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Brands Must Show Loyalty To Earn Loyalty, According To Alliance Data's New Consumer Study, 'The Rules Of NextGen Loyalty'

Gen Z and Millennials Play by Their Own Set of Rules, and Now Loyalty Does, Too

COLUMBUS, Ohio, March, 19, 2018 /PRNewswire/ -- NextGen consumers are leading the retail industry to a new view on loyalty, according to new research by Alliance Data's card services business, a provider of market-leading private label, co-brand, and business credit card programs. The newly released study, "The Rules of NextGen Loyalty," reveals how Gen Z and Millennials have been empowered by unique experiences, technology, and the power of choice to engage brands and experience loyalty in truly new ways.

Alliance Data's MyLoyalty App is customized to each brand and provides customers with the ability to apply, shop, earn and connect with their favorite brands. Retailers and customers may choose from a variety of features including the ability to apply for a store-brand credit card, make purchases with the MyDigitalCard, and earn and redeem rewards at the point of sale. (PRNewsFoto/Alliance Data)

"This study really unpacks the shopping and loyalty preferences of today's youngest consumer segment," said Shannon Andrick, vice president of marketing advancement for Alliance Data's card services business. "One-to-one conversations with real people supported by in-depth research has provided a unique view into the mindset of today's youngest generations and what they expect from brand relationships. The loyalty landscape has truly shifted from brands driving loyalty to brands earning loyalty."

Conducted by Alliance Data's Analytics & Insights Institute, "The Rules of NextGen Loyalty" study used a combination of qualitative and quantitative research methods including mobile diaries and digital app tracking to determine behaviors, follow-up one-on-one Skype conversations to provide context, and a survey to identify the differences, perspectives, and preferences among younger generations. The progressive approach sheds light on the difference between what consumers say and what they do. To create insights that can help brands understand the market and tap into trends based on customer behavior, the study took a close look at what brand loyalty means to each of these segments:

  • Older Millennials:        Born 1982-1989
  • Younger Millennials:    Born 1990-1997
  • Generation Z:              Born 1998-2010

Some highlights from the report:

  • Loyalty is earned. Understanding the role of and influences on choice is more important than ever before: 63% of younger consumers agree they have many choices of where to shop, so a brand must show them loyalty to earn their business. Once brands recognize the unique motivations of Gen Z and Millennials, they have taken the critical first step in building deep brand connectivity and earning lasting loyalty.
  • Loyalty is complex. Traditionally, loyalty has been viewed as one-dimensional. Yet, loyalty is anything but simple. Research shows when it comes to life loyalty and brand loyalty, a continuum emerges spanning a range from functional to emotional. Different types of loyalty span the continuum from traditional, mostly functional loyalty, to brand love, emotional loyalty. Re-thinking a brand's approach to loyalty means understanding that true loyalty requires a combination of function and emotion.
  • Loyalty is fragile. Today's younger consumers are increasingly unforgiving. They are empowered by instant access and greater choice to want more and "put up" with less. In fact, 76% of younger consumers only give brands two to three chances before they stop shopping them. One in three consumers said nothing could be done when asked what a brand could do to win them back.
  • Loyalty is multifaceted. Brands have typically viewed loyalty through a transactional lens. But NextGen loyalty is a combination of transaction (function) and emotion–traditional brand loyalty and brand love loyalty. Transactions aren't the only indicators of loyalty. Brands must understand customers' unique needs and think differently about measuring loyalty. Some consumers want the basics while others need more. 

Alliance Data is releasing the results of its "The Rules of NextGen Loyalty" study during this year's Shoptalk conference in Las Vegas. To access deeper insights into NextGen Loyalty, visit KnowMoreSellMore.com/NextGenLoyalty.

About Alliance Data's card services business
Based in Columbus, Ohio, Alliance Data's card services business develops market-leading private label, co-brand, and business credit card programs for many of the world's most recognizable brands. Through our branded credit programs, we help build more profitable relationships between our partners and their cardmembers, and drive lasting loyalty.

Using the industry's most comprehensive and predictive data set, advanced analytics, and broad-reaching capabilities, Alliance Data's card services business has been helping partners increase sales and provide greater value to their cardmembers since 1986. We are proud to be part of the Alliance Data enterprise (ADS), an S&P 500 company headquartered in Plano, Texas. To learn more, visit KnowMoreSellMore.com, follow us on Twitter @Know_SellMore, and connect with us on LinkedIn at Alliance Data card services.

About Alliance Data's Analytics & Insights Institute
Alliance Data's Analytics and Insights Institute systemizes its more than 20 years of expertise in delivering best-in-class data assets and resources to provide brand partners a customized approach to growing their credit programs. Its award-winning analysts and strategists are experts at developing a deep understanding of a brand's customers by combining a variety of data sets, representing 250 million consumers, to provide a complete 360-degree customer view.

Gen Z and Millennials play by their own set of rules. And now loyalty does too. Brands can no longer drive loyalty, they need to earn it. Discover more at KnowMoreSellMore.com/NextGenLoyalty.
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