A loyalty programme for all customers? Generation Z ticks differently.

One loyalty programme for all customers?

Generation Z thinks differently

Sustainable Loyalty Programmes

Generation Z differs from other buyer groups

A loyalty programme for all customers? It takes more than a generic loyalty programme to keep different groups of customers loyal to the brand. Instead of simply awarding points on a purchase, brands/companies should know and understand their customers, their expectations and wishes in detail. How can different customer groups, especially new customer groups, be addressed and what role does social media play in this context?

Does "new generation" also mean "new customers"?

A new customer group born between 1997 and 2012 is entering the market and will become one of the most important buyer groups in the near future.  As early as 2026, this generation will make up the largest share of consumers and thus have a significant influence on the future of the customer approach. In order to make loyal customers out of this potential buyer group and to bind them to their own brand in the long term, retailers must understand what makes this generation tick and how their requirements differ from those of previous generations or customer groups.

This generation ticks differently: Gen Z

Through their parents, Generation Z is confronted with a pragmatic, responsible generation (Generation X) that wants to prepare their children as well as possible for life. At the same time, shaped by the Corona pandemic and the accompanying social distancing and self-isolation, they lack tangible experiences and adventures. 'Blursday' describes this feeling that the individual days no longer stand out from each other, and it doesn't really matter which day it is. In order to break out of this structure, Generation Z is looking for a kick and thrilling experiences. In this context, social contacts play a particularly important role. 42% of Generation Z also feel more connected to their contacts through virtual experiences.

Generation Z

Traders face new challenges

Generation Z ticks differently and has different behavioural patterns compared to previous generations, which poses new challenges for retailers. For them, highly personalised addressing, social media presence of brands and good user experience are almost a matter of course.

Growing up with the smartphone and social networks

Digital Natives

Growing up with the smartphone and social networks
Hyper-personalisation and user experience have a high priority

Generation Demanding

Hyper-personalisation and user experience have a high priority
No generation is as prone to frequent brand switching as Gen Z

Explorer

No generation is as prone to frequent brand switching as Gen Z
No generation is as prone to frequent brand switching as Gen Z

Social Media

The social media presence of brands is particularly important to Gen Z - YouTube as a platform for product search and purchase decisions
Online around the clock

Study

Always online

Having grown up with the internet and social networks, Generation Z spends an average of 8+ hours a day online.  While many Gen Zers log on primarily via smartphone, only 25% of Millennials, 17% of Gen X and 7% of Baby Boomers prefer their mobile phone as their primary source of content/device for internet use.

The effect of social media ads

Fundamentally, the buying behaviour of young people is significantly influenced by social networks. More than 30% of Generation Z use social media as a source of inspiration for purchasing decisions. Social media ads and influencers in particular play a decisive role here in terms of influence compared to other advertising formats, such as traditional TV advertising or print ads. In the past, more than 25% of this generation were persuaded to make a purchase primarily by sponsored advertising with influencers and celebrities.

For 62%, positive brand and product reviews play a decisive role in the purchase decision. Two thirds of the transactions are carried out via mobile phone. This means that members of Generation Z buy via smartphone twice as often as Millennials. For other generations, social media play a fundamentally smaller role in purchasing decisions, as they are primarily used to stay in touch with friends and family.

Rund um die Uhr Online

Study

Change in buying behaviour

Since the onset of the Covid 19 pandemic, 36% of consumers have tried new products - with Generation Z (60%) as the most change-prone customer group.

Why is this so?

In addition to product availability and price, other reasons such as corporate values, sustainability and quality also play a major role for Gen Z. This means, conversely: Anyone who wants to bind this generation to their brand in the long term should therefore take various aspects into account as part of their loyalty activities within the customer loyalty programme. 

At the same time, however, it can be observed that the income of this generation is lower compared to other generations. Accordingly, the demands and desires for products and services are limited by income and available funds. For this reason, members of Generation Z resort to cheaper alternatives when necessary. This also means that benefits such as discounts and special perks can encourage this generation to buy or remain loyal to a brand.

Sustainable customer loyalty

How can this generation be tied to your company in the long term?

In order to inspire this customer group, to bind them to their own brand in the long term and to prevent them from migrating to other providers, marketers have to come up with more!

To better understand shopper groups, social networks have always been a good place to start. Here, customers interact with their favourite brands, talk about their preferences, what they don't like and what their requirements are. Thus, data is voluntarily provided in the form of user-generated content. 

Consequently, when designing and implementing a loyalty programme, retailers and companies should understand the differences between different customer groups, show more flexibility and be present exactly where their customer group is - on social media.

Social Media

Gen Z

Social Media

Millennials

Social Media

Gen X

Socila Media

Boomer

Social media - different age groups prefer different platforms

Attention: If you integrate social media components into your customer loyalty programme, you are not only addressing the youngest group of buyers, but can also reach other consumers. Because: It's not only the young customer group that is on the move here.

While Generation Z primarily spends time on TikTok, Instagram, Snapchat and YouTube, Gen X, Millenials and Boomers are increasingly on Facebook. Accordingly, not only can extensive customer data be generated on these platforms and thus better understood, but social engagement can also be incentivised across all buyer groups.

Loyalty Programme

What exactly can a loyalty programme look like in the context of social media?

Those who understand the different needs and requirements of their customers can optimally adapt their loyalty programme to them and thus better define it. Companies should therefore pay particular attention to tailoring their offer to the lifestyle and values of their buyer groups and integrate social networks into their loyalty strategy.

What exactly can a loyalty programme look like in the context of social media?

For example, award loyalty points not only for registration and purchases in your webshop, but also for social engagements and interactions. If you also award points for following on social networks, interactions with the brand on social media - for example, using hashtags, likes or comments, participating in competitions - or recommendations, you will be able to increase the number of members, points collected and redeemed, engagement and sales.

At the same time, social networks can increase customer growth rate and lifetime value, namely when existing customers bring their contacts to your company through referrals.

Conclusion

In summary, different generations differ significantly in their needs and requirements. Accordingly, it is essential to know your customers inside out in order to address them appropriately and to bind them to your brand.

The most important thing, however, is to remain flexible and adapt to changing requirements, platforms and technologies. Because: As quickly as new platforms emerge or are trendy, they can also disappear from the scene again, new influencers or idols are trendy or other factors for customer loyalty gain importance in the future.
Accordingly, brands/companies should adapt their loyalty strategy to customer behaviour. KPS supports you in developing or revising your loyalty strategy right through to implementation. If you are open to new ideas and willing to try new things to attract the attention of generations, you can only win or, in case of doubt, learn from mistakes.  

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