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Winning the Battle for Millennials’ Loyalty

Posted on 9.29.2016

:: By Kate Hogenson, Kobie Marketing ::

Millennials are now the largest generation in the United States, and they hold the purse strings to nearly $600 billion each year. Given their incredible spending power, brands know they must earn their trust and loyalty.

There is some skepticism about this generation’s embrace of loyalty programs, but the fact is millennials are eager to engage with brands – if marketers reach out to them on their own terms. Millennials – and increasingly, people in all demographics – expect brands to be always on, anticipating and solving their problems through mobile technology, in social channels, with customized, relevant values, offers, information and entertainment content.

And while some retailers are delivering what millennials demand in return for their loyalty - think Starbucks, Sephora and Walgreens – many have been slow to integrate loyalty, e-commerce, point-of-sale (POS) and digital experiences. To succeed with millennials, loyalty programs need to innovative and integrated.

Here are several guidelines for designing programs that will engage millennials.

Be where they are when they want you. Millennials live on their mobile screens and interact through social channels. About 90 percent of millennials own a smartphone, 45 percent access coupons via email on mobile devices and 63 percent say they are more likely to buy something if they receive a coupon on their mobile device while near a store. They expect to be able to access your program wherever, whenever, however.

Make it multi-channel. Many millennials still prefer email for offers and communications from retailers and brands, reserving their social interactions for friends. The key is providing choice of access, so they are in control, and not relying on any single channel.

Deliver a unified experience. Align your tone and content so that store associates, your ecommerce site, mobile app and other access points tell the same story. Consistency is key.

Engage and reward beyond the transaction. The loyalty programs of the past tended to be mechanical quid pro quos, an approach that strikes many millennials as boring, condescending, even mercenary. Successful programs today should incent, recognize and reward more than purchases – product reviews, shares, photo and video posts, participation in polls, games, etc. To engage millennials, programs should emphasize interaction, service, experience as well as transactions.

Get creative. Millennials want brands that will reward them in creative ways and make them feel like they’re part of something bigger. They want the brand to truly know them, and understand their needs and lifestyles. This could be anything from offering free music and mobile game downloads once a user has reached a certain number of points or purchases to something as simple as a free cup of coffee. 

Make your program multi-tender. Retailers have traditionally offered credit card loyalty programs, but statistics show that 63 percent of consumers age 18-29 don’t even have a credit card. Successful programs should allow participation whether a customer is paying with credit, debit, cash or mobile wallet. If you have a credit card product, best practices suggest that your loyalty program can offer extra rewards and benefits to customers using the preferred form of payment.

Support community experiences and positive values. Millennials are passionate about causes such as sustainability and volunteering. Brands earn loyalty when they take the initiative to address the issues that are most important to consumers. Customers who join your program should be addressed as members of a community of shared values.

Make it easy. Customers should be able to participate in your program without having to jump any hurdles. A simple phone number or scan of the mobile screen should be enough to identify members. (And from an operations perspective, a frictionless experience is not just best for the consumer; it is essential to keeping program costs down and avoid impacting speed of service.)

So while millennials are eager to interact with brands, they want to do so in ways that are personally relevant, intrinsically valuable, hyper-convenient and meaningful to the community. Brands that deliver on those needs and desires will succeed in winning millennials’ loyalty.

Kate Hogenson is a loyalty strategy senior consultant at Kobie Marketing, the industry leaders in customer reward programs and loyalty marketing solutions.

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