Customers join loyalty programs to save money, obtain rewards, earn status or even receive exclusive benefits. Essentially, they expect to see a value that exceeds the costs required to sign up and remain in the program. However, with four distinct generations making up the collective spending market, it can be difficult to design and manage a program with a clear value-add that resonates across multiple generations. Here’s a deep dive into generational loyalty: how generations are motivated, what they want and how you can speak to them.
As the youngest buying generation, Gen Zs are the first generation to have been exposed to the internet, social media and smartphones since birth; they are true digital natives. With the growing accessibility of global communication, Gen Zs are eager to embrace one another through online communities and social media. They also value individual expression and as a result, are willing to spend more on products that help them achieve it. While they enjoy connecting with others on their own terms, Gen Zs value privacy and tend to be skeptical when it comes to handing over personal data to companies; less than 33% say they are comfortable sharing personal data besides contact information and purchase history. So, rather than force required fields at enrollment and then spam with frequent communications, let them decide what information they want to share and choose when and how they want to be communicated. In terms of brand communication, Gen Zs expect transparency and hold brands to a higher standard than previous generations. The days of lackluster commitment to a strong ethical and environmental policy are over; brands realize they need to practice what they preach in order to align with the progressive nature of Gen Z. In doing so, the benefits of commitment to social change pays off, with 79% of Gen Z willing to engage with a brand that could help them make a difference. Lastly, growing up in the age where search engines return billions of results under one second and transactions are nearly instantaneous, Gen Z expects speed and efficiency. They shy away from clunky user interfaces and long sign up processes, with 62% saying they are willing to walk away from apps or websites that are difficult or slow to navigate. For Gen Zs, make sure your loyalty program delivers individuality quickly and digitally.
Millennials are one of the largest generations globally, and they remain a key focal point for many brands. When deciding which loyalty programs to join, this generation ultimately looks for programs that save them money, but is also interested in convenience and unique experiences. Rather than buying consumer goods, many Millennials prefer to spend their money on experiences, namely ones that they can share with their friends on social media. To engage more with Millennials, brands should offer them opportunities to interact and share socially, such as hosting pop-up events or meetups in certain cities. Millennials are heavy social media users, with 43% using social networks to fill spare time, which means they’re highly susceptible to social proof from friends and trusted individuals when making purchases. Additionally, Millennials, like Gen Z, expect loyalty programs to be convenient and easy to use. Since 68% of Millennials demand an integrated, seamless experience regardless of channel, be sure to incorporate real-time notifications, mobile wallet technology and personalized, multichannel communication capabilities within your loyalty program design to show them you understand the value of their time.
Of the four generations that have spending power in the market, Gen X is talked about the least, but shouldn’t be overlooked. Gen Xers, while making up the smallest generation, tend to have the highest disposable income and can be fiercely loyal to the brands they love. However, they are busy juggling career and family life, and may not have the time to go on a spending spree. As Gen Xers are time sensitive, they are looking for programs that require minimal action. Keeping enrollment processes simple with easily digestible program rules and redemption policies increase the likelihood that Gen X will join. Because many have families to provide for, Gen Xers are also keen on finding good deals that will make their life easier – they are, in fact, the generation most likely to redeem for gift cards in a loyalty program2. Plain and simple, loyalty programs must present convenience and cost savings for this generation.
For Baby Boomers, loyalty programs historically meant punch cards, coupons and vouchers. Fast forward to today, simplicity and practicality are key for this generation, with coupons and cashback remaining king. While many brands are finding ways to use technology in their loyalty programs, Baby Boomers are fine with traditional “buy X get Y” program designs; 74% of Baby Boomers surveyed saying that they are highly interested in obtaining product coupons for completing actions in a program over other rewards1. Boomers are initially more interested in a transactional relationship with brands they love, where they spend money and are rewarded accordingly. Although they are looking for a discount, continued brand loyalty comes from great customer service; in fact, 54% of Baby Boomers are unlikely to return to a store due to lack of appreciation from sales associates. And while many companies are looking to technology to improve customer service, incorporating things like chatbots aren’t necessarily going to make communication with this generation easier – 62% believe that chatbots are unable to answer complex questions. To maintain loyalty with Baby Boomers, brands should rely on already established communication channels such as direct mail and media spend to build those relationships. As long as Baby Boomers are presented with clear value and good customer service, brands can expect this generation’s loyalty to remain strong.
What’s the first step to building loyalty for your brand across generations? Know your customer. While demographic knowledge allows you to segment your customers into what drives some of their purchase decisions, taking the baseline of who your most valuable segments are, overlaid with behavioral data that can predict where they’ll go in their customer journey, is key to growth and unprecedented ROI from loyalty. Find out more about a data-driven approach that classifies, quantifies and predicts customer behaviour through Kognitiv’s SmartJourney®.
1Kognitiv Internal Benchmark Data 
2Kognitiv Internal Benchmark Data