How are you retaining your Generation Z customers?
Advice
8th March 2021
The increased spending power of Gen Z customers is shaping the future of retail. Knowing how to cater to the interests of these shoppers will be the key to having a successful 2021.
“Generation Z now makes up 20% of the US population. Born after 1997, this cohort is making their mark in the economy as they spend an estimated $143 billion per year”.
Who is Generation Z?
Gen Z are financially savvy and unswayed by marketing gimmicks. They also use technology to make purchases. They have high quality and service expectations when shopping online. This generation is digitally native and spends, on average, over eight hours a day online. They’re quick to turn to online retail but they are also wary of giving over their details: 60% of Gen Zs would prefer to keep their data over exchanging it for free services in 2020.
Gen Z are always browsing and are an attractive market. This is why it’s vital for you to keep them spending with you long-term. They are digitally empowered and you will have to innovate to earn their loyalty.
Let’s take a look at the methods you should be using to retain Gen Z customers and how you can build brand loyalty.
Sustaining the peak: Leveraging the April Student Loan drop
There are a few vital discount events that are important for Gen Zs. Some of which most ecommerce brands may not even know about. The most notable is the April Student Loan drop. Every year this influx of money results in increased spending from the student population.
“At the start of the spring term, 94% of students across the UK receive a huge bulk payment of their maintenance loan. As the biggest loan drop of the year, it determines how students spend their money for the rest of spring, summer, and beyond. The key to guaranteeing student loyalty and putting your brand on their radar is understanding spending patterns during this crucial time.”
A quarter of students resist significant purchases throughout the year and save major shopping for this discount event. Plus, this spending could be more intense this year as pandemic restrictions ease and students want to get out and about to show off their new purchases.
You should be capitalizing on peaks like this to acquire customers in the Gen Z market. The easy way to attract them is through discounts: 84% of students are drawn to ads with high discounts and 77% lookout for stackable discounts.
But, be warned: discounts only keep customers for so long. You can’t form long-term emotional connections or brand loyalty around slashed prices. Instead, you need to provide more value to customers that shop with you over discount periods all so they return to you when your products are priced back to full.
To sustain the discount peak and retain customers long-term try a variety of marketing strategies:
Set up an email marketing campaign that re-engages your new discount-driven shoppers after your sale is over. This could ask them to create an account and tell them they’ll earn points for doing so. You’ll then have what you need to reach out to them again down the line
Ask your new customers to leave you a review based on their first purchase and give them loyalty points for the action. This social proof will then act as content to motivate new shoppers to trust and make a purchase. Meanwhile, they’ll want to return to your brand again to spend the loyalty points they earned
With a loyalty program, you’ll be able to reward first-time Gen Z shoppers. Plus, they’ll earn points for purchases that will encourage them to return and spend with you down the line. All the while, upping their customer lifetime value and the loyalty they exhibit to your brand.
SkinnyDip demonstrates value through a simple and effective loyalty program. It’s fun, gives the customer an idea of their brand and provides various reward levels. If you spend £15 you get 75 points. When you leave a product review you get 50 points. Refer a friend and you’ll receive 150 points.
You can then use these points to redeem rewards. For every 500 points you earn, you’ll receive a 15% off discount code. And once you reach 1,000 points, you get exclusive offers throughout the year. This tiered reward system encourages shoppers to come back, spread the word and spend more time with the brand.
Shared values: Emotionally connect with authenticity
Gen Z are keyed into brand identity and look for businesses that share their values. 71% of 16 to 24 year-olds say they feel strongly or very strongly about corporate social responsibility. Brands should pay attention.
They also want to be sold a story, not just the products you offer:
“It’s really important that brands keep within their story and make sure that they are true to it and authentic.”
If they can see your authenticity, Gen Z shoppers will contribute to positive conversations around your store: 53% say they post comments on social media profiles of brands they trust. You should capitalize on this engagement and facilitate the conversation.
Start by building meaningful connections that boost enthusiasm for your brand. Appeal to this need and retain your Gen Z shoppers by making it clear what your brand is all about and by sharing the initiatives you back.
Astrid and Miyu’s community areas are a fantastic example of how to retain customers. They create community focussed content that makes their members feel valued.
On the Astrid and Miyu community page, it says they “thrive on customer feedback and bringing positive and uplifting vibes”. This is evident from their charity partnership with The Baytree Centre, their pledge to support BLM, and their podcast. They have made it a priority to connect with customers on a personal level and it is helping them succeed with Gen Z customers.
Pacifica Beauty is another success story. They have a recycling program where members get loyalty points for returning empty packaging. Nature is their mission. They’re able to communicate this and use it as a tool to connect with their customers. You should aim to emulate their success by deploying tactics centered on shared values and community.
Speak to them where they are: Create conversations on social media
For Gen Z customers social media is the go-to place to discover and research brands. As digital natives, they’re “always-on customers” who see products promoted to them and can make an instant decision to buy.
To retain your Gen Z shoppers make social media the place for them to research and discover your brand. First, reward loyalty points for social media follows. Then, reward them for creating social content on your behalf through product reviews or images of them using your products.
Use this UGC to show Gen Z shoppers how your product lives and breathes in real life. UGC is an effective way of communicating your message and 79% of people say it highly impacts their purchasing decisions.
LIVELY has an ambassador program where they encourage community members to create content on their behalf in exchange for first access to new products.They combine this with a hashtag (#livingLIVELY) where they promote UGC through real customers wearing their products. This is the kind of approach that will help you win new Gen Z customers and keep them loyal.
Retain Gen Z customers
Gen Z shoppers are on the rise. Brands must appeal to their desires and hook them in long-term to see prolonged loyalty.
Short-term discounts will help when the April student loan drops but for the rest of the year you need to innovate. To sustain interest, merchants must demonstrate their values and engage with Gen Z customers on their level.
Retaining customers is about more than discounts. Success with Gen Z shoppers will come when you have a loyalty program that communicates your brand and speaks to the values of the new generation.
Mollie is a Senior Content Marketing Executive at LoyaltyLion. After graduating from UCL in 2016, she has worked both in-house and at marketing agencies providing expertise in content for both B2B and B2C clients. At LoyaltyLion, Mollie manages our content, making sure our readers get the best quality resources about customer loyalty and retention.
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