YPulse data shows that Gen Z and Millennials consider themselves loyal-ish to most brands; they like reliability and innovation, but are willing to swap brands if there’s a better offer (especially for a lower price). But, one way a brand can win them over is by offering them rewards—specifically ones that lead to freebies. In fact, one quarter of young consumers say they would be more loyal to a brand who gives frequent purchasers special access and perks, meaning loyalty programs really can equal brand loyalty.
However, not all rewards and loyalty programs are created equal, and recent events have shown that young consumers are not afraid to drop a program that doesn’t measure up to their expectations. Dunkin’ Donuts incurred disdain from their loyal customer base over changes to their app’s rewards: DD Perks’ update changed the point earning system per purchase, while adding a “boosted” earning for frequent spenders. However, dedicated users of the app quickly pointed out each purchase would earn them less points than before, and getting enough points to score a free drink would now cost “$20-$30 more.” And, the update removed the reward of a free drink on users’ birthday, which had some users deciding they “no longer run on Dunkin.”
This shows a loyalty program could be make or break for keeping young consumers coming back. And if a program changes, or another brand has a better one, young consumers are willing to make the switch. But how many young people are actually taking advantage of loyalty programs, and how can brands know what perks and rewards will win them over? These two charts from our Shopping and Retail survey data show exactly how Gen Z and Millennials are, or want to be, using brand loyalty programs and rewards:
Half of young consumers already belong to a loyalty or rewards program
When YPulse asks 13-39-year-olds if they belong to a loyalty or rewards program, 49% say they are—and Millennials especially, with 57% saying they are compared to only 33% of Gen Z. Millennials are also more likely to agree they consider themselves loyal to one or more brands, and are also +9pts more likely to say they are very brand loyal. Now that they’re at a point in their life where they’re spending more, the youngest of them being 22-years-old, they’re all trying to save money wherever they can. After all, the vast majority of young people believe we will soon enter a recession, or are already in one, and as such, they’re prepared to cut back on non-necessities. But, it’s possible they’d be willing to do things like dine out and travel if they could do so at a discount earned through rewards.
In fact, even paid subscriptions that can earn them rewards are showing success in the face of their cost of living crisis: Walmart says members of Walmart+ “tend to be younger, more tech-savvy and more affluent than the typical Walmart shopper.” The service (another subscription bill to add to their budget) offers “benefits such as free shipping for online purchases, free deliveries from the store and gas discounts.” They appear to be willing to foot the bill for so many rewards, while turning away from even free loyalty programs if they don’t offer enough.
Earning points towards rewards is the most important quality of a loyalty program
It’s clear that young consumers are willing to use rewards programs for the right benefits—but some perks are more important than others to them:
Every factor a loyalty program could have is ultimately important, but young consumers are most likely to call “earning points that I can use for other things” and “getting specific discount codes and coupons” very or extremely important. Getting a flat discount on all purchases is also a top factor they consider when deciding to sign up for a rewards or loyalty program.
Points systems are the most popular rewards out there, and one of the most successful, as 31% of young people say they would stay loyal to a brand who gives them free things. On TikTok, their favorite social media platform to share recommendations with each other, tags like #BirthdayFreebies are where they boost the best free item rewards. Other deals they’re loving on TikTok are rewards not through brand loyalty programs, like those they can get through the app Fetch. The hashtag #FetchRewards has over 400M views, most videos showing off all the items they got for free using the app’s point system; all it requires is uploading photos of their receipts, which earns them points they can redeem for gift cards.
After Dunkin’s rewards misstep, Starbucks swiftly announced their new rewards venture, which doubles the benefits their app users earn. Through their new partnership with Delta airlines, Starbucks loyalty members can earn miles as they earn stars, from both spending money on drinks and flights. Starbucks has been gearing their benefits toward young consumers before then too, like when they launched a Web3 experience to pair with their loyalty program: “Starbucks Odyssey” allows users to collect NFTs through games and challenges, and earn points toward unlocking real-world coffee experiences. Other brands who have gamified their rewards include Sweetgreen, whose app prompts their loyalty members to complete challenges to earn coupons.
No matter what way they approach it—through engaging games or just plain points per dollar spent—it’s important brands recognize these young consumers want savings above all. To them, it’s not as important that they get special treatment from a brand, but that they are able to get the products and services they want over and over for a discounted price, or with an added bonus. Without rewards, or rewards that match up to how much they’re spending, loyal-ish young people will find a brand who gives them points and then some, and will stick with them for it.