March 18, 2013
How Can Retailers Gain the Loyalty of Millennials?
Through a special arrangement, presented here for discussion is a summary of a current article from the rDialogue blog.
Pop quiz: What’s the largest American generation of all time? (Hint: It’s not the Baby Boomers.) At 79 million people ages 15-34, the Millennial generation is three times larger than Generation X and surpasses even Boomers in number. By 2030, Millennials will outnumber non-Millennials.
Retailers are scrambling to secure the loyalty of this tech-savvy and fast-paced crowd, which spends $600 billion a year.
So, who are the Millennials? And, specifically, what are they looking for in a rewards program?
Millennials — a.k.a. Generation Y — are notoriously brand loyal, but there’s a catch. Rewards have to fit their unique needs and desires. Studies show that Millennials will promote brands online and share personal information for rewards, but they expect benefits in return. Nearly 80 percent will choose a brand with a rewards option over a brand without one. Forty-two percent will choose a card for long-term benefits, but 78 percent also expect to be rewarded within three months of joining a program.
Hyperconnected and intensely social, Millennials love variety and customization. They’ll personalize anything, from their phones to their bodies (at least 30 percent have tattoos). Since they’ve grown up with technology and get bored easily, Millennials are best reached through multi-channel (mostly digital) loyalty programs with simple, quick copy. More than 90 percent want to manage their credit cards, their banking and their rewards balances online.
Here’s a peek into Millennials’ mindset on loyalty and buying:
Loyal: Reward me quickly and make it easy.
Make it Fun: Ever on the hunt for a game.
Know Me: I’ll let you in, but use my info to send me relevant information.
Researchers: Shopping is a highly orchestrated mission, and I rely on online reviews.
Money Managers: I’m anxious, but aspire to be responsible.
Bloomingdale’s is a brand that’s doing it right. The department store’s Loyallist rewards card program allows shoppers to earn points in a variety of ways with few restrictions. Customers can easily track their progress online, and the Loyallist app keeps them engaged. Virtual dressing rooms make things fun and appeal to the desire to personalize.
![[Image: Bloomingdale's Loyallist Program]](data:image/svg+xml;base64,PHN2ZyB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciIHZpZXdCb3g9IjAgMCAxIDEiIHdpZHRoPSIxIiBoZWlnaHQ9IjEiIGRhdGEtdT0iJTJGcHVibGljJTJGaW1hZ2VzJTJGZGlzY3Vzc2lvbnMlMkYxNjY0NiUyRmxveWFsbGlzdC1zdGlsbC5qcGciIGRhdGEtdz0iMSIgZGF0YS1oPSIxIiBkYXRhLWJpcD0iIj48L3N2Zz4=)
Right now, the youngest Millennials are getting their driver’s permits; the oldest are buying homes. In coming years, these consumers will move through several significant life stages. So, retailers have to stay in touch with who their customers are and how their lives changing to clearly demonstrate how their brand is relevant to Millennials’ big-picture goals. Boring language won’t work, and neither will products that aren’t in touch with their unique generational perspective.
The Millennials have big dreams. Help them achieve those dreams and you could earn their loyalty for life.
- How to Gain the Loyalty of Millennials – rDialogue
- Marketing to Millenials – Kizer & Bender
- Born This Way: The us Millennial Loyalty Study – Aimia
- Millennials and "Hyperconnectivity" – Generational Insights
- Generation Y Tattoos: Millennials Drawn In As Interest In Body Art Jumps – Huffington Post
- Bloomingdale’s Loyallist – Bloomingdale’s
BrainTrust
Recent Discussions
Discussion Questions
How should customer rewards programs be tweaked to best support loyalty from Millennials? Which common features or perks of such programs should be enhanced and which have to go?
Poll
The good news is that Millennials are much more willing to share their personal information than other groups, so the opportunities are out there.
I agree with Ms. DeCosta’s assessment when planning loyalty programs for Millennials: make then relevant, fun and rewarding…but do it quickly. They are not a patient bunch.
