Photo by Joshua D.
With 76.3 million Visa credit cards in circulation in Canada, and a population of just over 35 million, it is clear that most consumers have several cards in their wallet. Millennials are projected to become 40% of the workforce and over 30% of retail sales by 2020. These consumers have demonstrated that they are motivated differently than the Baby Boomers.
The question marketers need to answer is how to engage with them to build long term loyalty and ensure that your card will be first in an overstuffed wallet. Consumer insights and trends research will point you in the right direction. In order to capture and sustain their loyalty, it’s important to understand three key Millennials needs and ensure your program meets them.
1. Allow Millennials to earn fast and redeem fast.
Millennials crave adventure and discovery. They see the world as an exciting place to explore and seek out novel experiences. For this reason, the idea of travel rewards is enticing. However, with only 56% of surveyed Canadian Millennials saying that they have achieved financial independence, the Millennials of today have relatively lower income compared to the big spenders they will become, so accumulating points in programs means that rewards are too distant a dream.
Most programs require a significant financial investment from the cardholder in order to accumulate the points needed to earn a travel reward, and even Baby Boomers do not earn these rewards on a very frequent basis.
Millennials were raised in a world of instant gratification, and marketers and programs need to satisfy their need to earn fast and redeem fast.
At the same time, Millennials are a social group. Whether collaborating or socializing, they want to experience what their friends experience and the ‘fear of missing out’ (FOMO) is of a large concern to Millennials. Shortening the timeframe for consumers to find and redeem for specific rewards removes this fear and encourages Millennials to frequently check your social media feed for program updates and be connected to their friends that are participating in the same program. This shortened timeframe heightens the immediacy associated with redemption and also allows Millennials to become brand ambassadors through social media.
To capture the Millennial’s loyalty using these insights, programs need to develop offers that allow for the fast accumulation of points towards smaller rewards that fit within a realistic cost per point range.
This means broadening the range of partners and offers so that customers have greater choices and more urgency to redeem. For example, this could mean offering a large points bonus when a new card member spends $500 within a defined time period, and then offering them the chance to redeem those points for an Uber trip downtown.
In a study by PwC, 83% of respondents want more flexibility in how they spend their loyalty points. Millennials want the ability to not just spend points on merchandise, travel, or redeem them as cash, but also to transfer the points to use where they play.
For example, consider the popularity of mobile gaming among Millennials. Candy Crush, a successful smartphone game that is free to play but requires fees to improve gameplay, could be incorporated into a rewards program by allowing the customer to transfer reward points to get an upgrade in level in the game.
Programs using insights and market trends to customize rewards according to what Millennials crave will increase the perceived value of the reward without increasing the cost per point. When you offer rewards that satisfy the Millennial’s sense of urgency, you are not just meeting the needs of their habits but showing them that you understand who they are, and they will reward that understanding with loyalty.
2. Technology is a given—so make sure it works!
Millennials have grown up with technology literally at their fingertips. They are connected to their social network, their financial institutions, their entertainment and favourite brands through technology at all times. This dependence on technology means that Millennials expect little to no problems with usage. With more choices than ever before available at the click of an icon, Millennials frequently base their assessment of your offering on the best of what they’ve seen. If you want to engage with them, you need to use technology in the correct way to meet these expectations. Your technology must work before it can exceed expectations.
Research has shown that gamification—activities with a reward system—keep customers more engaged with your brand. Instead of a smartphone game, it could be an extension of an existing offer. Loblaws’ PC Plus is an example of this: customers are already saving money on groceries, but the loyalty program allows them to save even more through customized deals delivered when they browse the PC Plus app or website.
The key to growing millennial loyalty is to keep them engaged throughout the earning and redemption process, and leaving tokens of appreciation in the form of points or savings through gamification will grow this loyalty.
But master the basics before you think about elevating your offering using technology. For example, your technology must be mobile. If your app or website shows up correctly on desktop, Millennials expect the same experience on their mobile devices. Do not make the mistake of launching quickly without fully testing your app. Millennials are early adopters and their social media savvy means that they will share their frustration with poorly tested programs with their broad network. As quickly as they share great apps, they also share ones that fail.
A technical solution is critical for any loyalty program that hopes to get acceptance and/or engagement from Millennials. Make sure that what you offer works.
3. Inclusivity vs. exclusivity
Today, travel reward programs are all about exclusive offers. Baby boomers like it that way. They want benefits that show they are part of an exclusive club. Millennials are different. FOMO, the fear of missing out, is driven by their desire to enjoy the same experiences as their friends. Their social nature drives their preference for inclusivity. This transfers to their participation in rewards programs. They engage with a rewards program in order to feel included in a network of their family and friends, and their purchasing patterns and activities can be measured according to the hashtags and social media groups that unify them.
Millennials broadcast their opinions on brands and products online, to feel included and also to show each other the best rewards and deals.
Your loyalty program should provide an exceptional experience consistently at every touch point to encourage positive social sharing.
A study by Accenture reveals that 67% of Millennials are more interested in banks that provide tools or services to help them monitor a budget, so give Millennials value-adding content such as tips to save on travel, entertainment, or retail purchases.
When Millennials want to redeem, their preference is to experience the reward with their network. But, with limited points earning potential, they are not in a position to redeem for more than one person. If you offer Millennials the option to have multiple accounts contributing to a reward (for example, allow the 2 people in the Uber cab to share the fare when they redeem) or to share and allow for one touch purchasing of the same reward by friends (for example, when the first person chooses to redeem for a restaurant gift card, their friends can do the same making the joint dinner a reward for all), you meet their need and encourage more frequent engagement and redemption.
Millennials want to earn quickly and redeem for diverse rewards. Recognizing that the traditional travel rewards do not meet these needs and using customer insights to understand their values and technology to engage and allow them to share will ensure your earn and burn offers will convince them to stick around even if a competitor offers a better reward.