CHALLENGE:
Research has been telling us Gen Ys tend not to be loyal consumers in comparison to older Boomer consumers. But the current economic recession has made more consumers sensitive to prices and deals. So do the typical deals offered by loyalty programs now draw more Gen Ys? New research says absolutely!
How they researched it:
An online survey was launched in April, 2009, by Colloquy, a marketing consulting and research organization, to follow up on a similar study in 2007. They collected 2,152 completed responses. The focus was on loyalty programs, such as “frequent flyer” or “frequent buyer” programs maintained by the travel industry and retail stores.
What happened?
Compared to their 2007 study, overall participation in loyalty programs have increased by 19%. Participation by women has jumped by 29% and Gen Ys are up by 32%. Nearly half of women and Gen Ys as well, report retail rewards programs are “more important” during the recession, and 27% of Gen Ys say they are actively seeking out new loyalty programs with which to stretch their budgets.
Interestingly, while loyalty program membership is up, redemption of rewards has stayed relatively constant. Consumers say they are saving (30.3%) their membership points rather than redeeming them on necessities (18.5%) or on luxuries (14.7%). Most redeem points for themselves rather than for gifts or family members.
Why Managers Should Care:
The research findings suggest that consumers, particularly women and Gen Ys, are using loyalty programs as a strategy to save. Hence, the core message for attracting new members to such program is more likely to be successful if “savings” is stressed. The savings could be for the future, and should focus on rewarding the buyer (loyalty member), not necessarily others.
The economy may be creating the predisposition of consumer response to loyalty programs, and this predisposition could be the basis of attracting new consumers and for laying the groundwork of longer term repeat purchasing.
How can you help?
Comment back on your REAL experiences. If you have a loyalty program, have you noticed more women and Gen Ys signing up? Are they redeeming points and if so, on what?
This research is based on Rick Ferguson and Kelly Hlavinka (2009), “Consumer Attitudes and Perceptions About Loyalty Programs in the Post-Recession Economy,” Loyalty One, Colloquy. A copy of the report may be downloaded after free registration at: http://www.colloquy.com/default.asp
It is very much correct that Women and Gen Y Are Key Targets for Retail Loyalty Programs. Nice blog. it is appreciated.
Great article!
The only question is…
If you win these consumers over with a loyalty program over the recessionary period, what is saying that won’t simply abandon your products once money starts flowing again? Are dollars best spent getting consumers invested into your “deals” or into your equity?
Of course, this is the million dollar question, right?
MK
No one knows what consumers will really do after the recession. We can use some theory to help forecast this. Many pundits argue that consumer behavior has changed forever. This might be an over-generalization. Those who are irreversibly hurt by the recession will be forever changed. In other cases, we might use the Generations hypothesis (Strauss & howe, 1991), which argues that teens and early 20-somethings are most likely to have their behaviors changed as a result of current events, over the long term.
From a more practical perspective, the study you are referring to (Women and Gen Y) is probably most reliably applicable to the short term. If you want business NOW, target women and Gen Ys for loyalty progrmas if it makes sense for your business.