Why Your Old Holiday Retail Strategy Won't Work on Millennials

The best things in life are free — unless you're a Millennial. A study from LoyaltyOne shows that 75 percent of shoppers ages 18-24 would pay for loyalty programs to access certain perks. While it's easy to brush off the word "Millennial" as "just another buzzword," dismissing the shopping habits of this age group could have big implications for retailers this holiday season. With the youngest subset of the Millennial generation hitting the stores for Black Friday and Christmas shopping soon, businesses that play their cards right could build lasting loyalty with this demographic.

But putting a price tag on membership isn't going to sway Millennials to sign up if you don't create the premium rewards experience this savvy age group is after. These findings show that this generation can be incredibly loyal but also discerning when it comes to the stores where they spend their money. Combine that with the knowledge that U.S. Millennials spend about $600 billion a year, and there's even greater motivation to reach them.

We've already seen a select few companies taking advantage of these findings, including Amazon Prime, which offers a half-price Amazon Student subscription option, as well as a budding Prime Campus service in conjunction with select universities that lets customers pick up certain items at a designated campus location, sometimes in as little as one day.

Regardless of whether you're charging a yearly fee for perks like free shipping or just upgrading your current free loyalty program, here are a few things you can do to capture the attention of this age group during the holiday shopping season and keep them long after the new year.

Understand what Millennials (don't) want
Millennials have a strong sense of what they want from a shopping experience, and businesses that meet these expectations are the ones that are most likely to make a big impression. According to a recent Accenture survey, 68 percent of Millennial respondents won't settle for a disjointed shopping experience. Instead, they thoroughly research products, and they do so on many different screens. Brands need to be ready on phones, tablets, desktops and beyond, and provide the information shoppers need to find the items they're looking for.
Beyond creating a holistic shopping experience, standing out from the pack when it comes to loyalty will also help retailers get ahead with Millennials. The same LoyaltyOne survey revealed that this age group is often on an unsuccessful hunt for unique loyalty offerings. Shake things up and you could attract the buying power of the 57 percent of respondents age 18 to 24 who think loyalty programs lack variety.

One way to do this is by implementing personalization tools such as beacon-enabled shopping apps that push location-specific offers to shoppers or give them opportunities to interact with in-store displays. Free shipping — once enticing to shoppers on its own — may soon become table stakes, so consider this your license to get creative.

Never underestimate the power of influence
According to a survey from The Boston Consulting Group, 59 percent of Millennials consider recommendations from friends to be the top influencer of where they buy. Another 51 percent trust their parents to guide their shopping behavior. 

Businesses can capitalize on this by creating memorable experiences Millennials (and their parents) want to share. Whether it's taking advantage of mobile loyalty and offers, giving sales associates the tools to check stock across stores and online (so that coveted item is always within reach) or serving up deals based on past purchases, leveraging retail technology may be one of the best ways to create unforgettable and share-worthy shopping experiences for this age group.

If you haven't convinced those key influencers, you risk losing business from them and their peers. The Boston Consulting Group survey also revealed that some younger Millennials take negative reviews seriously, with 28 percent avoiding products that received a complaint from someone they know.

There is some good news. A survey from Zendesk and Dimensional Research revealed the high level of shareability of positive retail experiences. Of those polled, 87 percent said they'd likely share quality brand interactions with friends. The power of influence should not be taken lightly.

Offer bargains on their terms
Just because Millennials will pay for loyalty programs doesn't mean they'll settle for any old program. Close to half of those surveyed by LoyaltyOne felt that paying to be a member leads to better rewards. But those perks have to be genuine, or they'll take their loyalty elsewhere. According to Accenture's survey, Millennials are some of the smartest shoppers when it comes to getting the best possible deal. Just as they expect to interact with a brand seamlessly across screens, they also expect prices not to differ—a major turnoff for this age group.

While the retail industry is no stranger to the power of mobile payments by now, the soon-to-be available loyalty capabilities of Android Pay and Apple Pay's iOS 9 loyalty capabilities are not to be overlooked. Accenture's survey respondents also noted that printed coupons are a thing of the past. If a coupon can't be pulled up on a phone in the store and scanned to score a deal, that purchase isn't going to happen. That said, if those coupons are already printed and mailed, or if they're scannable from the email inbox of a shopper's phone, the deal is still on for 95 percent of this age group.

If your store isn't accepting mobile payments, now's the time to start. A mere 72 hours after Apple Pay was released, one million cards were connected to the service. With both Android Pay and Samsung Pay launching this September, retailers have an increasing number of reasons to make mobile a top priority.

As college students head home for the holidays, they won't take their spending decisions lightly. If businesses want to earn their attention and give them a reason to pay their way into a loyalty program, the above steps will help craft a strategy focused on long-term spending and high levels of engagement.

Ben Saren is senior vice president of marketing for Cayan, a payments technology company.
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