Loyalty Programs and the Gen Zs Who (Still) Love Them

Loyalty Programs and the Gen Zs

According to a recent survey by Incogni, the Gen Z demographic assigns a higher value to loyalty programs than any other generation. Gen Z respondents saved an estimated $59 per month, on average.

Incogni, a personal information removal service, reports that this is a much higher figure than millennials, Gen Xers, or boomers provided.

Why the disconnect, when older generations were largely raised on coupons and deals? The fact is, many of these customer loyalty programs require purchases of hundreds or even thousands of dollars to realize even meager savings.

Loyalty Programs and the Gen Z
Loyalty Programs and the Gen Z

The Appeal of Loyalty Programs

The primary appeal of most loyalty programs is the immediate discount applied to purchases customers have already decided to make at their preferred retail outlets. The cash rebate at the register, for most people, far outweighs the risks of releasing a small amount of personal information. While the stores benefit from the data collected from loyal program members, the end result for customers is relatively painless.

A Deal With the Devil?

Since their inception, one common criticism of loyalty programs has been the Faustian terms and conditions stores place on participants. Younger consumers often have few reservations about storing their shopping habits in a nebulous database.

However, consumers past a certain age are only sometimes comfortable having their shopping preferences available for analysis. Purchases of sensitive items such as over-the-counter medications, personal hygiene products, adult beverages, and tobacco products are routinely included in the data collection.

Why Businesses LOVE Customer Loyalty Programs

Brand or service loyalty is an essential element in the world of retail. For many small businesses, the competition is next door or across the street. Loyalty reward programs help convert regular customers into faithful customers.

The data collected from these programs helps business owners detect buying trends, which in turn aids the ordering and stocking process. Some programs go as far as mapping the customer’s journey through the store, or pinging them with specific deals as they walk in or linger in a particular section.

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Loyalty program members also feel more appreciated since their shopping habits are rewarded through discounts or premiums, sometimes sooner rather than later. Businesses in competitive fields like fuel stations or grocery stores can also use loyalty programs to attract new customers.

Why Businesses HATE Loyalty Programs

There are some noticeable drawbacks when it comes to many loyalty programs. Some customers are reluctant to participate because of the sensitive data collection aspect. Many loyalty programs include an agreement to receive newsletters, online updates, or coupons for other products or services.

While the data collected from these programs may be valuable, owners or managers must also spend time analyzing the information. Suppose the program includes a premium reward or substantial discount. In that case, the cost of fulfilling those obligations can be higher than the program’s benefits.

The Hidden Dangers of Loyalty Programs

Incogni specialized in personal information removal service. Their examination of 10 popular loyalty programs reveals that many companies collect at least 7 points of personal information from participants, who often believe they have only provided basic details such as email addresses or phone numbers.

Instead, companies with loyalty programs can collect more detailed information on overall shopping habits – and are free to share these details with unknown third parties. The potential value of this demographic information is much higher than the small percentage of savings offered to customers.

Should Consumers Stop Participating in Loyalty Programs?

Participation in a loyalty program provides at least some financial relief for many shoppers during routine grocery store runs or fuel purchases. If nothing else, the average discount from a loyalty program offsets any sales tax.

Receiving a few additional email promotions or unsolicited coupons is a manageable problem. However, there are loyalty programs associated with aggressive third-party marketing that consumers should consider terminating voluntarily. The benefits do not outweigh the potential exposure of highly personal information to unscrupulous vendors or aggressive telemarketers.

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