By Tony Rose/Vantiv Director of Product Management: Mobile
Millennials, or what many refer to as "digital natives," continue to draw attention from all corners of commerce. This group — roughly individuals who are now in that long-prized 18- to 35-year-old age group — is the single largest generation ever seen in the U.S., with 75.3 million members at the end of last year, according to the U.S. Census Bureau.
As a generation, their habits, attitudes and thinking reflect the enormous change technology has had on our world. For instance, analysts like those at The Strawhecker Group (TSG), have asserted that millennials now play a critical role in leading overall adoption and use of consumer technology. That is, in part, why those seeking to understand which changes are still to come in social and consumer behavior are watching millennials for answers.
Mobile payments adoption is no exception. Many want to know whether mobile apps like Apple Pay and Android Pay will end up being cast aside, or embraced to the point of standardization. Here, the data shows a strong trend toward adoption by millennials.
In a survey of millennials by Business Insider Intelligence,about 90 percent of those polled said they had made a purchase of some kind on their smartphone. Slightly less than half, 44.5 percent, had made an in-store smartphone payment in the past week. Those are the kinds of response rates that indicate it's probably safe to assume that mobile payments adoption is popular with this group and will also grow with the population as a whole.
Similarly, businesses interested in closing the gap between revenue potential and actual profits in the rich, largely untapped soil of the mobile segment are also watching what attracts millennials to businesses and how best to use mobile payments in their operation to retain their loyalty.
Mobile rewards beget mobile payments
Simply put, rewards are the best way to capture millennials' loyalty to your business. More specifically, rewards that offer convenience are particularly attractive to this group.
Research from Vantiv and Socratic Technologies shows that a third of millennials say they don't like rewards programs because they leave them with too many cards to carry. And yet, 20 percent said they'd gladly provide their membership information via a mobile wallet.
An even broader survey by TSG shows 37 percent of millennials report being "extremely willing" to be tracked by trusted merchants. That's 24 percent more millennials indicating this willingness than the number of older Baby Boomers who said they would allow this kind of tracking.
So the lesson learned here is simply that when you have a population of consumers eager to use mobile payments, but annoyed by loyalty cards, it makes sense to offer them a mobile rewards program.
Successful mobile loyalty programs
Reams of research and surveys have proven that convenience is critically important to consumers these days. For digital natives, convenience looks and feels like a smartphone.
That's why loyalty programs that are mobile-based and targeted to consumers' preferences are good bets for this demographic. For a restaurant chain, this may take the form of an automatically mobile-delivered digital coupon for frequently purchased items to prompt a return visit.
In fact, some restaurant operators are having success with loyalty programs that deliver digital coupons to consumers' phones when they enter the restaurant, or even the restaurant's vicinity. Consumers who pass a coffee shop and simultaneously get a discount offer on something they often buy are much more likely to end up visiting the store and buying the item.
Then, its also pays to close the loop on that by offering convenient payment that involves nothing more than the diner handing his or her phone to the cashier to scan or tap to a near-field communication terminal. Operators who institute this sort of program are capturing millennial consumers and affirming payment trends in ways that the whole population will soon adopt.
So the bottom line is that restaurants can build loyalty among this largest population segment by seeking mobile rewards programs that can work with NFC-capable terminals. This single, relatively simple practice is a great way to stay relevant in this rapidly evolving commerce space.