As panelists have discussed recently, most stores’ loyalty programs are really discounts by another name. These kinds of incentives will be important to Gen Y shoppers, who outnumber Boomers but do not have nearly the same level of spending power. However, it’s well documented that Gen Y shoppers will also respond to marketers that understand their interest in technology and the emotional connection of community. (“Peer marketing” might be a good way to describe it.) Finally, customized rather than mass media are essential to reaching this target most effectively.
Loyalty programs need to be simple to understand, fairly unique from competitors, offer frequent rewards, and be available electronically. Too many loyalty programs gather data that is not used or is poorly used. Rewards do not come quickly enough or frequently enough. And the programs are too similar.
Retailers should balance their needed results with the desires of consumers, then start to build loyalty programs from the ground up. Too many of today’s programs are “me too,” failing to serve the retailer or the consumer.
Give me what I want, how I want it, and when I want it and I’ll be your friend. Instant gratification is the Millennial mantra and Bloomingdale’s gets it. They have few restrictions on use, which is common, but the kicker is they earn the reward instantly. No waiting for the mail to deliver the savings!
Watch out how you share their information however. They may appear to have a cavalier attitude about privacy, but that is far from the truth. They, like the rest of us, have an expectation of privacy.
So, be open and transparent about how you use their information and make it worth their while to give it to you.
Some very interesting insights provided by the article and references. In my opinion, the key to developing and maintaining a relationship is threefold: listen, respond, and respect. As products of “helicopter parents” Millennials are used to be listened to, responded to, and respected.
These factors underscore the need for real listening and engagement versus selling skills. Don’t interrupt these conversations to try to sell them something. Instead, recognize their unique uses of social media and be responsive. For example, in my research I discovered a significant use of social media to complain about products and/or services. Savvy marketers need to monitor and connect with the complaining millennial in a timely fashion.
Find out the unique problems that Millennials have in shopping your stores or product categories. Figure out which ones they will give you permission to solve and solve them better than anyone else. Remember loyalty is the reward, not the goal, of a solid relationship built on unique problem solving.
To help people realize their dreams you have to know what those dreams are. Our tendency is to tell them what they are or assume we know what they are. Both fatal mistakes.
I’m working on a new initiative called City Possibilities which is an online engagement tool through which we can involve individual city residents in rising up and transforming their city. While presenting this concept to a city council recently they started to whine about how people weren’t “engaged.” At one community meeting exactly one (1) citizen showed up. In digging deeper it became clear that their definition of “engagement” was “How do we get people to do what we want them to do?”
The futility of that thinking should be clear. Retailers often make the same mistake. The challenge is “How can my store help these young adults find and fulfill their aspirations?” That means starting conversations and perhaps cutting back a little on our clever ‘data analysis’.
There are also things NOT to do when approaching Millennials. Don’t require them to clip a coupon from a newspaper—they read them online, if at all. Don’t assume that they’re watching a TV program on a regular broadcast schedule. And don’t assume that a discount is the best way to reach them.
It’s going to be really interesting to see what happens when these first digital natives are running things….
While I am not a Millennial myself, we have a number of Millennials amongst our staff, and I leaned on them to supplement my opinions. Some of our thoughts on how to better serve Millennials is:
1) It’s all about mobile: make your loyalty program mobile-friendly (think Starbucks), as it’s the best way to make sure they’re always using their loyalty card when they shop (giving you valuable consumer insights). They might leave their wallet at home, but you can bet they don’t leave the house without their phones.
2) Personalize, personalize, personalize: use the loyalty and purchase information you gather to send them targeted emails. Show them exactly what they can get for the amount of rewards points they currently have (rather than a broad overview of all the points levels) and send them promotions about their favourite products.
3) Use social media to engage: address their concerns and complaints promptly, and also thank them for their positive reviews and social shares—they want to be recognized, and they share more than any previous generation.
Programs and benefits need to be twitter speak (in other words, short). I agree, you need speed to reward; boomers did not mind saving up airline points for years for their free flight to Hawaii. Millennials want it now.
