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Earning Millennial Loyalty

Earning Millennial LoyaltyMillennials are a contradictory generation. They’re young, but they’re highly motivated. Their finances are limited, but they’re developing some of the most cutting edge technology, mobile applications and social platforms on the market today. They may buck tradition when it comes to the workplace, but are fiercely passionate about causes that are making social impact and brands they feel a connection with. Oxymorons aside, this ‘army’ of 79 million young college students, workers, entrepreneurs, and consumers – all between the ages of 18 and 33 – make up America’s largest generation in history. Collectively, they spend $600 billion annually, and by the year 2020, are expected to account for 30% of all retail transactions in the United States.

In short, Millennials represent a growing economic force for the restaurant and retail sectors. Their future spending power alone serves up a veritable goldmine for the brands that can understand the motivators behind this generation’s purchasing behaviors and cater to their evolving lifestyles and needs. 

What Matters Most to Millennials?
While younger Millennials have not amassed much wealth yet (their median income at age 30 hovers around $42K), they have fully embraced the entrepreneurial and startup culture. In fact, more than 14% of Millennials are already earning more than $2 million annually. But as the most distrustful generation in recent history, the industries courting Millennials need to quickly understand those brand loyalty triggers to secure their trust – and future spending – before their loyalties become aligned elsewhere.

For the Millennial generation, brand loyalty (and their spending) amounts to a lot more than comparing restaurant menus or a store’s inventory. It’s about combining a brand’s products and offerings with a compelling mission they can identify with and trust. According to an academic analysis of their behavior and demographics, Millennials want the abundance of choice and freedom of selection they have known since birth. With this abundance and freedom, comes a desire for flexibility in schedule and items and orders personalized to their individual preferences – and they want them all now. Millennials are collaborative, and they learn through hands-on and social interactions. Yet despite this collaboration, they recognize themselves as individuals, and they don’t feel the need to conform to mainstream ideals.

So what do Millennial consumers look for in brands when aligning their loyalty? 

  • Social Impact. As a philanthropic generation, Millennials want to know that their actions, and those of the companies they align with, effect meaningful change.
  • Millennials are a product of technological advancement. They also champion disruptors.
  • Millennials don’t just want to make an impact; they want to lead the charge.
  • Millennials are the most educated generation – they are driven, motivated and always looking for the next big thing.

Technology Drives Loyalty

Greatly influenced by the latest mobile, social and disruptive technologies, Millennials expect that all their interactions with brands and service providers, whether it’s in the physical or digital world be immediate, efficient, relevant and rewarding. A recent Forbes article about Millennials as customers sums this up well:

“Customers expect you to be as good as the best of what they’ve encountered online and in self-service solutions.

While older generations might question or feel uncomfortable with these tactics, Millennials have only ever known a technologically-connected world; one where instant gratification is only a tap, click or swipe away.

Here’s a brief timeline of how they grew up:

In 1989, the Internet, which just turned 25 (the age of the average Millennial) become known to the masses. Just a decade later, while most Millennials were still in elementary school in 1998, Larry Page and Sergey Brin launched Google.

With their short history firmly rooted in technology, it’s hardly surprising that Millennials are hyper connected, technologically savvy and constantly on the go.76% own a smartphone, 45% access coupons via email on mobile devices and 63% are more likely to buy something if they receive a coupon on their mobile device while near a store. And while Millennials may not be readily handing out their loyalty, one thing they are giving away is data. Many Millennials freely share their personal information with companies having few, if any, invasion of privacy reservations. For loyalty marketers, this creates a perfect opportunity to build one of the most complete customer profiles for any segment, utilizing real-time data to tailor offerings to match Millennials’ fast-paced and mobile-centric lifestyle.

