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05/25/2022

Report: Understanding Gen Z's Loyalty Patterns

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s Gen Z’s buying power continues to grow, brands are faced with both an opportunity and significant challenges when it comes to winning this crucial demographic.

Recent research from Talkdesk, a global cloud-based contact center and artificial intelligence software provider, found that 88% of Gen Z consumers are loyal to five or fewer companies in total, nearly a third (31%) have become loyal to a new company in the past year, and they're also not afraid to discontinue support based on social stances.

In its "Winning Gen Z Through Exceptional Customer Service" report, Talkdesk calls out challenges brands face when it comes to connecting with Gen Z, and highlighted two points critical to developing and maintaining customer loyalty with this demographic:  

  1. Allowing them to easily and conveniently resolve service issues.
  2. Speaking to their concerns and priorities beyond the context of customer service alone. 

“Gen Z consumers are still establishing what brands they will support and trust, leaving an opportunity for companies to strengthen and fortify that relationship,” David Gardner, vice president of Research and Insights at Talkdesk, exclusively told Retail Leader and its sister brand Path to Purchase IQ. “While poor customer service can leave a mark on this cohort, winning their loyalty goes beyond customer service. Gen Z expects a total alignment on core values and social issues from all facets of a brand, including their customer service agents.”

rowing up with access to the internet, younger generations’ expectations for brands indicate a growing need for AI and automation in customer service. For instance, the Talkdesk report found that just 24% of Gen Z respondents said they want to interact with customer service over the phone, compared with 40% of Gen Xers and 56% of Boomers. No one avenue of resolution is taking the place of human-based support for Gen Z, but they are open to engaging with companies through a broad variety of different service channels, per the report. They are more likely to have engaged with AI-enabled channels, such as virtual chat, voice support and social media than older generations.

“We definitely see higher adoption with [Gen Zers] for self-service technology. We’re seeing great success over the last year with guided workflows where [Gen Z] can resolve issues themselves, or if at the end they need to reach an agent then that information is transferred,” a director of customer experience at a global entertainment ticketing platform is quoted as saying in the report.

Gen Z’s changing preferences for developing relationships and engaging with brands calls on organizations to have an “authentic and cohesive omnichannel support strategy.” Gen Zers put little premeditated thought into channel preference and expect to be able to engage wherever they are to get what they need. Omnichannel engagement, intelligent self-service, and agent enablement increasingly form the fundamental basis of building and maintaining consumer relationships with Gen Z.

Customer service agents, who the report says are already expected to serve as brand ambassadors at 92% of organizations, should be equipped with the means to not only understand a customer’s past interactions with the company, but also how they have engaged with the company on social media.

Beyond the digital experience, the heightened attentiveness Gen Zers have toward a company’s take on social and political issues raises the stakes in terms of loyalty. Forty-six percent of Gen Z consumers said they stopped buying from a company in the past year due to its stance on social issues. Gen Z and Millennial consumers are significantly more likely than other generations to end their relationships with companies due to their stances on social and sustainability issues.

Consumer expectations for corporate social responsibility are not new but have increased in recent years. Talkdek’s research points to the heightened engagement of Gen Z on social media means that customer-facing staff will need to be equipped to speak to them.

The report is based primarily on a quantitative online survey of consumers fielded in October 2021. The sample includes 12 different global markets including the U.S. and Canada, Australia and New Zealand, France, Germany, Mexico and Brazil. Survey results were bolstered with qualitative interviews with customer service/CX leaders at major consumer companies and consultancies with a global presence.