Loyalty is no longer a key fob or loyalty card, it needs to be on a mobile device. Allow Millennials to easily access benefits and rewards online through their phone. Integration is also key. Make it easy for them to use and share rewards including on Facebook, Twitter and Pinterest. Finally, make offers relevant by using data you collect. Millennial’s don’t mind sharing as long as they know you are using the data to make better offers that make sense.
Weaving personalized and meaningful gamification into loyalty programs will become vital. In my opinion, helping this group of shoppers achieve goals and be rewarded for that action will be all the rage.
As more and more people, especially those of Generation Y and later, get attached to technology, less people are paying attention to other mediums of communication, such as letters or even billboards. Therefore, in order to attract the attention of these tech-savvy customers, it is important to focus more strongly on advertising via the web, such as on the online website or even a social media website such as Facebook or Twitter. Many loyalty/rewards programs requires for customers to provide their information, in which newsletters would be sent out via e-mail or sometimes even snail mail. As stated previously, e-mails would be the more effective medium to use; a greater number of people are more likely to read these e-mails.
However, it is crucial to control the amount of the newsletters that go out. Frequently sending these newsletters out would be less effective as many people would get annoyed and unsubscribe from the mailing list. Therefore, it is important to realize what the appropriate frequency is; companies should periodically be sending these newsletters out, just enough to be reminding customers of the brand’s existence.
The article gives Bloomingdale’s as an example of a brand offering an effective loyalty program, in which I definitely agree. Rewarding points for every dollar spent is a great way to entice customers to shop at their store, as opposed to their competitors, such as Nordstrom and Neiman Marcus.
There are also many stores globally that offer similar programs; for example, an e-commerce company in Japan called Rakuten offers a similar system in which it would reward points for every yen (approximately 1 cent) spent on their website—offering points for such miniscule amounts allows customers to accumulate points quickly, in which they would be able to buy more products on their site. This method attracts millions of people to shop on their website as opposed to shopping in store, which has proven to be highly effective as Rakuten now ranks in the top 10 Internet companies in the world by market cap, next to other big-name companies such as eBay and Amazon.
This is a challenge because staying in touch requires constant monitoring and adaptation. While Millennials share information about themselves often and are influenced by friend’s opinions and reviews, companies are compelled to be listen to these consumers often. One survey a year is not sufficient. Finding a way to regularly monitor social media talk is critical. Since friends’ opinions are relevant, Millennials change their minds so constant monitoring is important.
Listening is not enough. Companies need to respond quickly to changing attitudes and interests. If this advice is followed, then companies have the added challenge of deciding how to keep current consumers while appealing to Millennials. Interests, values, and preferences between the two groups do not always converge.
Spend any time around younger Millennials and you will hear the word ‘obnoxious’ repeatedly. This is the adjective of choice to describe everything unpleasant in their lives. Just put this feather in your cap and when planning your loyalty program, give it the ‘obnoxious’ test.
Also keep in mind that this group will join as many loyalty programs as appeal to them. As long as the program delivers, they will tout the brand, but they will also tout every other brand as well. Hmmm…hard nut to crack!
I have similar thoughts on this article as I did with the other eCommerce growth article today (e.g., make it easy and they will buy). This group has among the least attention span of any age group. Ensure the merchant’s brand drives the true loyalty, and not simply mass, untargeted discounts. Because those discounts alone are not a real reflection of loyalty. We can think of great brands like Apple and Coca-Cola which never require discounts to drive amazing loyalty for their brands. Evaluate what aspects of your brand that set it apart from the rest, and then drive those out to the market.
One has to be very careful with loyalty programs, no matter who the target. They provide no sustainable competitive advantage. Today’s great will be tomorrow’s also ran. They are a meet competition tool, not a beat competition tool.
Let’s not call Millennials “tech savvy.” Let’s call them “tech comfortable.” They want ease and speed. They want convenience. The retailer who understands those will better succeed than the retailer who thinks a rewards program will generate new business.
