Nov 11, 2014 | Customer Retention Strategies That Work | 2 comments

How To Manage Millennials and Loyalty Programs

Kane Russell — Marketing at Thanx by  Kane Russell — Marketing at Thanx

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. 

For one, millennials might as well come with a charger. They spend at least 25 hours a week online and tote their phones everywhere – literally

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: 

  1. 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). 
  2. 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.
  3. 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. 
  4. 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

80% of millennials want brands to entertain them. Entertainment value makes loyalty campaigns interruptive, while also making them worth the time invested. Two examples of how to make loyalty programs more entertaining: 
Target writing style to millennials
When sending consumer notifications via text, push, or email, write using brand and demographic appropriate language. Make announcements and updates brief and relatable. Generic updates loaded with buzzwords categorically miss the mark. 
Introduce useful gamification
Badges, bells, and other whistles can quickly become a waste of time. Instead, introduce elements of gamification that also provide utility. For instance, rather than assuming consumers know how many reward points they have earned, provide an easy-to-find online portal with a a status bar that displays reward progress earned. Have the bar change color as a consumer gets closer to the goal

Expand the incentives offered to include both monetary and non-monetary benefits

The loyalty generated by brands that discount only goes wallet deep. To reach a millennial customer on an emotional level, expand loyalty programs to include more experiential benefits. Remember, 63% of millennials want to be the first to share news and information. Millennials ascribe value to being connected and “in the know.” For instance: 
Go beyond cash back
By only offering consumers cash rewards, merchants become discounters, where customers expect to pay less all the time. Instead, provide offers in line with long-term brand value that make programs more valuable for a millennial’s time: e.g. first to try, first to experience, first to evaluate. Focus on making customers feel like VIPs, which goes far beyond making things cheaper. 
Create personalization, not segmentation
Sending the same offer to all your customers, even if you change the name on the message, only counts as annoying segmentation. Activate millennials by delivering an offer suited to an individual’s personal taste to make an interruption worth their while.  

Solicit and track real-time feedback

60% of millennials produce and upload online content, e.g. photos, videos, and product reviews (compared to 29% of non-millennials). Configuring loyalty programs to create a two-way relationship between brand and millennial customers establishes trust and thought leadership, especially when inserted in the customer’s existing purchasing flow. Two ideas: 
Solicit feedback before millennials head to Yelp
Send millennial customers an opportunity to give feedback immediately following a purchase. Respond to pressing issues as soon as possible. This way, your proactive customer service becomes an asset of your Yelp review, as opposed to a shortcoming. 
Track Customer Satisfaction as a Key Performance Indicator (KPI)
In case you have never heard of Claes Fornell, customer satisfaction is a dynamite predictor of future performance. Tracking and improving against customer satisfaction metrics such as Net Promoter Score should be a key facet of your business strategy. 

Make Your Loyalty Program Transparent

Millennials demand transparency. In the modern economy, open information access establishes trust between business and customer. Two ways you can infuse loyalty programs with more transparency:
Provide real-time insight into a loyalty program’s goal
Loyalty programs require commitment from the customer. In turn, businesses have to provide a similar commitment. Communicate the incentives available to consumers and give them access to the progress they’ve accumulated to date. If customers can earn a reward at their next visit, let them know. This will drive them back in-store. 
Proactively communicate reward expiration
Drive customers in-store with soon to expire rewards, rather than counting on rewards to go unused. Long-term value is created with every customer visit, not by just having a rewards program in place. 

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.

Read the 6 Stats For Customer Loyalty eBook Now


The latest from the Thanx Blog, delivered weekly to your inbox.

  Download Customer Loyalty eBook — FREE!