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Are Gen Y loyal? – Loyal to what?

by Miguel Molina

The world of loyalty and branding revolves around consumers. As new generations emerge there is a distinct change in the way loyalty is perceived. As marketing companies are always in the lookout for newer customers, it is obvious that they need to embrace the Millennial or Gen Y group into their arms, not only due to the important number of its members.

Who are we referring to? Well, these individuals are ethnically diverse nationals born between 1982 and 2001; they are digital and exhibit tremendous persuading power. Interesting enough, surveys indicate that they have staggering stakes in influencing in shopping [i]– from the apparels bought in a family (81%) to the vehicles (52%) chosen and there is a rough estimate suggesting that their spending power is around $200 million.

This Google generation of Twitterers are perpetually online with Texting, Instant messaging, Podcasting and Gaming, in fact a Jupiter Research survey suggests that by 2011 90% of them will be online. They seldom email, rather “face book friends”, shop online and express views freely. The mobile phone is a must-have along with their personal blog. Their purchasing choices differ from the previous generation. Millennials being excellent in collaborating prefer informed decisions by consulting views through social networks, and this prompts the question, are we (marketers) doing something through social networks already?  The new marketing should focus on an engaging social presence, of course never neglecting what we call the traditional channels. If a millennial finds a product good, he will not hesitate to share and recommend and helps in creating a tribe of loyal customers.

Does Gen Y value relationships with companies? Yes, they do! The 2009 loyalty census indicates that the membership towards loyalty programs has risen to 1.8 billion from 1.3 billion in 2007. Despite the fact that brands are squeezing and making it hard for consumers to receive benefits, due to the economic downturn, there has been a greater enrollment from the Millennials (32% increase).  A strong 46.4% of Millennials have accorded the importance of participating in loyalty programs in the present economic scenario. This shows that there is a huge opportunity for the retail sector to tap this group of young adults through loyalty programs. Indeed, this generation has recorded its allegiance to relationship building, or loyalty to social relationship I should say.

Brands have to be careful and promote themselves more in a Social way. Having been exposed to the atrocities of terrorist actions of the last years, the natural disasters and the global warming, Gen Y has turned to be socially conscientious citizens. The 2006 Cone survey [ii] highlights the fact that nearly 83% of the Millennials promote products and services of socially and environmentally responsible companies and 89% would interchange loyalties if they find that the second brand serves a social cause.

So the conclusion is clear for the companies expecting loyalties from the Millennials – social presence is the essence, and supporting social causes is the secret to success!