Make it easy! Simple to use, simple to gain the advantages from, and mindless…that is the key to a successful customer rewards program. Once retailers understand this, they will rapidly understand the impact and how it can drive profits to their bottom line. Anything difficult, complex or not immediately rewarding will be a failure.
Sadly, too many loyalty programs in supermarkets only involve two-tier pricing discounts. And the checkout clerk will gladly swipe her card if you forget yours, which ruins any potential gains from later analysis. All of this will not inspire Millennials to be actively involved in such programs.
There are a few things missing from this debate in my view that retailers should recongnize and respond to:
1. The new value equation. Value to Millennials goes beyond the dollars. These can be broad factors such as sustainability and community, or more narrow ones like shareable content/experience that can create unique dialogue and engagement with friends. Retailers should consider programs that understand and meet these needs
2. Millennials are more “big data” aware, and so there is more need to ensure they get fair share of the growing value from their own data, and more access to control this too
3. The connected world. There will be greater expectation that retailers should collaborate with each other, with brands and with other industries to provide me with the right rewards and value. Rewards programs may need to go “boundaryless” too!
Everyone likes to be rewarded, but I’m not sure that will nurture loyalty in Millennials. Loyalty is ignorance/lack of better options. With knowledge available at their finger tips, Millennials could switch loyalty at the drop of their hat.
So the traditional loyalty card and program might not necessarily keep them coming back to you. Millennials like to be unique and stand out, and they search for solutions which will help them save time, engage with them, and grab their attention by being relevant.
Rewards program should focus on experience rather than just points. Amazon Prime is a good example of the same. Also they should be easy to comprehend; why do you get this benefit and what should you do to avail those benefits? If shopping online, let them know that they can get an item free or at half price or any other offer on items which are important to them because of their loyalty points.
Simple, personalized communication at the point of decision making and enhanced experience as a reward of loyalty can make Millennials come back.
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The good news is that Millennials are much more willing to share their personal information than other groups, so the opportunities are out there.
I agree with Ms. DeCosta’s assessment when planning loyalty programs for Millennials: make then relevant, fun and rewarding…but do it quickly. They are not a patient bunch.
As panelists have discussed recently, most stores’ loyalty programs are really discounts by another name. These kinds of incentives will be important to Gen Y shoppers, who outnumber Boomers but do not have nearly the same level of spending power. However, it’s well documented that Gen Y shoppers will also respond to marketers that understand their interest in technology and the emotional connection of community. (“Peer marketing” might be a good way to describe it.) Finally, customized rather than mass media are essential to reaching this target most effectively.
Loyalty programs need to be simple to understand, fairly unique from competitors, offer frequent rewards, and be available electronically. Too many loyalty programs gather data that is not used or is poorly used. Rewards do not come quickly enough or frequently enough. And the programs are too similar.
Retailers should balance their needed results with the desires of consumers, then start to build loyalty programs from the ground up. Too many of today’s programs are “me too,” failing to serve the retailer or the consumer.
Give me what I want, how I want it, and when I want it and I’ll be your friend. Instant gratification is the Millennial mantra and Bloomingdale’s gets it. They have few restrictions on use, which is common, but the kicker is they earn the reward instantly. No waiting for the mail to deliver the savings!
Watch out how you share their information however. They may appear to have a cavalier attitude about privacy, but that is far from the truth. They, like the rest of us, have an expectation of privacy.
So, be open and transparent about how you use their information and make it worth their while to give it to you.
Some very interesting insights provided by the article and references. In my opinion, the key to developing and maintaining a relationship is threefold: listen, respond, and respect. As products of “helicopter parents” Millennials are used to be listened to, responded to, and respected.
These factors underscore the need for real listening and engagement versus selling skills. Don’t interrupt these conversations to try to sell them something. Instead, recognize their unique uses of social media and be responsive. For example, in my research I discovered a significant use of social media to complain about products and/or services. Savvy marketers need to monitor and connect with the complaining millennial in a timely fashion.
