Retail Membership Programs & GenZ

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Retail Membership Programs & GenZ

Generation Z consumers are more likely than their generational counterparts to desire omnichannel loyalty rewards, premium perks, enhanced personalization, quick reward acquisition, and upholding generational values in their retail membership programs. Insights into the most desirable traits of retail membership and loyalty programs are summarized in the following section.

Insight 1: Omnichannel Loyalty Programs

  • A 2018 consumer attitudes survey by CrowdTwist revealed that 87% of Generation Z consumers desire loyalty points for every brand interaction, including entering brick-and-mortar retail locations.
  • Given the fact that the majority of Generation Z shoppers (53%) desire shopping in physical locations, brands must provide a seamless rewards experience in their membership and loyalty programs.
  • Generation Z also prefers to rack up rewards points through various interactive channels; for example, Generation Z consumers are more likely to desire the option to engage in playing games or interacting with videos to earn award points.

Insight 2: Premium Perks

  • Across all generations, the main reason for joining a loyalty program is to save money; however, Generation Z finds the most value in premium perks offered to members-only.
  • The majority of Generation Z respondents (77%) to Crowdtwist's survey indicated that they are more willing to pay a premium in exchange for valuable perks (e.g., free shipping, personalization), as compared to their generational counterparts.
  • Special pricing also holds equal weight for Generation Z consumers, in terms of incentive to sign up for a membership program, with Generation Z consumers rating "special pricing" and "free delivery" as equally desirable in CrowdTwist's 2018 consumer survey.
  • Eighty percent of Generation Z consumers also mainly sign up for loyalty cards for higher deals or discounts.
  • An example of a company capitalizing on this aspect of Generation Z's attitude towards loyalty programs is Sephora, which enhanced its Beauty Insider loyalty program to include a more exclusive option of a gift upon racking up enough points, based on the desirability of premium perks among consumers.

Insight 3: Enhance Personalization

  • The majority (75%) of Generation Z consumers are willing to disclose personal information for personalization and customized discounts.
  • Current efforts to enhance personalization among Generation Z, as is the case among its counterparts, have been mostly unsuccessful, with only a third of Generation Z having reported purchasing a product that was recommended by a brand in the past six months.
  • Generation Z, more than any other of its generational counterparts, values uniqueness and expects brands to engage with them in a similar, unique fashion.
  • Retail memberships may capture and leverage customer behavior and transactional data to segment and tailor strategies to consumers based on their engagement behaviors with a brand.
  • Membership programs may utilize consumer data to provide personalized recommendations such as celebrating member milestones and special occasions (e.g., birthdays, holidays) with exclusive rewards for members like gifts, discounts, or samples.

Insight 4: Allow Generation Z Consumers to Rack Up Points Quickly

  • Generation Z consumers have voiced that taking "too long to earn points" as one reason to leave a loyalty program.
  • Given their experience of growing up in a digital world where instant gratification is the norm, Generation Z consumers tend to have short attention spans and require abbreviated messaging and more rapid rewards incentives to remain engaged in a membership program.
  • Generation Z tends to utilize multiple digital media platforms concurrently, further highlighting the need for membership or loyalty programs to offer more interactive and visual marketing for rewards for capturing this generation's attention.

Insight 5: Align Programs with Generation Z's Values

  • Fun is a vital brand loyalty factor for Generation Z, with more than half of consumers (64%) citing it as a primary driver for brand loyalty.
  • Ulta Beauty, a popular brand among Generation Z consumers, runs a successful loyalty program with 27.8 million members and which drives 90% of year-on-year sales based on its targeted approach to provide both high-end and mass-market brand options in the beauty industry, which is appealing to Generation Z.
  • Additionally, Target's Target Red rewards program appeals to Generation Z consumers due to its program's provision of perks to individuals without requiring a credit card, which appeals to the values of this generation.

Research Strategy

The research team began its search for Generation Z consumer attitudes towards membership programs to identify the components of membership programs that are most desirable by this generation. To do so, the research team scoured consumer survey reports (e.g., CrowdTwist's 2018 Loyalty Research Survey, Lab42's Generational Brand Engagement survey), market research sites (e.g., PR Newswire, Footwear News, Loyalty 360), and financial news sites (e.g., Yahoo Finance, Forbes).