Generation Z is quickly becoming a huge revenue stream. But it’s not enough just to set your sights on younger shoppers. Generation X, Millennials and Generation Z all play a big part when it comes to customer retention, boosting brand awareness, and increasing profits. Learning more about their priorities, as well as the crucial differences between each group, is key.
In order to understand your audience, it’s important to know where they are shopping, what type of experience they’re looking for, and what they value.
Across the board, shoppers are prioritizing convenience. A 2020 survey found that nine in 10 shoppers were more likely to shop with a brand based on how convenient the experience was. Offering options like “Buy Online, Pickup In Store” (BOPIS) has proven to have shoppers returning in the future. In that same survey, 70% said BOPIS improved their overall experience.
Having multiple forms of payment options, such as Paypal, Apple Pay, Google Pay or “Buy Now, Pay Later” plans can increase customer retention. In today’s economic climate, many are spending more consciously, but including a payment plan helps shoppers spend more confidently, knowing they can slowly pay off higher ticket items.
Most consumers these days are also seeking an elevated, personalized shopping experience. They want to feel as though the brand cares about their values. Anticipating buyers’ needs will help decrease return rates.
Generation X is defined as those born between 1965 to 1980 and are currently around 43 to 58 years old. They still prefer a mix of brick-and-mortar and mobile shopping. Most Gen Xers prefer to learn about new products by researching them online, through traditional advertising (like TV ads), and while shopping in person.
Though 66% use their mobile phone to shop, they prefer to find items through multiple channels. This is in comparison to younger generations who are more likely to mostly shop using social media platforms. Generation X is sometimes called the “sandwich generation” since they support both their parents and children. Gen X is often overlooked, but they tend to be the biggest spenders compared to other generations.
As consumers, they are likely to do a good amount of research before trying a new product.
One in three prefer to find new items by searching online, with 58% saying this is the primary way they find new products. However, they are more hesitant to try new items, preferring to stick to what they know. If a product has good reviews, they are more likely to buy it. Gathering data on what exactly they are looking for with tools like AI chatbots on your website can help you better anticipate their needs. Make sure customer reviews are front and center so that shoppers know your product can be trusted.
Gen X spends their money carefully and are also fiercely loyal, sticking with brands they know they can rely on. In general, they prefer marketing campaigns that speak to them in a direct, transparent way, which shows them why the product is practical. Invite consumers to share reviews on their social media or Youtube page. This helps future Gen X shoppers visualize how the product can be used and why it’s worth investing in.
Implement a customer loyalty program that gives them rewards when they hit specific milestones or gives them reward points for shopping. 72% of Gen X shoppers said they considered a loyalty program an important factor when choosing where to shop.
Having digital payment (like Apple Pay) is a viable option and many will use this form. However, the majority of them prefer to shop using traditional credit cards.
Millennials (or Generation Y)
Millennials (or Generation Y) are defined as those born between 1981 to 1996 and are about 27 to 42 years old. As a generation, they grew up during a period of great growth for mobile shopping and ecommerce. Because of this, they prefer shopping with an omnichannel brand. Ensuring your presence is strong across multiple platforms is key to retaining Millennial shoppers.
They also prefer a multisensory experience. Shopping is very much a social activity to take part in with friends or family. When looking for reviews on a product, they will turn to social media platforms for reviews on the product. Younger Millennials are also using Tik Tok more to shop. Investing in newer platforms like this will help grow your brand awareness.
Good customer service (both online and in-person) is very important to creating an overall positive experience. Making sure to use tools like return automation if there are issues will save your team effort and will help create a more positive experience for Millennial shoppers.
One factor that drives Millennials to shop more is self-care. In 2021, 70% of Millennials said that they planned to buy “leisure services and products” to treat themselves. Offering products or subscription services to help fuel this desire is a good way to draw them in.
This generation also prioritizes supporting local and small businesses. Connecting to local companies and promoting your partnership will improve shoppers’ opinions of your brand.
When it comes to payment, they prefer a combination of traditional and digital payment systems. Though they do use credit cards, they regularly use virtual systems like Apple Pay and even cryptocurrency. Both Millennials and Generation Z are willing to use “Buy Now, Pay Later” payment programs if they really want a product. This kind of payment option helps ease the tension around choosing higher-priced products.
Generation Z is the youngest generation of shoppers, and defines those born between 1996 to 2010. They are around 13 to 27 years old. This age group is creating a lot of change in the ecommerce industry. Gen Z almost exclusively prefers mobile shopping and trusts social media influencers for their opinions over celebrities.
They like to be able to share their opinions on the products they buy. They believe in transparency—Gen Z wants to know your brand’s values, what goes into production, whether it’s sustainable, and how you treat your employees.
On the other hand, Millennials and Gen Z prioritize luxury much more than previous generations. In 2019, these two younger groups made up 40% of luxury shoppers in the U.S. Gen Zers who can’t afford luxury items are more often turning to resale or secondhand websites, which provide these items at a more accessible price. Many brands, like IKEA, are now offering pre-used versions of their products at a lower rate. Not only will this draw in those looking for a deal, but it will also speak to those who care about sustainability.
Gen Z values issues like environmentalism, diversity and equity and a brand’s ethical practice. A recent survey found that when it comes to environmental, social, and governance (ESG) factors, over two-thirds of this generation responded that at least one aspect of ESG is important.
Nearly half of Gen Z are minorities, so ensuring your brand focuses on issues that concern these consumers is key. Invest in diversity within marketing campaigns and create programs where your company gives back to communities facing inequity.
When it comes to the shopping experience, this group of consumers looks for personalized, elevated touches. Use tools like VR technology to show them what the product would look like on the shopper (if it’s wearable) or in their home. Being able to picture the item will improve their confidence in the purchase.
Having an AI chat bot that asks them a few questions when they begin shopping is a great way to hone in on their needs. You can also collect data to increase future purchases. Implement tactics like up-selling to suggest add-ons to items they have already purchased.
When it comes to payments, they are hesitant to use credit cards. This generation is wary of going into debt, having seen how older generations struggled. While half of Gen Z do have credit cards, the other doesn’t, mostly because they don’t qualify based on their income level.
Read more: How upsells lead to victories
Despite the predicted recession, with U.S. inflation rising to almost 8.5% in March 2022, consumers spent 18% more than they did two years earlier and 12% more than they were predicted to spend (based on the pre-COVID-19 trajectory).
When it comes to finding new ways to reach different age groups, think outside of the box. More buyers are shopping not just for themselves or loved ones. For holidays like Valentine’s Day, more shoppers are buying items for good friends or even their pets.
Looping in benefits like free delivery and discounts for future purchases will increase loyalty and encourage consumers to shop more online.
Having real customer reviews or offering discounts for reviewing products on social media also will increase retention.
Being willing to upcycle and promote more sustainable practices speaks to shoppers. 44% of consumers are more likely to buy from a brand that has a clear commitment to sustainability.
Zero in what the consumer values to help avoid purchase regret. Like it or not, returns are inevitable. Use integrations like Loop’s Return Composition to understand how your shoppers like to return and what they’re looking for. If they’re just looking for a refund, make it easy for them. If they want to exchange for a similar item, offer an easy automation process. This will increase revenue retention and higher customer lifetime value.
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