Fuel Rewards Resonate Strongly with Millennials
Millennials, who make up 25 percent of the U.S. population and spend more than $200 billion annually, often say they support specific retailers or brands, suggesting that they are a brand-loyal demographic. But according to a new report from market research firm Excentus, millennials actually are more likely than older consumers to be willing to switch to a different retailer or brand when offered a valuable-enough incentive. And programs that help members save money on fuel could be critical in getting more members of this demographic into the door.
“The Road to Rewards: What Drives Millennial Loyalty,” which details the results of a November 2015 consumer survey performed by Ipsos eNation, reports that, when given the chance to save 50 cents to $1 on gas, 56 percent of millennials (versus 46 percent of Gen Xers and 41 percent of boomers) are willing to switch grocery stores, and 55 percent (versus 38 percent of Gen Xers and 28 percent of boomers) are willing to switch brands. Millennials also are more likely than other Gen Xers or boomers to join a fuel savings rewards program based on the recommendation of a relative or friend, with 19 percent saying so versus 8 percent of Gen Xers and 7 percent of boomers.
“Remember: They entered the job market at the bottom of the recession, and they’re as open to saving money as older consumers,” Brandon Logsdon, president and CEO of Excentus, told Retail Leader. “In our survey, for example, they were actually 12 percent to 18 percent more willing than middle-aged and baby boomer consumers to switch brands or stores if, by doing so, they could earn rewards from everyday purchases to save money on the cost of gasoline. They also join loyalty programs for the same reasons as older consumers: To save money any way they can, and to earn everyday-value points [and] rewards from everyday purchases.”
However, barriers do exist for some millennials when it comes to joining a fuel perks program. One particularly difficult for grocery retailers to address is that nearly one-quarter of millennials (22 percent) don’t even own a car. But some barriers could be overcome more easily. According to the report, 21 percent are not aware of such programs’ existence, and 16 percent simply don’t belong to any rewards programs (compared to 10 percent of boomers). Additionally, 54 percent of millennials (versus 67 percent of Gen Xers and 78 percent of boomers) don’t even pay attention to the cost of fuel, even though they embrace saving money on it. Marketing programs geared toward creating awareness around the cost of gas and the benefits such programs provide millennials could be an opportunity to grow program membership.
Easing the ability to check reward status also could help grow millennial membership, especially since, at 13 percent, millennials are more likely than Gen Xers (10 percent) and boomers (7 percent) to check their reward status on a daily basis. Thirty-three percent (versus 16 percent of Gen Xers and 6 percent of boomers) check their rewards from a mobile app, and 27 percent (versus 14 percent of Gen Xers and 7 percent of boomers) check from a smartphone, the report says.
“Raised on the Internet and undeterred by technology, millennials expect their favorite food companies, retailers and brands to understand and cater to their characteristics and behaviors,” Logsdon says. “Many of their daily brand interactions occur on smartphones and mobile apps, and they assume brands will have a robust online and mobile presence.”