Loyalty programs should target young consumers

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Younger consumers, like Gen Zers and millennials, are less likely to belong to several loyalty programs than older consumers, like Gen Xers or baby boomers, according to a report from Kobie Marketing.

For context, the firm defines members of Gen Z as those born in 1996 or after, while millennials were born between 1980 and 1995. Meanwhile, Gen X accounts for those born between 1965 and 1979, baby boomers were born between 1946 and 1964, and members of the silent generation were born in 1945 or earlier.

BI Intelligence

Thirty-six percent of Gen Zers above age 18 reported participating in one or zero loyalty programs, while 22% of millennials fall into the same category. This stands in contrast to the 16% of Gen Xers and 16% of a combined group of baby boomers and members of the silent generation that belong to so few programs.

As younger generations grow older, they'll have more spending power and may develop stronger brand loyalty for more companies, which would likely lead to them joining such programs. Brands and retailers would therefore do well to target these customers now to increase their chances.

These are a few of Gen Z and millennial consumers' top reasons for not joining loyalty programs:

• Programs require too many purchases to earn rewards.This is the leading reason for both groups, with 40% of Gen Zers and 45% of millennials selecting it. Brands and retailers need to make sure their loyalty programs offer perks, like discounts, unique experiences, or gifts, early and often. Brands can offer small rewards soon after consumers join to make them happy with the program, potentially hooking them for years to come.
• There's a cost associated with joining. Having to pay some kind of fee to become a member scares off 33% of Gen Zers and 39% of millennials, so programs should strive to be accessible and free. At the very least, retailers should offer both a free and paid program, even if the free one has fewer perks.
• The enrollment process takes too long.Young consumers will abandon websites if they take too long to load, so it's not surprising that long enrollment processes are a problem for 28% of Gen Zers and 34% of millennials. Programs should require as little information as possible upfront to draw in these shoppers; this should also help with their concerns about sharing too much information, which 28% of Gen Zers and 25% of millennials cite as a deterrent.

In addition to addressing these concerns, personalizing rewards can help make loyalty programs more attractive to young shoppers. Young consumers are very used to shopping online, and through that, they have experienced a great deal of personalization. Loyalty programs that offer rewards that are tailored to a consumer's individual interests will feel more in-line with the online shopping experience, and have the potential to increase their popularity among all age groups.

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