Everything you need to know about Gen Z loyalty

Want to hear a mind-blowing statistic about Gen Z loyalty? Among Gen Zers with a favourite brand, more than 50% would switch it up if another brand were cheaper or of higher quality.

30% would “revert to their ‘go to’ brand for a new product or service” when making purchases, and a whopping 62% said they would check out other options, even if they have a favourite brand.

Does this mean that Gen Z loyalty is inherently unstable? That Gen Z core values are incompatible with loyalty programs? Or does this just mean that companies need to switch it up when it comes to loyalty?

In the past, brands used to retain customers by spending loads of money on big advertising campaigns and digital marketing.

This strategy is less effective on Gen Z than older generations, so let’s have a look at what brands can do to retain customers from this younger generation.

What makes Gen Z loyal?

Gen Z's loyalty is driven by a blend of elements that deeply resonate with their ideals and ambitions. Aligning with Gen Z core values and offering personalised and meaningful engagement means brands can forge lasting connections with this generation.

A robust brand identity, a compelling ESG (Environmental, Social, and Governance) commitment, an engaging loyalty program, and a sense of belonging within a community are all integral components that foster brand loyalty among Gen Z.

There are several things that differentiate the youngest shoppers from the older generations, and these are all things you need to remember when planning your product development, loyalty program, and overall marketing strategies.

1. Digital natives

Unlike other generations, online shopping has never been a new reality for Gen Z. They grew up having the option to shop online, and that has always been their normal. 

Digital accessibility has changed shoppers permanently, and it contributes greatly to their lack of brand loyalty. Make sure to always include a robust digital component.

2. More research

Gen Z is now using online sources before making a purchasing decision across our range of categories. They use the internet and social media to seek inspiration, research products and also connect with their favourite brands. 

You need to be present and communicate your messages in a vast number of locations to make sure you’re reaching your target audiences.

3. Value-based shopping

Gen Zers are more inclined to view their purchases in terms of who they are and what matters to them. They’re more likely to tie a brand’s real-world impact on society to their shopping decisions. 

Gen Z brand loyalty depends on everything from ethical manufacturing practices to employee treatment, and from eco-friendly initiatives to sustainability.

What are you doing in your own company to address these types of issues?

Is Generation Z less loyal?

Contrary to past trends, Generation Z displays a nuanced perspective on brand loyalty. While loyalty might appear diminished in comparison to previous generations, it's vital to recognise that Gen Z's loyalty is driven by different factors.

As digital natives, they seek authentic connections, personalised experiences, and brands that align with their values. Adapting marketing and product strategies to embrace these preferences can foster a strong and meaningful bond with this generation.

Did you know that 74% of Gen Zers are interested in personalised products compared to 67% of Millennials, 61% of Gen Xers and 57% of Baby Boomers?

So is Gen Z loyal to brands? Yes, and many of their favourite brands are surely already familiar faces.

Even though Gen Z might still favour some traditional retailers, that doesn’t mean their affection is easy to earn.

Across all of the brands tracked in Morning Consult’s Brand Intelligence in the United States, Gen Z’s average favourability rating is just 27%, compared with 36% for millennials. In addition, 10% of Gen Z adults have an unfavourable impression of a company, compared with 8% for all adults and 9% for millennials.

It’s clear that Gen Z gives brands lower favourability ratings much more easily, and one of the main characteristics of this generation is its healthy scepticism, the need to verify all the information that brands are putting in front of them.

Gen Z has access to more information and brands to choose from than ever before, and while this doesn’t mean that Gen Z loyalty doesn’t exist, it means that companies have to work harder to gain that favourability.

How do you build loyalty with Gen Z?

To build strong loyalty with Gen Z, adopting a multifaceted approach is key. Begin by embracing flexible payment choices like 'buy now, pay later,' enhancing their sense of financial control.

Next, deliver personalised loyalty perks that cater to individual preferences, underscoring their uniqueness. Lastly, intertwine genuine social values into loyalty initiatives, showcasing a brand's commitment to causes that resonate with Gen Z's ideals.

1. Find a Fresh Perspective on Loyalty

If you want to build a true Gen Z loyalty program, you need to make one that is easy to participate in and offers compelling and achievable rewards to keep members engaged.

Gen Z brand loyalty starts from perks like free delivery, discounts, free products, and instant access. Free returns and fast delivery matters more to Gen Z than any other generation, and the Millennial patience of waiting a few business days for delivery does not exist in Gen Z’s instant gratification world.

Make sure you cater to Gen Z core values with creative surprise, delight gifts and rewards like charitable donations and brand experiences.

White Label Loyalty’s event-based loyalty engine can help you drive any customer behaviour and provide effective personalised rewards in return.

2. Use Gamification

Gen Z customers love games. 65% of Gen Z customers have spent money on a virtual item that exists only within the confines of a video game.

By incorporating game elements and mechanics into non-game settings such as websites, online communities and loyalty programs, you can enhance user participation and engagement.

Elements like challenges, rewards, and interactive features encourage Gen Z consumers to collaborate, share knowledge, and interact actively.

Ultimately, this approach creates a sense of motivation and enjoyment, which drives increased engagement.

3. Encourage Members to Refer Their Friends

Gen Z loyalty also emerges in how the younger generation is more likely to refer friends to their favourite brands, share social media content, and advocate for a company or a product that they really enjoy.

Gen Z consumers are twice as likely to purchase a product based on referrals from friends compared to other generations.

Social media is where Gen Z are entertained, engage with friends, and share their identity, so be present on social media and make it easy for them to talk about your brand and products.

White Label Loyalty’s new social engagement module can help you incentivise word of mouth, engagement and referral on social media

4. Become Omnichannel

Gen Z members are omnichannel shoppers at their core.

While they occasionally enjoy the experience of going to a physical store, trying on clothes, and making an instant purchase, they expect an experience that is first and foremost online.

It is also important to keep in mind that Gen Z is also likely to value app-based interactions with your loyalty program. They expect a seamless experience in which they can interact with your loyalty program on any channel, at any time.

Give them more ways to shop and pay, adding Venmo, Apple Wallet or other flexible payment options (like BNPL) to the already existing cash or credit checkout options. Allow consumers to transact how they prefer, not just with cash or credit.

5. Support Sustainability

We already talked about the fact that Gen Z core values play a key role in Gen Z's loyalty. 90% of Gen Z say they are more willing to purchase products that they deem beneficial to society.

The newer generations, both Millennials and Gen Z, are more financially and environmentally conscious and like to have the option of making purchase decisions based on their values.

Gen Z expects companies to do their part in supporting good causes and alleviating global issues. A majority of them prefer environmentally friendly brands and are usually willing to spend more on them if they are eco-friendly.

This generation is more passionate about the environment, racial equity, and inclusive branding, including more gender-free selections.

In addition to free shipping and discounted products, young buyers may also value giving back to the community. 

By designing loyalty programs that recognize who consumers are beyond sales, companies can demonstrate to younger consumers that they acknowledge their values and identities.

In 2020, Sephora’s already-popular loyalty program became even more famous for allowing users to redeem accumulated Beauty Insider points as donations for the National Black Justice Coalition.