Social Dependency

More importantly, as Millennials continue to offer data, marketers need to gather and analyze it. By using data gleaned from CRM and social channels to understand behaviors, restaurants and retailers can ensure they’re sending well executed and targeted campaigns to give these consumers what they’re actually asking for. By analyzing their data, loyalty marketers can evaluate their campaigns and gain real insight into what’s working with millennial engagement, what’s not – and what they can do next. Millennials want retailers and restaurants they frequent, and their employees, to be a real-life representation of the easy and effective virtual experience they have always grown up with. They demand control over their loyalty wallets and programs, they want to shop and eat without the interference of store associates and waiters, and they want retail and restaurant employees to know all of the same information about their shopping and dining preferences that logging into their online account would give them.

It’s this kind of seamless experience that will drive Millennial loyalty far beyond the loyalty program itself – and companies who don’t create this experience could fail as a result. Take the popular fast food chain McDonald’s – which ranked number one amongst American consumers, but doesn’t even make the top ten list for Millennials’ favorite restaurant chains, Why is this? Unlike Subway, Wendy’s and Pizza Hut, all in the Millennials’ top five, McDonald’s hasn’t offered Millennials the opportunity to customize, or control their food ordering. Furthermore, as Millennials subscribe to healthier, more sustainable food chains, they look for quality over quantity even with smaller average incomes. They want to know the food they’re consuming is grown sustainably, and that the brand they’re aligning with is not harming them – or the environment. This comes back to an emotional component of their generation: trust. The brand-consumer relationship is pivotal for Millennials, the socially-dependent generation, and they align brand loyalty beyond what they see in store.

 Sowing the Seeds by Roasting the Beans (for the Digital Natives)

One rewards program that has successfully captured the Millennial mindset (and their wallets) is My Starbucks Rewards, powered by what is currently the largest coffeehouse chain on the planet. Having survived the push for local business, this global coffeehouse-cum-retailer continues to engage Millennials through various social media channels, mobile technology and sustainable efforts. By offering smartphone applications and mobile payment options, and rewarding consumers for engaging with the brand through social media channels, My Starbucks Rewards isn’t only making life easier for its younger customers – it’s as if the program was designed specifically with the Millennial in mind.

And that’s what keeps the coffee-loving generation coming back: the program is built around motivators that cater to the Millennial lifestyle including music downloads, mobile games and free beverages. The program’s tiered approach lets members earn “Stars” so they can move up to different levels.

Most notable about this customer loyalty program is that it’s entirely mobile – there are no physical rewards cards and consumers have the option to pay using a mobile wallet through the program’s smartphone application. Starbucks also updated its iPhone application (in March 2014) to incorporate tipping and a special “shake to pay” function that will help boost the store’s trend towards “next-generation” retail, digital and mobile payments.

In fact, recent studies reported that nearly 10 million consumers pay for their coffee drinks through the app, making more than 5 million mobile transactions per week. And since we know Millennials look for sustainable brands that value social impact, their mobile wallets also give them avenues to donate to help fund jobs in America through Starbucks’ Create Jobs for U.S.A. Program.

To keep these young consumers loyal to the brand, Starbucks’ marketing team used an omnichannel approach to ensure their brand and communications were accessible and everywhere their customers were. A simple to use and interactive rewards structure, combined with clear and concise messaging really grabbed the attention of Millennials. By combining an innovative mobile application with forward thinking and an opportunity to contribute to the greater good in the world, My Starbucks Rewards appeals to Millennials by leveraging advances in technology and encouraging social engagement and smart spending.

What We’ve Learned about Millennials and Loyalty

As contradictory as they are, what we do know about Millennials is this:

  • Millennials want control over their shopping and dining experience.
  • Millennials need to trust the brands they are loyal to.
  • Millennials thrive off social interaction and engagement, whether through personalized messaging, in store communication or social media outlets. Millennials want to know their impact – and align with brands that identify with a greater purpose than increasing revenue.

Between their spending habits and dining and shopping preferences, this generation – the largest and most culturally diverse since the Baby Boomers – is changing the way restaurants and retailers develop customer loyalty programs. By mining CRM and social data to identify preferences and trends, and utilizing predictive and behavioral analytics to understand what triggers brand love and loyalty among this set, these brands will create and seize opportunities to nurture long-lasting relationships as the generation matures and flourishes financially.

Kobie Marketing

Kobie Marketing