How You Can Win Gen Z’s Loyalty With Data And Trust

The young are wise beyond their years and heirs to the world. How does retail earn your trust?

By: Jenn Mc Millen

Retail is obsessed with Generation Z, the 68.2 million people between the ages of 10 and 25, for even more compelling economic reasons than the industry’s obsession with Millennials.

These tweens, teens, and 20-somethings are holding $360 billion in disposable incomehave an oddly innate tendency to do their own brand research, and most use their smartphones at least five hours every dayreports the site 99 Firms, contributing to massive amounts of consumer data.

All of which presents great upside potential for retailers, particularly those that operate membership programs. For starters, retailers can use their shopper data to understand what is relevant to this group of consumers and gain their scarce trust. Only 39% of Generation Z Internet users trust brands to keep their data safe, according to Insider Intelligence. That’s the lowest trust score of any generation, which isn’t surprising given how many data breaches make the news every day.

These 5 Loyalty Factors Set Gen Z Apart From The Rest

Gaining the trust of an entire generation of skeptics is not something that can be done with a smartphone. Generation Z’s reliance on digital technology has made them natural researchers. They have sharp BS detectors, so companies that want to earn their trust must commit to proving that they are, in fact, worth trusting. Without distorting the facts or greenwashing initiatives.

Consumer data and membership programs can serve as unique tools in this effort because they provide immediate insights into purchases, channels, and preferences. However, the context of Gen Z purchase paths may require some adjustment to these tools.

Here are five reasons why it’s worth the effort.

Reason 1: They have been deprogramming. In 2020, the share of Gen Z consumers active in at least one membership rewards program dropped to 59% from 68% in 2018an oracle ORCL -1.3% study states. The pandemic probably played a role, but that doesn’t matter because every business knows that winning back customers is harder than keeping them. So what’s grabbing the attention of post-pandemic Gen Zers? Here’s a hint: in 2021, 70% of Gen Z consumers belonged to at least one premium rewards (also known as payment) program, retail consultant Clarus Commerce found. This suggests that they anticipate a higher value and a better deal when they pay for a service. But more importantly, the figure represents a generational change, as only 57% of boomers belong to paid rewards programs.

Reason 2: They are pioneers in different ways to buy. More than half of Gen Z shoppers skip the middleman and buy directly from a brand’s website, 7 percentage points more than the total population, according to the consumer research group. WSL Strategic Retail. Similarly, they are more likely than the total population to sign up for product subscriptions (by 10 percentage points), such as Hello Fresh meal kits, Stitch Fix clothing, and Birchbox. Retailers are likely to gain an advantage by partnering with brands, especially direct-to-consumer brands, and creating a commanding presence on their sites. Recent Glossier Association with Sephora stores, due to roll out in 2023, it is expected to expose both companies to more young consumers (and reward members), according to Vogue Business.

Reason 3: They want alternative solutions to credit cards. As of spring 2022, credit card balances among Gen Z consumers are up 30% over the same period in 2021, according to the credit rating firm. VantageScore. This may be why more than half of Gen-Zers prefer Buy now pay later (BNPL) options to credit cards, according to Adweek research. More than half, 55%, used BNPL services at least once this year, according to a july report. And in 2021, they reconciled 75% of all BNPL users. Merchants must ensure that they communicate that rewards can be earned and redeemed with each payment installment of a BNPL program.

Reason 4: They are a mix of opportunities. According to Insider Intelligence, members of Generation Z are the the most racially, ethnically and sexually diverse generationever. Their digital connectivity raises their awareness of issues that can compromise opportunities for all, including workplace equity, global sustainability, and gender stereotypes. And they are active supporters of these causes. Retailers and brands can communicate their missions through membership programs and encourage customers to participate. Take Ben & Jerry’s. His consistent message about inclusion is credited with improving sales, Forbes Reports. And there’s a growing trend among womenswear retailers, including Victoria’s Secret and Nordstrom, to communicate inclusivity with mannequins that look like real women (ie size 12).

Reason 5: They inspire Gen Alpha. The kids growing up behind Gen Z are similar to their older influencers in that they are being raised with digital devices clutched in their dimpled hands. (After all, the first of Generation A were born the same year as the iPad, 2010). So while the screen may be your “north star,” the people still on those screens are probably old enough to qualify. as authoritative and cool. Therefore, brands and marketers who champion Gen Z as influencers are more likely to gain the trust of Alphas.

Let Gen Z teach us well

Members of Generation Z not only inherit a new world, they also inherit its challenges, eyes wide open. This awareness raises the challenges retailers must overcome to prove their worth, and it should. No customer should be taken for granted, for many, many reasons.

You don’t have to be of legal age to know.

Jenn McMillen, founder of Incendio and loyalty marketing expert, recently joined as a retail contributor and we’ve been granted permission to share her articles with you. You can see all of Jenn’s articles here.

How Gen Z can win loyalty with data and trust

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