Although 74% of Baby Boomers say they are encouraged to spend with a brand that has a loyalty programme, this falls to 58% of Generation X - and among Millennials, just 41% agree. But if retailers get the proposition right, it can be the start of long-term, valuable relationships with this group.
In a survey of 1,014 consumers carried out by global marketing agency ICLP, 36% of the total sample wanted personalised offers when they walk into a store. Among Millennials, 25% want a stylist to advise them - more than twice the overall sample level of 11% - while 22% expect suggestions based on their prior purchases.
“What the research tells us is that, if you know the customer and can be relevant to them, you can drive new opportunities out of that,” Jason de Winne, general manager, ICLP told DataIQ in a discussion about the survey. “It moves you into the realms of real loyalty and engagement where people are more flexible on price and they consider other elements in their buying decisions. You can even change store location and people will still keep coming because you have created stickiness.”
Having history with a brand is becoming a new basis for loyalty, says de Winne: “People fear starting all over again with a new brand. For example, Netflix knows what you watch and makes recommendations based on that information. If a rival comes along with the same proposition, but a lower price, you still have to start all over so it can get to know you. That is too much hard work.
He adds: “From a generational point of view, things are changing and Millennials want different types of personalisation. That means one size does not fit all. Retailers have got to be aware of how different consumers are and what are their expectations.”
The study found that the nature of what consumers expect in retailing is changing, with 18% saying they are likely to spend more time in-store if they are greeted by name and made to feel valued. “There is a clear desire among these customers to be loyal and to have personalised, relevant experiences and offers. But they do question why they should be known at every touchpoint. Retailers need to explain how, if they know you, it makes life easier and quicker,” he says.
This experiential need does not fully overshadow what loyalty programmes have long been doing - rewarding customers for their data by giving them points and discounts. The research found nearly two-thirds (63%) of consumers would shop more frequently or spend more with a brand if they were offered discounts on future purchases.
De Winne believes this behaviour is more rooted in some age groups than others. He notes: “Baby Boomers grew up with the first generation of loyalty programmes where all they had to do was present a card to be known. Younger generations have grown up with digital channels where data is readily available, so they want things to be more relevant and personal.”
“The challenge now is less about having the data and knowing what the customer wants, it is more about the retailer’s ability to deliver that. Marketers make promises in campaigns, but they rely on in-store staff to know what is coming at them. A big change is enabling frontline staff to react and meet those customers’ expectations,” he adds.
For ICLP, that marks another step in its 30-year evolution from traditional, transaction-based loyalty programmes to enabling brands and driving the next best behaviour which marketing is looking for. Says de Winne: “The key is not just the promise to the customer, but enabling staff to deliver on that promise. That includes internal communications because they ensure good interactions take place and the experience is seamless for the customer. The underpinning elements of that are data and technology.”
Loyalty may have changed, but it is still exhibited by consumers - 59% say they spend more with brands that run a programme. De Winne concludes: “What’s exciting is how to take that in-store experience and express it digitally as well. If you know a customer’s behaviour and what they have done, you can deliver communications in a personal way. Creating that feeling is powerful and it means the customer will tell people about it. Consumers post the positive things about their lives.”