What’s the Secret to Winning Gen Z Loyalty?

Gone are the days when a plastic loyalty card and a few points were enough to keep customers coming back. Gen Z is rewriting the rulebook on brand loyalty, and if you’re still relying on a ‘spend X, get Y’ approach, you might as well be sending them a fax.

This generation wants more than discounts, they want experiences, exclusivity, and a reason to engage. They’re looking for brands that align with their values, make their lives easier, and inject a bit of fun into the mix. So, how do you turn Gen Z from occasional shoppers into lifelong fans?

 

Why Gen Z Won’t Join (But Will Stay)

Gen Z is the least likely to sign up for loyalty programmes, but once they do, they’re the most engaged members. That’s because they’re not just after discounts, they want to be part of something bigger. They want brands that align with their values, offer personalised perks, and keep things exciting. In fact, 78% of Gen Z customers say they’re likely to remain loyal to brands that reward them with more than just discounts, offering them experiences and personalised perks is key to keeping them coming back.

The problem? Most loyalty programmes are stuck in the past. Gen Z don’t want to take part in standard point schemes, taking an eternity to earn anything valuable with no emotional connection. They want instant rewards, VIP access, and a sense of community. According to Shopify, 60% of Gen Z shoppers expect to receive rewards instantly rather than accumulating points over time.

 

Sephora’s Winning Formula

Sephora’s Beauty Insider programme is a prime of loyalty done right. It’s got three tiers: Insider (Bronze), VIB – Very Important Beauty Insider (Silver), and Rouge (Gold), all which reward customers based on their spending. But it’s not just about the cash.

At each level, Sephora makes customers feel like they’re unlocking a world of beauty perks. Members account for 80% of Sephora’s sales, proving how effective the program is at driving revenue.

Here’s why it works:

• Tiers That Actually Feel Like A Win: The higher the tier, the better the rewards think early access to sales, exclusive goodies, and free beauty classes. It’s like leveling up in a game, but with actual rewards.

• Choice Galore: Points? You can trade them for discounts, exclusive experiences, or limited-edition treasures. Gen Z loves having the power to choose.

• VIP Treatment: Higher tier members get birthday gifts, free shipping, and invites to exclusive events, making them feel like insiders.

• Gamified Engagement: Earning points is a breeze, and Sephora makes sure you’ll actually use them (no more forgotten points that expire before you even blink)

 

How to Win Gen Z’s Loyalty

Want to build a loyalty programme that Gen Z actually gets? Take a leaf out of Sephora’s book:

1. Consider Tiering: Give them something to aim for. Fun, meaningful rewards at every level keep them hooked.

2. Offer More Than Discounts: Gen Z craves experiences, exclusivity, and personalisation. A generic 10% off? Boring. A Giv survey found that 32.5% of Gen Z respondents prefer loyalty programs that offer charitable contributions.

3. Keep It Simple: Nobody wants to jump through hoops. The easier it is to earn and redeem rewards, the better.

4. Create FOMO: Limited time perks and VIP access keep them engaged.

5. Go Beyond Transactions: Encourage them to engage on social media, attend events and get involved with your community.

Gen Z loyalty isn’t about bribing customers with points, it’s all about making them feel seen, valued, and excited about your brand. Gen Zers consider about 1.7 times as many brands as older generations, indicating a strong preference for variety and brand exploration. Nail that, and they won’t just stay… they’ll bring their friends along too.