How Generation Y will reshape customer loyalty

Generation Y are skeptical of the location-based offers that pop up on smartphones but (not unsurprisingly in the era of over-sharing on Facebook) will reveal personal details for fast, free and easy rewards.

Gen Y (or Millennials) are a fair portion of the global population today at 1.7billion strong (there’s more of them than there are Baby Boomers and three time as many of them as Gen X).  We’ve completed a proprietary study in the USA, UK and Canada (with possibly markets closer to home to follow) on this important market segment.

In all markets we’ve found that Millennials are active in loyalty programmes (75% participate and they’re more willing than their parents to do so) and 75% of them will prefer a brand that gives offers a programme over one that doesn’t. In unprompted responses, Millennials rate loyalty rewards as the top incentive they look for in exchange for sharing personal information with marketers.

Millennials are willing to promote brands or products through social media in exchange for rewards.  This doesn’t extend to them wanting to receive location based offers on a smart phone (only 10% have responded to these offers).  They do however (25% of them) want their smart phones to be a replacement for a plastic loyalty programme card and for the loyalty programme to deliver coupons or gift cards through the smart phone.  Only 10% though want the smart phone to replace their credit or debit card.

The first part of the study covering the USA is available for download from Aimia.com.

Rick Ferguson, Aimia's VP Knowledge Development lead the research and presented it in Sydney this week at The Customer And Loyalty Show.  

Rick Ferguson - Aimia's VP Knowledge Development -  presents the Millennial Research in Sydney this week.

"Millennials are even more willing to participate in loyalty and reward programs than their parents, but they expect reward programs to be free, easy and fast," said Rick. "This generation also relies heavily on outside information to make purchase decisions—information that is often out of the realm of control for marketers. The winners in building sustainable brand loyalty with Millennials will be those who break through the information overload to deliver value at the level of the individual customer."

Digital marketing technology – the best thing since sliced bread?

I recently attended the Shopper Marketing conference in Sydney which featured speakers, workshops and case studies on how to best drive sales, engage shoppers and subsequently influence their purchasing power while in store.

One consistent theme at the conference was that digital marketing technology is the latest trendy must-have for retailers and manufacturers. From iPhone apps, digital billboards and interactive LED screens, digital was touted as the next best thing.

However, many of the opportunities lacked a strong business case and ROI - primarily because the core foundations of new product development were missing. This means for marketers - beyond the "cool" factor, the ability to get a solid ROI out of the innovation is missing.

It's a good reminder, whether working with loyalty programmes, promotional communications, or iPad apps, to look beyond the trend to ensure that the opportunity;

• meets a need that a customer has yet to realise they have (if not meeting an existing need);


• relates to your product or service and the purpose of your business;


• tells you something about your customer that you can use in your business;


• is difficult for your competitor to replicate.

And don't forget, if your customer service is poor, your product unappealing or the pricing is wrong, the coolest app will not save your sales.

They’re not like us.

Originally published in the March 2008 edition of teh New Zealand Marketing Association's DLB magazine - authored by Carlson Marketing

Salvador Dali said that “The problem with the youth of today is that one is no longer part of it.”  

We all know that to reach the youth in the youth market we have to live with the fact that they are creating content faster than we are. The real competition for youth attention is youth generated content. 100 million blogs, social networking sites,

 wikis, forums; there are plenty of online places for any of us to connect with like-minded people. The youth just do more of it.

And unless we are really funny or outrageous with our creative efforts, (not always appropriate) they prefer their own content to ours!

There are ways to harness this desire for connectedness. Two current community-based projects are teaching us that the rules are different, but youth are willing to engage with you if you learn the rules and follow them.

Here we profile two client programs which are both works in progress but are mature enough that some consistent themes are being repeated.  We share these nascent learnings for us all to benefit from.

Stop smoking by widget

The issue : Scary images or tar filled veins and cancerous lungs are questionably effective in the adult population.  They’re less than effective at preventing youth from trialling tobacco if smoking is seen as cool and will likely annoy authority.  

Our client : an Australasian government’s national health department looking to reduce the health impact and future economic cost of smoking.

