When we conducted some consumer research into the UK loyalty sector, we were surprised to see the generational divide that was apparent amongst loyalty scheme members. This was evident across nearly all our metrics, with younger shoppers noticeably less happy with the schemes they currently encounter, and far clearer in terms of what they want and expect from loyalty programmes.
This sentiment could have dramatic implications for retailers. Already, those under 25 are nearly twice as likely to NOT be a member of any loyalty schemes (17%) as the UK average (9%). Our research highlighted that loyalty schemes are seen as key differentiators that clearly influence where people shop, and this is even more pronounced among those under the age of 25. Retailers that do not address the concerns of younger shoppers may see them switching their custom to competitors in the future.
The 16-24 year old age group identified several issues with loyalty schemes, which ranged from the sign-up process through to the rewards themselves. For those in this age bracket, 45% were put-off by the time it took for loyalty rewards to build up. The over 25s were more patient when it came to rewards, with just 30% of those experiencing the same problem. Perhaps unsurprisingly, the older the shopper, the more patient they were, with only 23% of over 65s deterred by the time it took for rewards to build up.
Three in 10 (31%) survey respondents in the 16-24 bracket felt the sign-up process took too long which put them off using a loyalty scheme. This was almost double the result of any other age-group (with an average of 17% for all those aged 25 years or older). Over a third of 16-24 year olds (36%) found loyalty schemes to be too complicated, compared to approximately a quarter (27.5%) of those over 25. There is clearly work to be done in creating schemes that are simple to sign-up to, with clear rewards.
It also appears that shoppers, especially the younger generation, are moving away from just points and are looking for new ways to be rewarded. Two thirds of all respondents (66%) said loyalty schemes would influence where they would spend their money if they received exclusive products, services or access, which was notably higher for younger customers, rising to over three quarters (79%).
Those under 25 were also far more likely to “strongly agree” that exclusive products, services or access would influence where they spent their money (36%), 10% higher than those in the 25-34 age bracket. Younger shoppers’ desire for greater personalisation in loyalty programmes also came through strongly, with over 8 in 10 (83%) 16-24 year olds, saying they would be more likely to use a loyalty scheme if rewards were tailored to them. Strikingly, whilst 4 in 10 (40%) of 16-24 year olds “strongly agreed” that personalisation would affect where they spent money, less than half (18%) of those aged 25 and older felt the same.
Younger customers clearly feel more strongly about loyalty, which may prompt them to look elsewhere if they feel there’s a better deal to be found. But judging by the results of our survey, shoppers seem to be moving in the same direction. When it comes to loyalty schemes, the dissatisfaction experienced by younger shoppers may serve as the driver that retailers need to update their loyalty programmes in response to changing behaviour.
So what does this mean for loyalty schemes? Will we see different programmes emerging that cater specifically for older and younger shoppers? The short answer is no. Ultimately, shoppers, whatever their age, want the same thing: Loyalty programmes that are personalised, convenient and genuinely rewarding.
Dr Hassan Hajji, CEO and Co-Founder, Ecrebo
To download a copy of the UK Loyalty Landscape Report, please visit: http://marketing.ecrebo.com/loyalty2016