Millennials (18-34 years old) are one of the most impactful groups of consumers globally. By 2030, they are estimated to account for 50 per cent of Australia’s population, and the collective annual income of millennials worldwide is expected to exceed 4 trillion dollars.
Generally speaking, millennials are bigger spenders than the generations before them. But whilst they may represent a gold mine, they are also extremely selective when it comes to where they splash their cash.
Born in a world of emerging technology, they’re no stranger to choice – trawling through huge amounts of digital content, quickly comparing value and navigating ads – meaning that retailers need to go the extra mile to win their loyalty. In fact, only 7% of millennials identify themselves as brand loyalists.
Many market researchers have pegged millennials as unpredictable and inconsistent in their shopping patterns, which is not entirely true. While millennials are indeed harder to tie down, it’s clear what they need from brands to stay loyal.
For retailers grappling with how to keep millennial consumers coming back, here are some keys to building brand loyalty with millennials.
Millennials more than any other generation value flexibility, accessibility and usefulness – and all of this has to be available via mobile phone.
A report by market research company GfK found that 71% of millennials consider their mobile device to be their most important shopping tool, compared to just 21% of baby boomers.
Millennials rely on technology to add value to their shopping experience, or at the very minimum, streamline it. They’ll be quick to abandon slow loading apps, won’t bother with websites that aren’t mobile-friendly and will be turned off by complicated interfaces or convoluted rewards programs.
Millennials are more likely to stay loyal to a brand because of loyalty rewards than any other generation before. Therefore, brand incentives and rewards can result in successful millennial traffic, as long as they’re accessible and easily applicable.
Ninety-four per cent of millennials use a coupon when shopping online, and 75% of millennials report being influenced to shop during a retail sale or promotions. In fact, many people would consider shopping somewhere else, if that place offers them more rewards.
However, to make loyalty engagement a habit and create brand advocates out of repeat shoppers, you need to understand exactly what millennial shoppers expect from a loyalty program.
Millennials are drawn to loyalty programs that engage them through various channels – whether online, through a mobile app or in-store, brands can reinforce loyalty with a program that keeps them looped into the brand experience. Add to that, millennials are interested in rewards programs that focus on experiences and tangible engagement, rather than simply discounts alone.
Do it for a cause
Millennials place high value on authenticity and transparency and are likely to buy from brands they are passionate about and identify with.
Millennial loyalty is often linked to their social conscience. In fact, 4 out of 5 millennials would choose to purchase a good or service from a company that supports a cause they care about (if the price and quality are equal); 3 out of 4 think more highly of a company that supports a social cause; and 85% of millennials make purchasing decisions based on responsible efforts a company is making.
For this reason, brands should have a think about how their cause-based marketing and wider corporate social responsibility activities can act as a bridge to connect with their consumers and build a community of loyal shoppers.
Millennials can be courted into brand loyalty through highly personalised, authentic communications.
Research shows that there’s a positive relationship between personalised communications and brand loyalty – millennials who prefer personalised messages from retailers have a 28% stronger brand loyalty. And, if millennials think a brand communicates with them using relevant messages that are based on their own interest, their brand loyalty increases 7% on average.
Put simply, whilst millennials are very aware of how much data online sites are collecting about them, they don’t mind – so long as it’s being used to enhance and personalise their shopping experience.
Don’t forget customer service
A scary but unsurprising statistic for many brand managers is that 74% of millennials would switch to a different retailer or brand if they had a negative customer service experience, even if it’s a brand they’re loyal to.
Most shoppers have high expectations when it comes to customer service, but this is even higher for millennials who value authenticity and transparency above all else. Ninety-five per cent of customers will tell at least one person about a bad customer service experience.
In a world of instant transactions, the brands that hold on to millennials are the ones that provide customers with a smooth shopping experience and are swift and professional when issues arise.
Like any other customer, millennials value good service, however, it’s important to remember they are a highly informed consumer and are quick to move when their expectations are not met. Since 80% of brand revenue comes from just 20% of existing customers, it’s worth investing in ways to make repeat customers out of this group, or risk falling behind.