reviews and posts about a brand, and also to express their pleasure (or displeasure) over an experience.
4. Loyalty is multifaceted.
Transactions and sales should no longer be the only measure of loyalty, since it is now a combination of both function and emotion.
Once more emotional elements are introduced by a brand—like shopping options that make consumers’ lives easier, offering exclusive products, or even factors like making personal recommendations or showing they are socially responsible—it then moves past traditional brand loyalty and into aspirational territory.
Alliance Data said brands need to understand customers’ unique needs and think differently about measuring loyalty, understanding some customers only require basic service elements, while others need more.
Being able to measure young consumers’ loyalty and how they’re prioritizing certain values can help differentiate consumers to better target and earn their business.
For all three age groups surveyed, trustworthiness, honesty and reliability are at the core of loyalty in general. But when it comes to brand loyalty, there are a number of other factors coming into play.
For millennials, it’s also based on rewards, quality, discounts, reliability and coupons, among other things. For Gen Z, brand loyalty is described by the terms quality, reliability, discounts, and rewards.
Other notable aspects popped up for all groups like helpfulness, free shipping and convenience.
3. Loyalty is fragile.
Younger consumers expect great service and a great experience across all channels, and if those expectations aren’t met, they won’t hesitate to take action and voice their opinion.
In fact, 76 percent of younger consumers only give brands two to three chances before they stop shopping with them. One in three consumers, meanwhile, said nothing could be done for a brand to win them back.
Alliance Data said that to keep these consumers happy, “remember that beyond price and quality, (they) expect good service and a great experience.”
Not surprisingly, the demographics surveyed are also heavily influenced by social media. Thirty-five percent keep up with the brands they like on social media. 34 percent of Gen Z members, 29 percent of younger millennials and 26 percent of older millennials said they are influenced by bloggers and YouTubers on what to purchase.
This means they’re also more likely to be influenced by reviews and posts about a brand, and also to express their pleasure (or displeasure) over an experience.
4. Loyalty is multifaceted.
Transactions and sales should no longer be the only measure of loyalty, since it is now a combination of both function and emotion.
Once more emotional elements are introduced by a brand—like shopping options that make consumers’ lives easier, offering exclusive products, or even factors like making personal recommendations or showing they are socially responsible—it then moves past traditional brand loyalty and into aspirational territory.
Alliance Data said brands need to understand customers’ unique needs and think differently about measuring loyalty, understanding some customers only require basic service elements, while others need more.
Being able to measure young consumers’ loyalty and how they’re prioritizing certain values can help differentiate consumers to better target and earn their business.
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