The New Consumer (July-August 2022)

​​​​​​​A look at Gen Z’s loyalty, back-to-school shopping and the connection between ‘fueling’ and consumer spending.

Recent research from Talkdesk, a global cloud-based contact center and AI software provider, found that 88% of Gen Z consumers are loyal to five or fewer companies in total. Nearly a third (31%) of respondents have become loyal to a new company in the past year — and they’re not afraid to discontinue support of a company based on social stances.

Talkdesk’s “Winning Gen Z Through Exceptional Customer Service” report, based primarily on a quantitative online survey of consumers fielded in October 2021, called out some challenges brands face when it comes to connecting with Gen Z, and highlighted two points critical to developing and maintaining customer loyalty with this crucial demographic:

1. Allowing them to easily and conveniently resolve service issues.

2. Speaking to their concerns and priorities beyond the context of customer service alone.

“Gen Z consumers are still establishing what brands they will support and trust, leaving an opportunity for companies to strengthen and fortify that relationship,” said David Gardner, vice president of Research and Insights at Talkdesk. “While poor customer service can leave a mark on this cohort, winning their loyalty goes beyond customer service. Gen Z expects a total alignment on core values and social issues from all facets of a brand, including their customer service agents.”

When it comes to how younger generations want to engage with customer service, the report found that just 24% of Gen Z respondents said they want to interact with customer service over the phone, compared with 40% of Gen Xers and 56% of Boomers. No one avenue of resolution is taking the place of human-based support for Gen Z, but they are open to engaging with companies through a broad variety of different service channels, per the report. They are more likely to have engaged with AI-enabled channels, such as virtual chat, voice support and social media than older generations.

Gen Zers put little premeditated thought into channel preference and expect to be able to engage wherever they are to get what they need. Customer service agents, who the report says are already expected to serve as brand ambassadors at 92% of organizations, should be equipped with the means to not only understand a customer’s past interactions with the company, but also how they have engaged with the company on social media.

Beyond the digital experience, the heightened attentiveness Gen Zers have toward a company’s take on social and political issues raises the stakes in terms of loyalty. Forty-six percent of Gen Zers said they stopped buying from a company in the past year due to its stance on social issues. Gen Z and Millennial consumers are significantly more likely than other generations to end their relationships with companies due to their stances on social and sustainability issues.

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Back-to-School Shopper Behavior

A study of U.S. consumers from global influencer marketing platform LTK found that affordability and convenience are key drivers for this year’s back-to-school season as shoppers adjust their behaviors due to rising inflation and inventory shortages. The data is from two surveys conducted in May 2022, both reflective of the U.S. population with 97% confidence, according to the report.

Some key takeaways from the report, titled “Back to School and Beyond: Shopping in a Shifting Market,” include:

• Shoppers are starting early. The back-to-school (BTS) shopping window is already underway, running from late June through early September this year, with shoppers hoping to land deals and avoid out-of-stocks. Nearly one-third of BTS shoppers plan to shop between late June and early July, but the majority will shop by the end of July.

• Saving time and money online. More shoppers are turning to online shopping to help save time and money, citing rising gas prices, versus going to physical stores. Buying online was the second-ranked money-saving strategy for shoppers behind driving less.

• Gen Z has different priorities. While the top items for the average BTS shopper include shoes, backpacks and core supplies like pencils and notebooks, Gen Z is focused on electronics, beauty/personal care products, women and men’s apparel, and food and beverages more than the general population and Millennials.

• Turning to influencers for help: Back-to-school shoppers are turning to creators for help finding the best deals and items that are in stock. According to the study, Gen Z trusts creators more than friends/family when it comes to shopping recommendations, again veering away from the general population’s sentiment. Social media sponsored brand content and celebrity posts are also driving purchases. Additionally, influencer posts are driving almost as much traffic in store as online.

Fueling Behavior and Consumer Spending

Consumer insights company Affinity Solutions and GSTV, a national video network engaging targeted audiences at convenience retailers, partnered on an analysis showing a predictive relationship between a fuel transaction and increased retail spending.

Key findings include that, in the three hours after fueling, consumers spend 3.7 times more money, transact 4.2 times more frequently, and are more than four times more likely to make at least one additional purchase compared to those not fueling that day.

“GSTV came to us with a hypothesis: Since consumers often stop for fuel as part of a larger shopping trip, a fuel transaction might be a good predictor of immediate future spending,” said Phil Lore, executive vice president and chief revenue officer at Affinity Solutions, in a news release. “Our analysis, spanning hundreds of millions of credit and debit card transactions, across 20 million accounts, bears this out. … These findings identify a uniquely pivotal moment along the shopper journey to strongly influence consumer decision-making.”

Affinity Solutions quantified the lift in spend propensity for more than a hundred of the country’s top retailers and restaurants. The analysis quantified the increase in spend at specific key retailers following a fuel transaction, including Walmart (plus-5 times), Kroger (4.9 times), Target (4 times), Walgreens (3.8 times), The Home Depot (5.2 times) and Chick-fil-A (6.6 times), among others.

The study also found that a fuel transaction can predict substantially higher levels of spend across major categories, including quick-service restaurants (5.3 times), home supply (5.2 times), grocery (4.8 times), big box (4 times) and pharmacy (3.6 times). Note: Spend behavior was analyzed in the three hours immediately following a fuel transaction from May 1 through July 31, 2021, and compared to active accounts without an observed fuel transaction that day.

The analysis period for the study came more than a year after the start of the COVID-19 pandemic during a lull in cases when there was widespread vaccine availability and prior to the uptick of cases from the delta or omicron variants.