Millennials (24-40 year olds) and Gen Z (18-23 year olds) are known for being loyal to brands that have a strong ethos and allow them to shop in a way that's tailored to their needs and desires as a consumer. In a recent 5W PR study, 62% of millennials surveyed said it’s important to buy from companies that support their own political and social beliefs.1
Since the onset of COVID-19, however, economic hardship is testing this brand loyalty. According to McKinsey, 36% of consumers have tried a new product brand since COVID-19, with Gen Z the most prone to switching brands out of any generation.2 And while product availability and pricing were the top reasons for brand switching, other reasons consumers gave for switching were whether companies met certain values, such as offering natural/organic products, the quality of products and how companies treat their employees.
In light of these new trends, retailers are expanding their playbook around shopper acquisition and loyalty. Here are three tactics that will help strengthen your relationship with these high-value customers.
1. Align with younger shoppers’ values and lifestyle
Millennials and Gen Z are a hugely important audience. In sheer numbers, they are quickly becoming the dominant population, especially in the U.S., according to data released by the Census Bureau and cited by Brookings.3 More than half of the nation’s total population are now members of the millennial generation or younger: Combined, millennials and Gen Z total 166 million consumers.4
As brands strive to attract this audience, they need to look inward at their own corporate values and mission. “Companies that are built on a core set of values — and own these values publicly — will have an authentic bond and drive loyalty with consumers of similar ideals,” notes Marcy Campbell, PayPal Vice President and General Manager of North America and Australia. “That said, if a brand does not authentically live the values it portrays, it won’t just not connect to this audience – the audience could turn on it.”
Brands also need to focus on aligning their offerings with younger shoppers’ lifestyles. With 75% of millennials saying a brand’s social media presence impacts their purchase decision, according to a recent study by Animoto, social channels should be a priority.5
2. Provide flexible financing options that help their budget
As marketers look for new ways to engage and grow relationships with their younger shoppers, the payment experience provides an untapped opportunity.
“By leveraging shopping tools such as rewards, Store Cash and Honey Offers, PayPal can help retailers identify, engage and convert potential lost shoppers and turn them into loyalists," Campbell says. “These tools can also help with personalization and geotargeting, helping brands speak directly to their buyers to stand out in a sea of marketing.”
Campbell notes that PayPal has a unique ability to help retailers reacquire and convert “lost shoppers” who showed high purchase intent but left the website without making a purchase. “We know that PayPal Credit* is a loyalty accelerator: 48% of our users in the U.S. say they’re more likely to shop at a retailer again if they offer PayPal Credit.6 This is one way that payments and checkout can act as a marketing channel that helps drive loyalty,” says Campbell.
It’s also clear that more consumers want flexibility, speed and choice in how they pay. Consumers desire a quick process that doesn’t require them to manually enter their payment information for every purchase. They also want more choice at checkout – and will even walk away from a purchase when the choice they want isn’t available. According to a study by Ipsos, a quarter of people have abandoned a transaction because their preferred payments provider wasn't available.7
3. Customize your brand loyalty programs
As a result of the pandemic, marketing execs are reporting customers’ lower likelihood to buy and weaker loyalty levels, according to The CMO Survey.8 However, Gartner notes that the vast majority of CMOs say customer loyalty is what will fuel post-pandemic growth – making it an area all marketers should prioritize.9
But what makes a successful loyalty program?
The hope with loyalty programs is to turn a one-time shopper into a habitual buyer. Campbell notes that winning companies take a customer-centric approach. “Success starts with a deep understanding of customers and smart designs and is rounded out with engagement strategies that are personalized, geotargeted and designed to surprise and delight a customer base,” she says.
She notes that PayPal’s internal data has shown that flexible financing options can help drive increased sales and loyalty for businesses as they implement new ways to engage their customers. “A proprietary loyalty program is one way to engage customers, but payment solutions like PayPal Credit already have existing customer bases that are loyal and drive increased sales,” Campbell says.
To further build loyalty, it’s also imperative that businesses use all the channels at their disposal. This includes inserting marketing messages where they may never have considered, such as product pages, to highlight flexible financing options or discounts, as well as using payment methods that consumers prefer to help drive conversions.
*PayPal Credit is subject to consumer credit approval
The content of this article is provided for informational purposes only. You should always obtain independent business, tax, financial and legal advice before making any business decision.
1Consumer Culture Report,” 5W PR, 2020, https://www.5wpr.com/new/research/5wpr-2020-consumer-culture-report/.
2Tamara Charm, Becca Coggins, Kelsey Robinson and Jamie Wilkie, “The great consumer shift: Ten charts that show how US shopping behavior is changing,” McKinsey & Company, August 4, 2020, https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/the-great-consumer-shift-ten-charts-that-show-how-us-shopping-behavior-is-changing.
3William H. Frey, “Now, more than half of Americans are millennials or younger,” Brookings, July 30, 2020, https://www.brookings.edu/blog/the-avenue/2020/07/30/now-more-than-half-of-americans-are-millennials-or-younger/.
5“75 Percent of Millennials’ Purchase Decisions Influenced by Brand’s Social Media Presence, Says New Animoto Data,” Cision PR Newswire, March 31, 2020, https://www.prnewswire.com/news-releases/75-percent-of-millennials-purchase-decisions-influenced-by-brands-social-media-presence-says-new-animoto-data-301032167.html.
6Online study commissioned by PayPal and conducted by Logica Research in May 2020 involving 2,000 U.S. consumers, half were PayPal Credit users and half were non-PayPal Credit users.
7Bill Ready, “People are 54% More Willing to Buy When a Business Accepts PayPal,” PayPal, October, 16, 2018, https://www.paypal.com/stories/us/people-are-54-more-willing-to-buy-when-a-business-accepts-paypal.
8“Special Covid-19 Edition,” The CMO Survey, June 2020, https://cmosurvey.org/covid-drives-digital-as-marketers-pivot-into-stronger-and-leaner-roles/.
9“The Annual CMO Spend Research 2020: Part 1 (Budget View),” Gartner, July 6, 2020, https://www.gartner.com/en/marketing/research/the-annual-cmo-spend-survey-2020-part1.