Tom Caporaso, CEO of Clarus Commerce, shares three ways retailers can incorporate features and benefits into loyalty programs in the quest to attract millennials.
After living through the Great Recession, the student debt crisis and now an unstable pandemic economy, millennials have learned to plan ahead. And their forward-thinking sensibility extends to holiday shopping as well: Nearly 1 in 4 millennials (23%) begin holiday shopping as early as July, according to data.
Even more, 73%, have joined a loyalty program solely to take advantage of the benefits and rewards during the holiday shopping season.
While it’s probably too late to launch a completely new loyalty program for millennials before the holidays, there are several ways to incorporate features and benefits that attract millennials into an existing program. Once you identify the features and benefits that best attract your millennial customers, you can apply those insights to a more robust update or premium loyalty offering next year.
3 ways to attract millennials to your brand in and out of the holiday retail season
Millennials have surpassed baby boomers as the largest adult generation. So failing to connect with millennial shoppers could mean a significant revenue loss during the holidays.
To connect with millennial shoppers this year, you’ll need to incorporate several characteristics into your existing loyalty program.
1. Corporate social responsibility: Despite earning less than their predecessors, millennials are a charitable generation: 84% donate to a charity. MIllennial consumers are conscious about supporting brands that share their values. Partner with a nonprofit or charity that millennials care about during the holiday season, such as Toys for Tots or the Salvation Army. But remember to be authentic with your corporate social responsibility. Millennials can easily spot performative acts of kindness, so practice authenticity and consistency with your charitable contributions — all year long. REI, for example, donates to the National Forest Foundation each time customers use their REI credit card, which pairs well with their demographic of outdoor enthusiasts. DSW gives VIP members the option to donate points to charitable organizations like Soles4Souls. Target allows Circle members to cast votes for a selection of nonprofits. How can you incorporate an element of corporate social responsibility into your program?
2. Instant gratification: Millennials expect instant gratification and 28% shop with retailers whose premium loyalty programs they belong to at least every few days — consider the success of loyalty programs like Amazon Prime, whose main benefit is faster shipping. Appeal to this need by following Starbucks’ lead. The coffee brand switched up their program to more frequently reward shoppers. You should also keep in mind that millennials prefer instant perks rather than collecting points and waiting to receive rewards. Consider a premium loyalty tier that charges a fee in exchange for immediate benefits to promote loyalty regardless of the shopping season, with 24/7 transactional benefits like daily discounts and free shipping. How can you make your millennial shoppers feel valued everytime they engage (and not just after collecting enough points)?
3. Lifestyle values: Millennials are also attracted to brands that embody their personal values and lifestyle. Consider Lululemon, the millennial-favorite athletic clothing brand. In addition to making clothing that fits their customers’ active, healthy lifestyles, Lululemon communicates its values through several omni-channel strategies: live and virtual workout sessions, a fitness community and on-site cafes with healthy menus. Millennials are loyal to brands they relate to on a personal level, and that’s where emotional loyalty is built. Consider omnichannel strategies your brand can deploy to embody the lifestyle of your millennial shoppers. While in-store experiences may not be possible this holiday season, online classes, a partnership with another brand popular with the demographic or virtual holiday events that millennials enjoy can still build emotional loyalty for your brand. What do your millennial customers value and how can you add programs benefits that tap into their lifestyles?
You should never “set and forget” a loyalty program — millennials move fast and if the program no longer provides clear value, they will move on to a program that does.
To continue delivering value, make small improvements based on customer feedback, lifestyle changes or seasonal purchasing behavior. This keeps the program fresh and saves you from making wide-scale changes or conducting a complete overhaul in the future.
Loyalty programs that are fine-tuned to millennial shopping habits offer an opportunity to win over the increasingly valuable millennial shopper and secure their loyalty during pivotal retail seasons. But remember, value should always remain at the core of the program. When it is, customers will routinely choose your brand as their preferred retailer, during the holidays and throughout the year.
Tom Caporaso is CEO of Clarus Commerce.