Menu Menu

Understanding Gen Z and brand loyalty in 2020

Companies looking to create long-lasting connections with younger consumers must respect personal data, provide quick, authentic services, and be transparent about their business operations.

If you’re a business looking to tap into the ever growing market of young Generation Z shoppers, then you’re probably wondering how to go about doing so.

By the end of this year young adults and teens will make up over 40% of all American consumers. Avoiding such a huge, rapidly emerging societal bracket would mean risking longevity, profit, and relevancy, but actually gaining the loyalty of this demographic is harder than you may initially think.

When it comes to Gen Z, clarity, openness, pricing, and speed are all essential factors in determining whether they’ll return to use your services in the future. It’s not enough to give a great or cheap product– young people need to be certain that your business is environmentally conscious, ethically sound, and in line with their own values.

Here’s our rundown of all the factors that play into Gen Z’s ideas of brand loyalty, many of which are unique to their demographic.

Be upfront with customers about how and why you create your product

Companies with a genuine purpose and an eagerness to be transparent about their operations will be significantly more attractive to Gen Z than mysterious or allusive ones. Growing up in a capitalist society, we’re accustomed to seeing news stories about shady business practices, poor worker conditions and pay, and sky-high pollution rates. We’re assuming your company is evil from the get-go – unless you can prove it to us otherwise.

Businesses that have lengthy, in-depth explanations as to how they create products and why they do what they do will very likely have an edge over the competition when it comes to Gen Z. When we give loyalty to a brand, we want to buy into an idea, a movement, or a feeling that gives us a unique experience. Many of us are not just looking for a quick fix or easy solution; we value brands that give back, that are clear-cut about how they treat their workers, and ultimately demonstrate that they’re not just out to reap the benefits of our capitalist economy.

According to a 2017 study by Cone Communications, 87% of Gen Z shoppers stated that they’d buy a product if a company advocated for a cause they cared about. 75% also said they’d flat out refuse to buy a product or service if a company demonstrated it had opposing views. In other words, company purpose and transparency is a huge deal – and this is only set to grow with younger consumers.

Gen Z is all about the environment

I’m sure you saw this one coming.

Any business that’s willing to embrace more environmentally friendly practices will be far more likely to entice Gen Z into brand loyalty for the long haul. Forbes highlights that a majority of Gen Z consumers are willing to pay more for sustainable or ethical products compared to traditional ones, and if a company goes above and beyond to show how its products are made then that’s another point in its favour.

Nearly every young person cares about the state of our environment. We’ve seen the effects of climate change begin to play out in real time over the past few years. Many teens have grown up with regular wildfires, increased environmental disasters, and constant scientific reports that emphasise how bad things have gotten.

Gen Z are very, very mindful of their carbon footprint. Products that don’t use plastic packaging, from companies that really stress how environmentally conscious they are, will be embraced much easier with younger consumers. We don’t want to feel guilty when we’re buying a service or item, and it’s something we think about constantly.

Gen Z value respect for privacy and proper data handling

Data usage has become a huge, huge issue in modern times. Thanks to shady business from companies such as Cambridge Analytica, most of us have far more knowledge today than we did a decade ago about how companies make money off our information.

More importantly, Gen Z is expecting you to target them with ads, store their personal information, and create algorithmic content based on their habits. What’s more important is that, as a brand, you acknowledge this upfront, and make clear how and why you’ll be using your information. Gen Z accept that in order to receive targeted content they’ll have to share some of their data online – but it has to be clear how that’s happening.

This conversation around privacy on the internet has become louder over the last half a decade or so, as our politics becomes intertwined with third-party data handlers and our private financing information is leaked through data breaches every six months or so. Gen Z are far more likely to stay loyal to a company that respects their data, and is clear on how it intends to use the information it does store.

Price is still important for many younger shoppers

Economic turmoil in the last ten years has meant that for most of us, pricing has become a huge factor when deciding which brands we pick, particularly as far as essential goods are concerned.

There are some we’re willing to pay more for, of course. Luxury clothing or high-end tech that’s been ethically made and sourced is likely to attract Gen Z, but companies should also be mindful of how much they’re charging. We’ve all got a limit – and when more of us are living with parents for longer and racking up student debt, it’s no surprise that cost will forever be on our minds.

According to Retail Dive, brand loyalty is harder to achieve from young consumers today, and for many price ends up being the definitive factor that dictates who they purchase from. Private labels take the edge when shoppers are looking for low prices, too, which should be encouraging for independent or smaller business.

Loyalty schemes are less effective with Gen Z than millennials

This might be one of the more surprising ones on this list but, yes, Gen Z are less likely than any other demographic to buy into loyalty schemes.

For one, the rewards usually take far too long to come to fruition, and significantly reduce your options as a consumer. Retail Wire backs this up, highlighting that such marketing tactics are at odds with our era of instant gratification. Put simply, Gen Z want the best value immediately, rather than having to stretch their purchasing decisions across weeks or even months.

Your best bet with gauging interest from young shoppers is to offer them the best deals upfront, or have reward systems that benefit them on a daily or weekly basis. Offering a discount of promotion after buying ten of one item over a long stretch, for example, is simply not going to cut it.