Find out the unique problems that Millennials have in shopping your stores or product categories. Figure out which ones they will give you permission to solve and solve them better than anyone else. Remember loyalty is the reward, not the goal, of a solid relationship built on unique problem solving.
To help people realize their dreams you have to know what those dreams are. Our tendency is to tell them what they are or assume we know what they are. Both fatal mistakes.
I’m working on a new initiative called City Possibilities which is an online engagement tool through which we can involve individual city residents in rising up and transforming their city. While presenting this concept to a city council recently they started to whine about how people weren’t “engaged.” At one community meeting exactly one (1) citizen showed up. In digging deeper it became clear that their definition of “engagement” was “How do we get people to do what we want them to do?”
The futility of that thinking should be clear. Retailers often make the same mistake. The challenge is “How can my store help these young adults find and fulfill their aspirations?” That means starting conversations and perhaps cutting back a little on our clever ‘data analysis’.
There are also things NOT to do when approaching Millennials. Don’t require them to clip a coupon from a newspaper—they read them online, if at all. Don’t assume that they’re watching a TV program on a regular broadcast schedule. And don’t assume that a discount is the best way to reach them.
It’s going to be really interesting to see what happens when these first digital natives are running things….
While I am not a Millennial myself, we have a number of Millennials amongst our staff, and I leaned on them to supplement my opinions. Some of our thoughts on how to better serve Millennials is:
1) It’s all about mobile: make your loyalty program mobile-friendly (think Starbucks), as it’s the best way to make sure they’re always using their loyalty card when they shop (giving you valuable consumer insights). They might leave their wallet at home, but you can bet they don’t leave the house without their phones.
2) Personalize, personalize, personalize: use the loyalty and purchase information you gather to send them targeted emails. Show them exactly what they can get for the amount of rewards points they currently have (rather than a broad overview of all the points levels) and send them promotions about their favourite products.
3) Use social media to engage: address their concerns and complaints promptly, and also thank them for their positive reviews and social shares—they want to be recognized, and they share more than any previous generation.
Programs and benefits need to be twitter speak (in other words, short). I agree, you need speed to reward; boomers did not mind saving up airline points for years for their free flight to Hawaii. Millennials want it now.
Loyalty is no longer a key fob or loyalty card, it needs to be on a mobile device. Allow Millennials to easily access benefits and rewards online through their phone. Integration is also key. Make it easy for them to use and share rewards including on Facebook, Twitter and Pinterest. Finally, make offers relevant by using data you collect. Millennial’s don’t mind sharing as long as they know you are using the data to make better offers that make sense.
Weaving personalized and meaningful gamification into loyalty programs will become vital. In my opinion, helping this group of shoppers achieve goals and be rewarded for that action will be all the rage.
As more and more people, especially those of Generation Y and later, get attached to technology, less people are paying attention to other mediums of communication, such as letters or even billboards. Therefore, in order to attract the attention of these tech-savvy customers, it is important to focus more strongly on advertising via the web, such as on the online website or even a social media website such as Facebook or Twitter. Many loyalty/rewards programs requires for customers to provide their information, in which newsletters would be sent out via e-mail or sometimes even snail mail. As stated previously, e-mails would be the more effective medium to use; a greater number of people are more likely to read these e-mails.
However, it is crucial to control the amount of the newsletters that go out. Frequently sending these newsletters out would be less effective as many people would get annoyed and unsubscribe from the mailing list. Therefore, it is important to realize what the appropriate frequency is; companies should periodically be sending these newsletters out, just enough to be reminding customers of the brand’s existence.
The article gives Bloomingdale’s as an example of a brand offering an effective loyalty program, in which I definitely agree. Rewarding points for every dollar spent is a great way to entice customers to shop at their store, as opposed to their competitors, such as Nordstrom and Neiman Marcus.
