How to attract, convert, and retain young consumers
Gen Z, the population born between 2000 to 2010, represents an approximate USD $360 billion in spending power, according to a recent study by research and advisory firm Gen Z Planet. And with 98% of them owning a smartphone, their shopping and payment habits are weighted heavily towards speed, convenience and social media.
Investopedia estimates that a quarter of Gen Z already hold cryptocurrencies and stocks, and one in 10 own NFTs. In the next decade, this generation will have considerable influence over global economies and culture. As a future-focused online retailer, it’s essential to plan ahead for the preferences that will drive sales and remove friction at the checkout with this cohort. Here are three top Gen Z consumer trends, and how to use capitalize on them to maximize conversion rates:
1. Help Gen Z spread the cost
These young consumers are most likely to support socially conscious brands, shaped by the forces of global warming and digital technology. As shoppers, they are more inclined than any other generation to pay more for brands that advocate for social issues such as environmental protection, animal welfare, and racial, gender, or marriage equality.
At the same time, Gen Z is the consumer group most concerned about their finances — 78% of them according to Global Data. As new homeowners or young parents, this group will seek to balance their inherent preference for sustainability and environmental protection with concern about rising lifestyle costs.
Gen Z shoppers are unlikely to compromise on their strong ethical and environmental beliefs, even when facing a cost-of-living spike. This cohort would prefer to spend more on their preferred sustainable, honest brands and spread the budget to make their outgoings more manageable. So, to attract and retain these shoppers, consider a transparent approach to your brand identity, using genuine images of real people and influencers. Also consider offering buy now, pay later options like Klarna or AfterPay at your checkout.
2. Offer secure recurring billing
Gen Z shoppers are digital natives. As consumers, they are far less wary of emerging digital tools than other age groups. Equally, they are incredibly data security-savvy. Many are willing to tie their bank accounts to trusted digital wallets, merchant sites or online bill payment platforms to pay recurring bills. Those involved in the financial industry will need to offer new, streamlined solutions for Gen Z, making it easy for them to take control of their finances.
Recurring billing and subscriptions deliver convenience and peace of mind, but Gen Z want to trust their personal information is secure. Now, growing public awareness of data privacy is applying pressure to brands and merchants to enact stricter practices.
Tokenization is a data security method that replaces credit card information with a token, a random value that retains the card’s essential information without compromising security. This is especially helpful for recurring or subscription billing purposes as it allows access to billing data without needing to store credit card information. Each token is linked to a single customer profile and can be used to complete a purchase transaction. As a merchant, you can safely process transactions while reducing the risk of having sensitive data fall into the wrong hands.
3. Diversify your alternative payment methods
Finally, for Gen Z, mobile payments come first. Gen Z consumers see their devices as extensions of their personas, creating new imperatives for brands with respect to how shopping experiences and marketing communications are conceived.
What’s more, this cohort has grown up during key innovations and fintech launches around the world. They are the primary demographic to use mobile-first alternative payment methods, seeing online, mobile, and social shopping as a way of life. They are prolific shoppers who take for granted their ability to make unplanned, small-ticket purchase anytime, anywhere.
As consumers continue to use digital devices over cash and physical cards in 2022, the value of mobile wallet transactions will exceed USD $266 billion in the US, and USD $60.5 trillion in China. Without offering suitable alternative payment methods to Gen Z, you risk experiencing cart abandonment and reduced sales. Mobile wallets like Apple Pay and Google Pay not only offer the convenience of on-the-go mobile purchasing, but also act as a gateway to a broader range of in-app financial services. They also allow users to make online and in-store payments, peer-to-peer transfers, or bill payments.
With rising living costs, ingrained ethics and busy lives, Gen Z are a demanding consumer group to satisfy and retain. For more consumer data, tips, and information about building a payments strategy for Gen Z, download our infographic, Maximizing Online Conversion for Gen Z Shoppers — Payment trends and shopping behaviors in young consumers.