Design your loyalty program to drive continued business from the valuable millennials demographic.
Those merchants that effectively manage millennials and loyalty programs create an enormous opportunity for growth. By driving repeat business from this coveted demographic, businesses can cost effectively generate dramatic increases in long-term customer lifetime value.
That said, millennials possess a number of traits that make them challenging to engage via a traditional loyalty program. Below are the adjustments retention marketers can make to improve their loyalty program’s ability to effectively engage millennials.
Millennials Market Size
Born between 1982 and 2004, millennials hold tremendous purchasing power in the modern economy. According to Barrons, millennials make up the largest population cohort the U.S. has ever seen. In 2013, millennials numbered 86 million, eclipsing the baby boomer generation by almost 10%. As a whole, this group of buyers holds $200 billion in spending power. Barrons estimates that millennials could soon generate GDP growth of 3% or more – at least a percentage point higher than the current levels.
To semi-quote an early millennial favorite, Marv, “Wow - what a demographic.” Clearly, businesses looking for a long-term competitive advantage stand to benefit from capturing these customers now, and retaining their business for the foreseeable future.
Millennials Require A Specific Type Of Treatment
If only marketing were that easy. Millennials represent one of the most difficult customer groups to engage via traditional marketing.
That said, “requiring a mobile strategy” isn’t unique to millennials. All demographics constantly use mobile. What makes millennials different is that they literally grew up alongside mobile phones. Matures, Baby Boomers, and Gen Xers were always adults in a mobile world. Generation Z uses iPads instead of babysitters. Only millennials transitioned in step with mobile, starting with landlines and carphones, then later sizing up to a Zach Morris, down to a Zoolander, and then back again.
As a result of this co-evolution, millennials exhibit four characteristics relevant for retention marketers:
- Demand respect of their time – the most stressed out demographic, millennials will only provide their time to initiatives that seem worthwhile. They’re young enough to be open to modern forms of communication, but old enough to chastise brands being careless (and make an impact).
- Require building trust – only 6% of millennials consider online advertising credible. Campaigns that treat customers like humans do much better than those that seem form-fitted or automated. Millennials know how modern marketing works, and demand personalization from marketers looking to cut through the noise.
- Look beyond their immediate social network for expert opinions – whereas all demographics trust friends and family for product information, millennials also trust online experts. Content matters a ton, so pay attention.
- Open to interruption, but turned off by annoyance – according to Advertising Age, consumers in their 20s switch between communications platforms and devices 27 times per nonworking hour. Brands not only have to interrupt millennials to get their attention, but also have to take measures to deliver information as efficiently as possible.
How To Manage Millennials And Loyalty Programs
To best execute against all four characteristics, marketers should implement the following tactics. Doing so will increase the frequency and size of customers transactions for a given business.
Make loyalty program content entertaining
Target writing style to millennials
Introduce useful gamification
Expand the incentives offered to include both monetary and non-monetary benefits
Go beyond cash back
Create personalization, not segmentation
Solicit and track real-time feedback
Solicit feedback before millennials head to Yelp
Track Customer Satisfaction as a Key Performance Indicator (KPI)
Make Your Loyalty Program Transparent
Provide real-time insight into a loyalty program’s goal
Proactively communicate reward expiration
So, there you have it: how to effectively manage millennials and loyalty programs. Make loyalty programs entertaining. Balance monetary and non-monetary incentives. Solicit and track feedback. Make your loyalty program transparent. To those that succeed? Immediate increases in the size and frequency of customer transactions, as well as dramatic increases in customer satisfaction.
Now, go out and make those millennials loyal. If you have any other ideas on how to achieve this important goal, please share them in the comments.