The challenge : To make smoking uncool; to de-normalise it among the youth.

The solution : Facebook is the channel. Humour is the value proposition.

Market tests have shown that non-smoking youths are willing to message their smoking friends on Facebook but only if the message is funny.  It mustn’t be confrontational as they don’t want to risk losing the friend.

A widget will allow Facebook users to place humorous images on friends’ walls, with escalating status for users who use them repeatedly.  To date this has proved a successful social intervention; youth channel, youth rules for content and youth as the channel.

The referee may not listen but the management do

Moving from the disease of smoking to the other end of the continuum, we’re also working with a sporting body to grow their profits.

The issue : Aging and declining membership of a football franchise together with reducing attendance at games and all the financial difficulties that produces.

Our client : An Australasian sporting body with a large base a members

The challenge : To lift membership levels (especially with youth – the future of the game), lift game attendance and hence lift revenues

The solution : A “focus group on steroids”. 

Working with the membership-based sporting organisation, we established a ‘by invitation’ online advisory panel of several thousand passionate members.  These members came to games regularly and had been paying their subscription fees for a number of years.

The incentive offered; the club will listen to your advice, implement your suggestions if they can but in all events they will talk to you and let you know that they heard you.

Watching these online members ‘talk’ to each other, and the club, about a subject of common interest is a visceral experience for marketers more familiar with response models. Questions are asked and answered directly and quickly.

The panel has given advice on which players to feature in promotions, and how to talk effectively to the membership.  More importantly, thanks to the Hawthorne Effect these ambassadors have personally increased membership significantly above last year’s levels through word of mouth recruiting.

The panel is not a research vehicle and is not intended to be. Understanding the opinions and attitudes of your most engaged customers is more important than understanding the average if you are trying to generate positive word of mouth for your brand or product. They are simply more likely to bother than the average customer.

Research we’re finding true

Its Gen Y and Gen Me and Gen C

Forrester found that “Gen Yers are more apt to like style, fun, and technology; seek out what’s hot; make purchases based on image; consume all types of digital media; and use every wireless service on their mobile phones”.

In consuming all types of digital media they’re also creating it and doing so far faster than any marketer.  The rate of consumption also has them tagged as Generation C for content and also Generation Me.  This latter description was developed by Jean Twenge who believes “Gen Yers were raised and schooled in an educational system focused on promoting self-esteem and a “you can be anything” mentality. As a result, they’re more narcissistic than other generations. Students scored significantly higher in the Narcissistic Personality Inventory (NPI) test in 2006 than they did in 1987”. 

Within these broad descriptions there’s also a level of granularity of subcultures they identify with including niches such as “goth,” “emo,” or “prep” according to Forrester. Each of these is differentiated by clothes they wear, the music they listen to, and the media they consume and share.

Kagoy - Kids are Getting Older Younger. 

Best described late last year in The Times of London, “KAGOY has also affected the dolls that little girls covet. As well as Barbie with her accessories, there are now the streetwise, precocious Bratz dolls. The Bratz Secret Date Collection, marketed to six-year-olds, pairs each Bratz girl with a Bratz boy, and includes two champagne glasses and “tons of date-night accessories”. 

Kids are learning about adult life much earlier than ever before.  And in many instances they want to emulate it and are influenced by the style of older teens.

Listen

Make it a conversation. They are used to conversations, not just telling, also listen. Listening means confirming you heard in some way.  Implementing their suggestions is one way, replying to them is another way. Close the loop.  

Authenticity 

Genuinely invite discussion, do not presume and praise your product on their behalf. This means being brave, they may say negative things. They will do this with or without you by the way, so it is best to be involved so you can ask them how to improve

Volume matters

As you really want to address a market, not a handful of customers, volume matters. Use existing communities which already have large numbers of participants or use traditional marketing to seed your own. 

Data – always data

Data should still drive marketing decisions, not anecdotes. Marketing to youth through conversations does not mean you should abandon rigour. Find a way to link ideas expressed in the conversation with actual behaviour. Registration, coupons, referrals; there are ways to do this. Go to the trouble.