American Express reveals stark divide in loyalty drivers between Gen-Z and Baby Boomers

American Express has revealed that purpose is a driving force in generating Gen Z and Millennial shoppers’ loyalties - trumping product pricing, despite the challenging economic environment.

However, their parents’ generation is far more price motivated when it comes to loyalty, according to new research by American Express. The study of 2,000 UK shoppers explored the drivers of brand loyalty and how retailers can attract customers in today’s landscape.

The research revealed that one-third (33%) of 18-34-year-olds (the Gen Z and Millennial cohort) said they are more loyal to brands with a positive corporate reputation and values which align with their own. This group of shoppers are also the most likely to donate their points or cashback earned from loyalty programmes to charitable causes.

This uncovered a distinct 'loyalty divide', as an attractive price tag was cited as a loyalty driver for the vast majority (86%) of those aged over 55. Gen Z and Millennial shoppers are the least likely to consider price as a loyalty driver (49%).

Baby Boomers are less tolerant of poor customer service too, with almost two-thirds (63%) of shoppers over 55 confirming a poor in-store experience would make them less loyal, compared to under one-third (29%) of younger shoppers.

Dan Edelman, Vice President and UK General Manager, Merchant Services at American Express, commented: "Building a loyal customer base is the holy grail for any retail brand, but the current economic environment means that's tougher than ever as shoppers prioritise and flex their spending.

"Our research reveals a stark divide among different generations, meaning retailers need a range of strategies across areas such as price, purpose and service to keep customers coming back and spending."

The research did reveal some common ground between the generations. A similar proportion of these groups said that the cost of living pressures meant they are considering using loyalty schemes for the first time to save money. Shoppers in both of these groups are signed up for an average of four loyalty schemes.

Kate Nightingale, Consumer Psychologist and Chief Behavioural Officer of the agency Humanising Brands, said: "In the current environment, it’s natural for people to feel uncertainty meaning an increased desire to control their life, including where they spend money.

"Consumers are seeking reassurance from retailers, and want services that make their lives easier, while also feeling valued by the brands they choose to support. It’s clear that alongside price, both purpose and authenticity are important factors that build trust and support long-term loyalty."