Millennials Embrace Experiential Marketing in Loyalty Programs

LoyaltyOne Retail Practice Leader Fred Thompson told Loyalty360 that a recent study his company conducted suggests that retailers should consider providing Millennials with hands-on shopping experiences by offering exclusive sessions with consultants or experts in the field−as a way to motivate this high-value segment to shop more at their stores.

“Since 2008, a lot has pointed in the direction of hard rewards and discounts as an omnipotent driver of loyalty,” Thompson told Loyalty360. “This study was an interesting probe for us and we were pleasantly surprised that many Millennials indicated they would love the opportunity, for example, to have a teaching class with a professional chef. We were amazed how strongly people responded to that, and there was greater resonance among Millennials.”

Thompson said Millennials are a difficult group to generalize or categorize broadly.

“Social connections play out strong across all studies we do regarding Millennials,” he explained. “It’s no longer just about a published reward chart. It’s about participation and engagement that drives better program structures. Having a loyalty program meaningfully differentiate the customer experience is critical.”

But, Thompson said that structuring a loyalty program without a social or mobile presence is challenging if it’s aimed at Millennials.

“I think everybody’s expectations on instant availability and gratification keeps rising,” Thompson said. “As marketers, we’re getting better and better at understanding customers and they expect us to act on it in a manner that is consistent with our brands. Loyalty programs need to amplify their companies’ brands to be wildly successful.”

In LoyaltyOne’s recently released study, which was conducted in September, it noted that 84% of Millennials (age 18-29) said that being able to redeem rewards/loyalty program points for a session or consultation with a chef or nutritionist would motivate them to shop more with that grocer.

Millennials’ interest around in-store sessions and consultations wasn’t limited to grocery shopping. Here’s how the group responded when asked about other retailers:

79% said a session with a stylist as a loyalty program benefit would entice them to shop more at the clothing store offering the session.

77% said a session with a technician or software expert would spur them to shop more at the electronics dealer.

68% said a session with a makeup artist would prompt them to shop more with the cosmetics retailer.

69% said a session with a plumber or electrician would motivate them to shop more with the home improvement or renovation store.

When broken out by gender, 72% of women said they’d be motivated by the chef or nutritionist session, versus 64% of men

68% of women said they’d be motivated by a session with a plumber or electrician, versus 63% of men

69% of men said they’d be motivated by a session with a technician or software expert, versus 67% of women

“The pendulum keeps swinging between program simplicity and allowing consumers control,” Thompson said. “There is an underlying social contract with a loyalty program. If you agree to raise your hand to join, we’ll make it richer and beneficial for you.  And when we don’t drive value for the customers in exchange, customer trust is broken and hard to regain.

Often, Thompson said, customers want speed and efficiency without excessive personalization.

“Companies are now focused on understanding new technology capabilities, and matching these capabilities to customers’ expectations of personalization to create an experience that is relevant, but not intrusive,” Thompson explained

Experiential rewards can be a huge point of differentiation, Thompson said.

“This requires expertise operations-wise,” he explained. “They become galvanizers of frontline employees because they want to see the company doing something different out there. We have seen that blended loyalty programs have the best returns and best engagement. They make the relationships deeper with the best customers.”

Thompson was surprised that the experiential expert sessions from the study resonated so high with Millennials.

“It’s one more proof point to the argument of going the extra mile,” he said. “Millennials represent a group so many retailers are looking to engage.”

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