Decoding the Gen Z Customer Journey: Insights for the Modern Marketer

Today’s Generation Z consumers, varying in age from 10 to 27, starkly differentiate themselves from previous generations. Their preferences when it comes to loyalty, products, and payment methods do not align with older generations. Hence, retailers must evolve their strategies to better understand and optimize this generation’s customer experience. Generation Z is characterized by a widespread abandonment of loyalty and a penchant for convenience, and here’s how retailers can best adapt.

Less loyal Generation Z: How are retailers adapting?

The majority of Generation Z is willing to replace their favorite brand if they find a competitor’s product at a better price or higher quality. Therefore, retailers need to reconsider their tools to stimulate, encourage, and measure loyalty.

Most likely, retailers are not using the right approaches to listen to and retain young consumers. What worked in the past – offers, coupons, or traditional loyalty programs – are losing effectiveness.

Members of Generation Z describe themselves as emotional individuals who are open to others and have strong opinions. They are more likely to be sensitive to brands using their platforms to express themselves on social issues.

Retailers could consider replacing their traditional loyalty programs with incentive programs that support causes that are important to consumers and recognize consumers for their contributions to these efforts.

According to PayPal’s white paper “Rethinking Customer Loyalty,” over 25% of Millennials and Generation Z worldwide indicate that a company’s environmental footprint has already influenced their purchasing decisions.

Practicality: The New Engine of Experience for Generation Z

The Generation Z expects retailers to provide them with the best value for their money, be conveniently located, and sell items at the lowest prices. Compared to their predecessors, the Generation Z is more likely to indicate that they have a preference for a retailer based on the fastest or cheapest delivery options. Inflation shaping the customer experience, members of Generation Z are also more willing to sacrifice the quality of both the service and the products to save money. Ultimately, all these factors have one thing in common: convenience. Retailers wanting to retain customers from this generation will need to meet these new expectations by focusing on reducing friction and developing new ways to provide products and services.

A Generation Z more inclined to prefer BNPL

The Generation Z prioritizes retailers that offer their preferred payment methods such as buy-now, pay-later (BNPL) or installment payments.

The popularity of BNPL can be attributed to the erosion of purchasing power and the desire for immediate credit. With inflation, young people still want to buy what they want, when they want it, but their purchasing power has decreased.

In response to this, BNPL platforms have made obtaining extended credit, which used to be a complicated process, almost instantaneous.

For retailers, the digital channel provides an advantage. It allows them to evaluate how factors like BNPL contribute to conversions.

For instance, brands can experiment by placing the option to use BNPL on the product detail page rather than the payment page itself, measure the results, optimize based on the findings, and continue iterating.

Companies can then use post-transaction surveys to ask users why they use BNPL and utilize this information to guide future BNPL strategies.

Understanding and Enhancing Generation Z’s Customer Experience through Gathering and Examining Unstructured Data from Social Media and Other Channels

There is a real opportunity for retailers to understand their customer experiences through surveys and unstructured data. This data can come from social media, contact center emails, phone calls, and live chat sessions. It is then analyzed by generational cohort to highlight loyalty drivers and reveal insights for customer acquisition and retention by age group.

Generation Z consumers are more likely to gather information about products through social media than other generations. They are also more inclined to try a brand endorsed by a celebrity, which can be done directly through social media platforms.

Given the significant influence of social media, retailers have a unique opportunity to directly get to know consumers through their feedback. Text and speech analysis tools powered by AI can be used to automate the examination process of unstructured data from social media (captions, comments, and audio from videos) to discover insights and help consumers better understand the company’s products and services.

Retailers can quickly obtain answers on what is important to consumers by generation, allowing them to real-time adjust their strategies and improve acquisition and retention outcomes.

While there is no one-size-fits-all strategy to improve the customer experience, brands will increase their chances of success by creating personalized, contextual, and timely experiences through age-based segmentation, especially to cater to the specific needs of Generation Z.

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