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The Rules of NextGen Loyalty.

We live in a time where change and choice are the only true constants. Their influence on Gen Z and Millennials is simply undeniable. The Rules of NextGen Loyalty were developed to help brands understand motivations that influence brand connectivity and facilitate lasting loyalty with today’s younger consumers.

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A SNAPSHOT OF TODAY’S YOUNGEST CONSUMER SEGMENTS

Each generation displays their own unique qualities and subtle differences in views on shopping. Understanding these differences and the influence of life stage on views, we segmented Gen Z and Millennials into three distinct consumer groups. Collectively, we refer to these groups as younger consumers.

The Rulesof NextGenLoyalty

  • Loyalty

  • Is

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Rule #1

Loyalty Is Earned.

The reality is that greater choice means consumers no longer see loyalty as something they freely give—brands now must earn it. Armed with choice, consumers increasingly have the ability to be more selective when it comes to where and how they shop. It’s about what suits their needs at the time.

Pop quiz

Beyond the table stakes of price and quality, what do you think are the two most important factors when deciding where to shop?

Younger consumers believe selection and convenience are important factors when deciding which brands to shop.

Playing By the Rules

Choice has empowered today’s consumers, which means brands need to recognize their motivations.

04ED0471-CC38-415E-B63E-A65825B43A3D Created with sketchtool. Rule #2

Loyalty Is
Complex.

Evolving expectations mean consumers now expect loyalty from brands. Research shows that when it comes to life loyalty and brand loyalty, a continuum spanning a range from functional to emotional emerges. The continuum also illustrates the relationship between loyalty, price, and quality, which is defined as value.

Balancing Price and Quality

Don't love, but shop frequently

An amount that is easily attainable and when quality becomes a non-issue.

Love & shop frequently

An amount the consumer is comfortable spending. It meets their expectation.

Love, but rarely shop

An amount that is higher than the consumer’s personal comfort zone, yet they are willing to spend when they are able.

Playing By the Rules

Loyalty has been viewed as simply one-dimensional. Yet, loyalty is anything but simple.

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Rule #3

Loyalty Is Fragile.

Breaking up with you is easy to do and winning them back is hard. Consumers expect great service and an ideal experience across all channels. When that isn’t the case, they will take action and voice their opinion.

Playing By the Rules

Younger consumers “put up” with less, which means every brand interaction and experience has to be exceptional.

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Loyalty Is
Multifaceted.

NextGen loyalty is functional, emotional, and everything in between. Traditionally, brands have used transactions to measure loyalty. And most brands still operate that way today. However, loyalty can be thought about and measured much differently using the NextGen Loyalty Continuum. That’s because transactions aren’t the only indicators of brand loyalty.

The NextGen Loyalty Continuum

Functional

Emotional

Traditional
Brand Loyalty

For most, loyalty is built on a blend of functional and emotional attributes. This is traditional brand loyalty as we know it. How we measure it

When measuring traditional brand loyalty, it can be gauged by looking at frequency, monetary impact, and recency in shopping a particular brand. What it is

Brand
Love Loyalty

As more emotional elements of loyalty are introduced, the relationship changes. It moves beyond the transactional and into the aspirational. This is known as brand love loyalty. How we measure it

When measuring brand love loyalty, a traditional model is no longer applicable, requiring brands to review how they approach and measure it. What it is

Loyalty doesn't always lead to brand love loyalty, and that's okay.

Playing By the Rules

Loyalty combines emotion with function and brands need to understand how to differentiate one set of consumers from the other.

Loyalty is Complex
Loyalty is Earned
Loyalty is Fragile
Loyalty is Multifaceted

Change And Choice

Have had a major impact on how the next generations view loyalty. Brand engagement is now being shaped by new experiences, innovative technologies, mobile devices, and an unprecedented number of consumer options. To build a connection and ultimately trust, brands need to see loyalty through the eyes of Gen Z and Millennials.

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