There are also many stores globally that offer similar programs; for example, an e-commerce company in Japan called Rakuten offers a similar system in which it would reward points for every yen (approximately 1 cent) spent on their website—offering points for such miniscule amounts allows customers to accumulate points quickly, in which they would be able to buy more products on their site. This method attracts millions of people to shop on their website as opposed to shopping in store, which has proven to be highly effective as Rakuten now ranks in the top 10 Internet companies in the world by market cap, next to other big-name companies such as eBay and Amazon.
This is a challenge because staying in touch requires constant monitoring and adaptation. While Millennials share information about themselves often and are influenced by friend’s opinions and reviews, companies are compelled to be listen to these consumers often. One survey a year is not sufficient. Finding a way to regularly monitor social media talk is critical. Since friends’ opinions are relevant, Millennials change their minds so constant monitoring is important.
Listening is not enough. Companies need to respond quickly to changing attitudes and interests. If this advice is followed, then companies have the added challenge of deciding how to keep current consumers while appealing to Millennials. Interests, values, and preferences between the two groups do not always converge.
Spend any time around younger Millennials and you will hear the word ‘obnoxious’ repeatedly. This is the adjective of choice to describe everything unpleasant in their lives. Just put this feather in your cap and when planning your loyalty program, give it the ‘obnoxious’ test.
Also keep in mind that this group will join as many loyalty programs as appeal to them. As long as the program delivers, they will tout the brand, but they will also tout every other brand as well. Hmmm…hard nut to crack!
I have similar thoughts on this article as I did with the other eCommerce growth article today (e.g., make it easy and they will buy). This group has among the least attention span of any age group. Ensure the merchant’s brand drives the true loyalty, and not simply mass, untargeted discounts. Because those discounts alone are not a real reflection of loyalty. We can think of great brands like Apple and Coca-Cola which never require discounts to drive amazing loyalty for their brands. Evaluate what aspects of your brand that set it apart from the rest, and then drive those out to the market.
One has to be very careful with loyalty programs, no matter who the target. They provide no sustainable competitive advantage. Today’s great will be tomorrow’s also ran. They are a meet competition tool, not a beat competition tool.
Let’s not call Millennials “tech savvy.” Let’s call them “tech comfortable.” They want ease and speed. They want convenience. The retailer who understands those will better succeed than the retailer who thinks a rewards program will generate new business.
Make it easy! Simple to use, simple to gain the advantages from, and mindless…that is the key to a successful customer rewards program. Once retailers understand this, they will rapidly understand the impact and how it can drive profits to their bottom line. Anything difficult, complex or not immediately rewarding will be a failure.
Sadly, too many loyalty programs in supermarkets only involve two-tier pricing discounts. And the checkout clerk will gladly swipe her card if you forget yours, which ruins any potential gains from later analysis. All of this will not inspire Millennials to be actively involved in such programs.
There are a few things missing from this debate in my view that retailers should recongnize and respond to:
1. The new value equation. Value to Millennials goes beyond the dollars. These can be broad factors such as sustainability and community, or more narrow ones like shareable content/experience that can create unique dialogue and engagement with friends. Retailers should consider programs that understand and meet these needs
2. Millennials are more “big data” aware, and so there is more need to ensure they get fair share of the growing value from their own data, and more access to control this too
3. The connected world. There will be greater expectation that retailers should collaborate with each other, with brands and with other industries to provide me with the right rewards and value. Rewards programs may need to go “boundaryless” too!
Everyone likes to be rewarded, but I’m not sure that will nurture loyalty in Millennials. Loyalty is ignorance/lack of better options. With knowledge available at their finger tips, Millennials could switch loyalty at the drop of their hat.
So the traditional loyalty card and program might not necessarily keep them coming back to you. Millennials like to be unique and stand out, and they search for solutions which will help them save time, engage with them, and grab their attention by being relevant.
Rewards program should focus on experience rather than just points. Amazon Prime is a good example of the same. Also they should be easy to comprehend; why do you get this benefit and what should you do to avail those benefits? If shopping online, let them know that they can get an item free or at half price or any other offer on items which are important to them because of their loyalty points.
Simple, personalized communication at the point of decision making and enhanced experience as a reward of loyalty can make Millennials come back.