GenZ, Millennials, and Loyalty Programs – Are They Still Relevant?

If you really think about it, the concept of being loyal to a brand is pretty insane. Why on earth would a customer, who knows deep down that an exchange of money is ultimately all this process is really about, think any corporation is deserving of allegiance?

They aren’t, is the simple answer. And, while we do see frothing loyalty in the audiences for certain companies – think Apple, PlayStation, Xbox, etc. – the fact of the matter is that customers are becoming increasingly fickle and waking up to the idea that no company is truly worth being loyal to.

This is most evident in customers belonging to the GenZ demographic. According to Forbes, only 37% of GenZ customers fall into the loyalist category – defined as those who bought a product from the same brand they were considering at the start of the shopping journey – with a significantly higher proportion moving seamlessly from one brand to another during the process.

Loyalty Programs

You might be thinking at this point that loyalty programs are the answer to this conundrum. After all, if GenZ and Millennial customers won’t remain loyal to a brand out of some misplaced sense of belonging, perhaps they need some greater incentive to do so.

However, this does not appear to be the case.

Whilst, according to data from YPulse, nearly half (49%) of GenZ and Millennial customers are members of loyalty programs, only a third (33%) agree they are actually loyal to any brands. This suggests that GenZ and Millennial customers do not necessarily choose which brand to shop with based on whether they have a loyalty scheme membership with them but treat loyalty rewards as a nice to have bonus when they happen to line up.

In fact, when asked what benefits would be the most attractive to them and motivate them to sign up for a loyalty program, the highest proportion (62%) of GenZ and Millennial customers stated specific discount codes and coupons, and a similarly high proportion (60%) stated a flat discount on all purchases. This adds further evidence to the idea that GenZ and Millennials aren’t so interested in long-term loyalty reward systems such as collecting points on an incremental scale. They are far more willing to engage in schemes which reward them purchase to purchase instead of expecting a continued relationship.

"No matter which way they approach it, it’s important brands recognize these young consumers want savings above all,” says YPulse in its report. "To them, it’s not as important that they get special treatment from a brand, but that they are able to get the products and services they want over and over for a discounted price, or with an added bonus. Without rewards, or rewards that match up to how much they’re spending, loyal-ish young people will find a brand who gives them points and then some and will stick with them for it.”

The End of Loyalty Programs?

What’s clear from the figures we have looked at thus far is that Millennials, and especially GenZ, have not heralded the demise of the loyalty program as some commenters have prophesized. However, brands seeking to attract these demographics need to learn from data and adapt their loyalty strategies to meet their expectations.

When you consider the environment they are operating in, especially the staggering rate of inflation, the energy crisis, and the skyrocketing cost of living, it’s easy to see why GenZ and Millennial customers are far more interested in saving money in the short term compared to their older peers.

These generations are also the most likely to be considering travelling and vacations as a way to escape the drudgery of day-to-day life in this often-oppressive atmosphere – especially coming off the back of the global COVID-19 crisis – and will be searching for loyalty programs which can help make these dreams a reality by saving them money during key travel purchases.

Final Thoughts

The loyalty program is not dead but will require a change of thinking to adapt to the ways younger audiences seek out value in their purchasing decision. Speak to your customers, discover the challenges they are facing and design your loyalty programs to address them.

"While brand loyalty in its traditional sense may be a thing of the past, especially among your Gen Z audience members, there are ways to reach these younger generations in an effective way,” concludes Forbes. "Start out with market research that takes a consumer-centric approach and stop relying on brand loyalty metrics to guide decision making. Understand how this digitally native generation is different from its older counterparts, what they want to know and what they care about, and you’ll be on the path to capturing their fleeting attention with your offering.”

Brand loyalty is sure to be a hot topic at Digital Travel Connect 2023, being held in April at the Rancho Bernardo Inn, San Diego, CA.

Download the agenda today for more information and insights.