Guess who’s starting to make some serious money? Well, at least they are starting to SPEND some serious money. The Millennial generation. Those born between the early 1980’s and early 2000’s are starting to reflect their parents’ values and spending as much, if not more, than they are making.
So what does this mean for loyalty? While it seems to be an overall boon for businesses the jury on customer loyalty is still out.
It is incredible how different every generation is from its predecessor. Experience shapes behavior, and people have argued that the reason the millennial generation is spending more than they are making is because of the events that have taken part in their younger years. While some of these events were extremely catastrophic (9/11 and the “great recession”), others were beneficial, such as the innovation of the digital world & extreme social changes. Some sociologists argue that all of these events have imbedded the idea in millennials that “you never know what the future will bring”. This sense of insecurity causes them to want to spend more money on themselves and believe that it’s OK to treat themselves whenever they want. Watching their parents exhibit this behavior certainly adds to this attitude.
It’s this attitude that causes millennials to want to experience new things. Older generations used to enjoy consistency – purchasing the same brands, eating at the same restaurants, or using the same services. Millennials have a contrasting point of view and want to experience new things, causing a lack of brand loyalty that businesses once had. The “double-whammy” of increased competition and a disposition that lacks loyalty has driven many companies to introduce rewards programs that help bolster customer loyalty. While this does help, it doesn’t necessarily build “true” loyalty. According to an article by Kate Kaye in Adage.com, 37% of millennials said they would not be loyal to a brand without a program. Another statistic, from the “2014 Loyalty Report” from Bond Brand Loyalty, shows that 60% of millennials who are members of a loyalty program would switch the brands they buy, and two-thirds would change when and where they shop, if it meant getting more benefits.
Now, the question remains, how does a business create a sense of “real loyalty” with millennials? One way of doing this is by implementing a feeling of kinship in your business. This ultimately starts by training your employees to be as friendly and caring to the customers as possible. But there are other ways to make the customers feel like they are special. Give them rewards even if they’re not part of your loyalty program, or if you don’t have a loyalty program. Keep it simple. Random acts of kindness stick with customers and they will tell their friends about your good deed as well. Taking a small loss means nothing if it assures a customer will come back again.
Another way to reach them…mobile. Millennials are the first mobile native generation and if you are not reachable in that medium, forget it. All studies show that by 2020 mobile payments will be over 13 gazillion dollars, and the millennials are leading the way. Offer them information, payments, and communications this way. Oh, and email? Forget about it. This generation wants nothing to do with email. Expect open and engagement rates to fall even further.
Millennials are a complicated generation to understand fiscally, or in any way for that matter. But gaining their loyalty could be what sets your business apart from your competitors and could be a big advantage in the future.
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– Luke Pustay