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Brand engagement for Generation Z

Three things loyalty programs should consider...

As a college student, the only loyalty program I belong to is a Buy 10, Get One Free punch card for on-campus cafes. When I asked one of my intern peers what loyalty programs she was a part of, she said that she did not belong to any. When I pushed, prompting her with examples of loyalty programs such as Amazon Prime and Starbucks Rewards, it dawned on her: she had been mistaken. Her family was indeed a member of Amazon Prime and she frequently used Starbucks Rewards built into the app. Her response begs the question--why didn't she identify these as loyalty programs?

Before digging deeper, I'd like to paint a macroeconomic landscape: young people simply don't spend as much, which changes the perception of traditional loyalty programs (e.g. accumulate points, get rewards). As of 2013, members in the 18-24 year old range only spent an average of $20,000 when considering non-housing expenditures. After comparing this level of spending to the $31,000 for individuals aged 25-34 and $38,000 non-housing expenditures of individuals aged 35-44, it obvious that younger people have less disposable income to spend (*Bureau of Labor Statistics).

Consider structuring the "youth oriented" or Millennial/Generation Z loyalty program features so they incent repeat purchases, but supplement with additional value.
For example, the Amazon Prime student package provides for a 6-month free trial of Amazon Prime to introduce young people to its benefits. At the end of the trial, Amazon hopes to convert students into subscription-paying members. As of early 2018, Amazon Prime had more than 100 million members--39% of those being within the 18-34 age range. Despite being a nontraditional loyalty program, Amazon Prime has achieved widespread adoption, even among younger people.

Another suggestion for loyalty programs targeting younger people, like me, is that it needs to be simple!
My generation is easily distracted by so many things set before us. If the value proposition is easy to understand, and simple to acquire, I'm in. People use Starbucks Rewards because they're already visiting the app to pre-order their favorite drink. It's hard to get young people over the initial hurdle of signing up for a program, especially if they can't imagine themselves making additional purchases from that company. It wasn't convenient for me to store my punch card because I didn't carry a wallet so bye-bye punch card. Even that slightly burdensome effort dissuaded me from continued use. All said, I could get excited about a loyalty program for goods/services that I purchase regularly only if it was fast and easy.

Finally, I suggest that the loyalty program should present unique discounts or savings relevant to a younger crowd.
Like many of my peers, I tend to shop around to find lower prices rather than having an affinity for a particular brand. Digital discounts can be a highly effective motivator and appeal to those like me, with less disposable income. Pro-social rewards such as charitable contributions or novel rewards like free pizza for me and my friends also would be appealing.

As of today, I have no loyalty cards in my wallet. However, as I develop financial independence and make more of my own purchasing decisions, I will likely be attracted to creative loyalty programs that capture my imagination and provide meaningful value for my loyalty to their brand.

*Bureau of Labor Statistics of 2018

Miles Wittenberg

Miles Wittenberg

Intern, Augeo