Understanding the Gen Z CX in 2023

What sets Gen Z consumers apart from the rest? Plenty. For starters, they have different preferences on loyalty, products and payment methods.

So how should you evolve your strategies to capture more insights about — and optimize for — the new Gen Z customer experience during the post-holiday sales period and beyond, during uncertain times?

This past fall, Medallia conducted a study of Gen Z members who are in the workforce and have buying power, finding a massive shift away from loyalty and an appetite towards convenience. This is how retailers can best adapt.

You Need to Rethink Traditional Loyalty

Only 43% of Gen Z members said brands can earn their loyalty, compared to 59% of the general population. Loyalty isn’t going away, but retailers need to rethink what they’re using to drive, incentivize and measure loyalty.

Most retailers probably aren’t using the right attributes to listen to and foster loyalty among younger shoppers. What’s worked in the past — deals, coupons, or typical loyalty programs — may no longer be relevant. Gen Z members describe themselves as emotional, inclusive and opinionated, and that they’re more likely to want brands that use their platforms to be vocal about social issues. Consider evolving beyond traditional loyalty, instead offering a pay-it-forward incentive program that supports causes Gen Z members care about and that recognizes consumers in your contributions to these efforts.

Convenience Is the New Driver of Gen Z CX

Gen Z wants retailers that offer the best value for their money, have a convenient location and sell items at the lowest prices. Compared to other generations, Gen Z is more likely to prefer a retailer based on whether the company has the fastest or cheapest shipping options. With inflation shaping the customer experience, Gen Z members are also more willing to sacrifice service quality and the quality and size of products to avoid spending more money.

At the end of the day, all these factors have one thing in common: convenience. Even price is about convenience, because if a consumer can’t afford something that’s not convenient.

If you want to win repeat business from Gen Z, you’ll need to meet these new expectations by focusing on reducing friction and developing other ways of delivering products and services.

Gen Z is More Likely to Prefer BNPL

Gen Z members are more likely than all other generations to say that being able to use their preferred payment method (such as buy now, pay later or BNPL) is a factor they consider when choosing retailers.

One force driving the push to use BNPL is the erosion of buying power. Gen Z has been used to getting a lot of value from the dollar. Now, thanks to inflation, they still want to buy what they want, when they want, but don’t have the same buying power. Another is the immediacy of acquiring credit; again, this is about convenience. BNPL platforms make obtaining extended credit, once a complicated process, an almost instantaneous experience.

The beautiful thing about digital as a channel means you can use your web presence to see how different factors like BNPL drive conversions. For instance, brands can experiment with placing the BNPL option on the product detail page vs. at checkout, then measure the outcome, optimize based on results and keep iterating. You can then layer in using post-transaction surveys asking users why they use BNPL and let these insights guide further BNPL strategies.

Unstructured Social Data Is Key

There’s a real opportunity to look at your customer experience insights from surveys and unstructured data, such as data from social media and contact center emails, phone calls and live chat sessions. You can then analyze this data by generational cohort to shed light on drivers of loyalty, unlocking clues for acquiring and retaining customers by age group.

Gen Z consumers are 50% more likely to find out about products from social media compared to all other cohorts. Furthermore, they’re also 9% more likely to try a brand affiliated with a celebrity compared with older shoppers, which may come directly through social media platforms.

Given the huge influence of social media, this presents a unique opportunity to learn about consumers directly from social media in particular. This can be done using AI-powered text and speech analytics, which automate the process of reviewing unstructured data from social media (captions, comments and the audio from videos). You can then uncover insights that help you get answers faster about what’s important to consumers by generation to drive acquisition and retention strategies and outcomes.

Final Thoughts

There’s no one-size-fits-all strategy for improving customer experience. As with the world of marketing, brands will be more successful with their customer experience strategies if they’re personalized, contextual and timely. Segmenting insights by age group is a great place to start, particularly as you learn to meet the needs of Gen Z, and the newest generation of shoppers behind them.

Mike Debnar is a solution principal for Medallia