Guide to Millennial Loyalty

Millennials are often thought of as the generation that shops around without being loyal to brands, but they just need to be engaged in the right way.

Have millennials killed brand loyalty? You might well have seen a headline or two saying exactly that. However, the truth is more complicated. In fact, under the right circumstances millennials can be more loyal than older generations. However, the approach companies must take to secure this advocacy has to be different and more tailored to the wants and needs of this generation.

Driven by discounts

Millennials are often seen as less consumerist due to their resistance to traditional advertising. However, that doesn’t mean they aren’t brand-loyal. A KPMG survey found that astonishing 90% of millennials belong to at least one loyalty program. Moreover, they are more likely than older generations to join programs in certain categories.

This is due to a key aspect of millennial loyalty: it is largely based on access to discounts. Saving money is something valued more highly by millennials than any other generation, according to research from Kobie. That means millennials are more likely to sign up for a loyalty card or app in retail sectors they will use frequently and will therefore build up plenty of redeemable points more easily. These sectors include department stores, grocery stores, restaurants, food delivery, entertainment, gyms and healthcare. In all of these areas, millennials are more likely to participate in loyalty programs than other generations. 

Gamification is key

For many of these businesses, the key to success is gamification. This tactic resonates particularly well with millennials, with 40% saying games should be included as part of loyalty programs. Are you interested in loyalty gamification? We have written more about it here.

However, it’s not just the essentials; millennials are more than willing to sign up for premium programs if the offer is good enough. Take lululemon as an example. The athletic wear company launched a loyalty program that costs its largely millennial customers $128 a year. That is hardly a bargain for such a value-minded group. However, the company has found significant success thanks to a deep understanding of its consumer base.

Make them understand the value

The key to lululemon’s success was being clear up-front about their loyalty program’s value. For a start, membership provides customers with a free pair of yoga pants, which typically retail on the company’s site at over $100. That means the additional benefits of membership - exclusive exercise classes and events - effectively cost just $28 a year, or $2.33 per month. The value is extremely clear from the start.

This is one key way to engage millennials, and it relies on two things: the aforementioned value and simplicity. The latter is just as important, as customers can immediately see the benefits of signing up. Rather than waiting to build up reward points they can reap those rewards straight away with a free pair of yoga pants.

The Kobie research mentioned above found that 45% of millennials avoid loyalty programs because they require too many purchases to earn rewards. Similarly, 27% would not join because they don't see the benefits. Clarity and quick rewards are the key to avoiding these obstacles.

It’s clear that millennials can be just as brand-loyal as other generations, as long as they are approached in the right way. Utilising gamification, making rewards clear and providing them sooner rather than later are all key techniques to capture the loyalty of this demographic.