This was a sponsored post by Aimia under the Master Report series.
According to an Ernst & Young (EY) report, Gen Z are described as a group of people who are self-aware, persistent and realistic, among other things. In the study conducted by EY on Baby Boomers, Gen X, Millennials and Gen Z, to gain an insight on their overall purchase behaviour and loyalty, the results highlighted that attempts to reach out to Gen Z via traditional loyalty programmes is a lost cause given only a mere 30% of the new generation express that a loyalty programme makes a store attractive, compared with 45% of Millennials.
As a result of all these traits, marketers are now compelled to think out of the box with innovative marketing strategies to not only grab the attention of this new generation, but also retain them as their loyal customers. The report also stated Gen Z are more inclined towards online shopping and are quickly losing interest in brick and mortar stores.
Echoing similar findings, a report by Kobie Marketing stated that 36% of the new generation above the age of 18, and 22% of Millennials, expressed participation in one or zero loyalty programmes. This is contrast to 16% of Gen X who participated in more than one programme. The report also highlighted core reasons why Gen Z shy away from loyalty programmes.
First, it takes too many purchases to earn reward points. With 40% of Gen Z citing this as a reason, marketers must ensure that loyalty programmes offer small and early benefits to keep these groups engaged with the brand in the future. Second, the cost associated with joining a programme is not appealing to 33% of Gen Z. This generation is very price-sensitive, according to market research firm Lab42, and depends on their parents’ money for shopping.
The key to tapping into this group is to remain accessible, with perhaps an option of having a free loyalty programme to start with, and later integrating the option to upgrade to unlock all benefits of the programme. In fact, even offering a discount at the sign-up could potentially trigger this new generation to join your programme, said a study from marketing solutions provider CrowdTwist. The study said that nearly 80% of Gen Z respondents said they would join a programme that gave them a discount at the sign-up.
Third, Gen Z are also dissuaded to register for programmes by the time taken to sign up. With an immensely short attention span, 28% of the new generation view this as a block. The solution might be to ask as little information as possible or to link to social media websites, as they are more open to sharing information as compared with previous generations. With these challenges, Gen Z may seem like a tough segment to crack. However, just like for any other generation there are a few things to check off the list.
How do you connect with Gen Z?
Gen Z are born digital, and they are constantly connected which means that marketers must embrace these factors while communicating with this generation. While Millennials were happy to receive rewards by emails, brands must now use digital platforms to interact with the new generation.
Moreover, this new generation is exposed to multiple screens per day. This means they are bombarded with messages and can quickly detect whether or not something is relevant to them. Interestingly, however, according to The Loyalty Report 2018 by Brand Loyalty, 91% of Gen Z are open to being tracked. Marketers can therefore give their loyalty programmes an edge by rewarding this generation based on their previous preferences, rather than just points to redeem. Brands must shift from a single loyalty programme to a more personalised version as connecting with this generation means establishing an emotional relationship.
Gen Z also expect much larger rewards from loyalty programmes compared with Millennials. Despite them being price-conscious, they want to receive additional benefits such as free samples, free online shipping, discount coupons and other things. If the rewards are relevant or valuable, they will be less likely to leave the programme. Overall, this new generation of consumers no longer view loyalty as something that brands are entitled to. It must now be earned.
At the end of the day, companies that can relate to their lifestyles will have a better chance of establishing that relationship.
Check out here for more on tips regarding banking loyalty:
The competition is real and intense! And, to differentiate themselves, banks need to center their offering on core customer needs and evaluate their loyalty strategy to draw synergies from these emerging start-ups. Read here on best practices to for banks reaching out to Gen Z.