How Brands Can Build Loyalty in the Era of the Millennial and Gen Z

Loyalty, loyalty, loyalty. If your business is working to harness the purchasing power of future generations, these wise words from Pulitzer Prize-winning millennial rapper, Kendrick Lamar, ring truer than ever in 2020. The spending power of Gen Z and millennials combined with the increasingly saturated retail market has made attracting repeat customers — and organic brand ambassadors — an interesting challenge for companies of all sizes. With that in mind, digital creative agency Compose[d] conducted a research survey with 500 people across the U.S. to unearth loyalty leanings and triggers among both Gen Z and millennial consumers. Below are a few key findings from the report, along with implications for retailers, particularly in the fashion and beauty space.

While the endless array of brands that today’s consumer can choose from has created ample opportunities for discovery, 87 percent of the participants surveyed have loyalist tendencies. Female-identifying consumers are more loyal across both generations, with Gen Z women being the most loyal in the set, shopping the same fashion, beauty, and skincare brands at least 70 percent of the time. That means once a brand hooks a young woman, it will have a customer for life. And since the oldest Gen Z cohort has just entered their 20s, this presents decades of opportunity for conversion.

That said, these loyalist tendencies are earned, not automated. Authenticity is key, not only in what a brand stands for and the efficacy of its products, but also in marketing and discovery channels that showcase real people telling this narrative. This is most apparent on Instagram and YouTube for Gen Z consumers, while Facebook and Instagram rank highest for millennials. If you think your Instagram posting strategy can be left to the intern, think again. Twenty percent of Gen Z consumers surveyed will immediately lose interest if they don’t like a brand’s visual representation on their favorite social media platform.

Of course, repeat customers today are earned, not bought. Freebies like coupons and loyalty program memberships rank below 10 percent as a priority for men and women of both generational cohorts, while sales or special promotions hover at just over 15 percent for being a driving factor. Additionally, 71 percent of survey respondents want to see real people advertising or using a product as proof of its efficacy, with 80 percent of women saying that trials in advertising often influence their purchase intent. That said, if the product works and the price is right, consumers are most attracted to products that are convenient and widely available (37 percent), and also sustainably sourced and made (19 percent).

It shouldn't come as a surprise that the power of purpose is increasingly important for both brands and consumers. In fact, 76 percent of millennials and Gen Z consumers say that they would pay more for a sustainable product, with 85 percent saying that sustainability influences their decision to purchase, even if it isn’t their primary motivator. While Gen Z consumers are 23 percent more likely than millennials to seek out sustainable products, both groups say that they value a product’s origin story and consider how its products are made and sourced (60 percent), with 75 percent of total respondents favoring brands that offset their environmental impact. While this may seem like an extraneous piece of a brand’s narrative, the prevalence of social media has brought behind-the-scenes practices to the forefront of the consumer conversation.

If your company already prioritizes sustainability, great! If not, it’s not too late — the time to re-evaluate product lifecycle pipelines, sourcing, and packaging is now, and consumers are eager for this story to be told. In fact, 65 percent of Gen Z and 70 percent of millennials believe that products have too much packaging, and 70 percent of women across both generations would refuse to buy a brand they know tests on animals.

Knowing that doing good makes for great business in the eyes of both consumers and C-suite executives, it’s clear that now is the time to double down on driving brand loyalty.

Jason Parkin is founder, president and chief creative officer of Compose[d], a digital and creative services agency, servicing the top names in retail, fashion, beauty, and lifestyle.