Steve Smith explains why Gen Z ‘outsiders’ are turning brand thinking inside out
Have nearly two decades of austerity re-wired our attitudes to loyalty schemes and our relationships with brands? Since the banking crisis of 2008, an entire generation of people – Gen Z – has grown up in a money-saving culture. A culture that has been amplified and facilitated by technology making choice and information infinitely accessible and sharable.
These forces have made Gen Z’s attitude toward selection and long-term affinity towards products and services tangibly different to previous generations. This change in attitudes is creating a dichotomy for FMCG brand marketers and retailers because the old rules of marketing and reward seem to be breaking down.
It’s long been held in marketing circles that promotional activity is detrimental to brand value and loyalty. For more than a decade, the Institute of Practitioners in Advertising has regularly decried rising investment in promotional marketing in its quarterly Bellwether data suggesting that this damages brand equity. But what if the reverse is true?
A new model of loyalty marketing
A growing body of research suggests we need a fundamental rethink about brand loyalty and the role transactional promotions can play for FMCG brands. Some years ago, savi UK launched an annual study of consumer attitudes towards price promotions and the way they used them. The data suggests the influence of promotions, particularly coupons, extends far beyond individual purchases.
Over the last two years, we’ve seen a 50 percent increase in the value of discounts offered and a 100 percent increase in redemption rates as consumers actively seek out deals. Shoppers now anticipate discounts across a wide range of categories, with food (71 percent) topping the list, followed by household goods (54 percent), clothing (51 percent), dining out (46 percent), and fuel (42 percent).
There now seems to be an expectation of regular or on-going rewards and savings. Shoppers increasingly expect brands to reward them for their engagement. Our latest study, covering 2000 UK consumers in November 2024, found almost half of all respondents (46 percent) look for loyalty rewards, 37 percent expect discounts on their birthdays, 31 percent for Christmas, 25 percent for providing feedback or in compensation for a problem.
Promotions are also intrinsically linked with trial – 76 percent said they would be willing to try a new product if they had a discount for it. A staggering 90 percent of 18–25-year-olds agreed with this statement.
And retailers risk losing loyalty if they do not enable a fluidity of promotions. 68 percent of shoppers said they would consider switching supermarkets if they couldn’t redeem a coupon there, an increase of four percent on the previous year.
Analysis by McKinsey highlights price as a key driver for Gen Z, with many willing to switch brands for better value. But their loyalty is also influenced by other factors – brand strength, ESG values, community, and gamified rewards. Mobile coupons and engaging, reward-based mechanics help brands deliver on both value and experience. So, for Gen Z it seems, loyalty is not built through accumulation – it’s earned in the moment. Their purchase decisions are shaped by immediacy, relevance, and digital convenience.
An alternative route for FMCG brands
Given loyalty infrastructure is typically in the hands of retailers, FMCG brand’s ability to gather first-party data or build direct relationships using these schemes is limited. As is control over how the brand is promoted and experienced.
To Gen Z, that dependency becomes a liability. But this generation’s obsession with mobile technology and shareability, coupled with its desire to save money, opens new paths for brands to engage them directly.
Mobile technology is a definitive influence on Gen Z’s transactional relationships with brands. Our study found 70 percent of young shoppers have used mobile coupons on their smart phone to redeem offers and 57 percent say being able to download coupons to their phones encouraged them to use them.
FMCG brands are no longer trapped in the aisles. They can meet Gen Z where they are – on mobile, on social, on the move – and deliver personalised experiences that feel organic and immediate.
Many brands now pursue multiple, complementary routes to market, aside from retailer listings and participation in loyalty programmes such as DTC models which naturally generate closer relationships, as well as agnostic digital loyalty programs for brands such as the Shping app.
Embracing pop-up loyalty
However, the appetite for mobile coupons enables brands to create pop-up loyalty moments – time-sensitive, contextually triggered offers that feel bespoke and brand-driven. Think scan-to-win activations, micro-incentives for social shares, or limited drops via SMS or WhatsApp. These experiences not only excite Gen Z but also generate first-party data and direct engagement.
Coca-Cola, a brand with a long history of successfully capturing the hearts of new generations, is now leveraging value as a core mechanic in its marketing. A prime example is their impactful Take a Taste campaign for Coke Zero. This initiative ingeniously combined Digital Out-of-Home (DOOH) advertising with gamification and mobile coupons, effectively transforming it into a mass sampling device that scored 30M views. The result? A massive 68 percent coupon redemption rate resulted in record trials for the product and a 53 percent increase in consideration from their target audience, demonstrating how smart value-driven strategies can resonate powerfully with today’s consumers.
Linking a campaign’s creative directly to mobile coupons via QR codes collapses the marketing funnel. It connects brand awareness (upper funnel) with immediate purchase intent (lower funnel). In a world where consumers are bombarded with information, it’s crucial to capture and maintain their attention to secure a purchase before they move on to the next appealing option.
Value and brand creativity
All of this suggests brands could hotwire the loyalty process to leverage Gen Z behaviour. But doing so requires a shift in marketing mindset and embracing a test-and-learn approach which fuses brand strategy with promotional marketing and loyalty programmes.
Traditionally, price promotions have been managed within the confines of trade marketing – negotiated on a retailer-by-retailer basis, with brands playing a largely reactive role. To make promotions part of broader, above-the-line campaigns demands a more integrated, consumer-centric strategy underpinned by thoughtful business planning. Value needs to be embedded into the creative from the outset, not tacked on as an afterthought.
This is not a zero-sum game. Retailer loyalty programmes offer great value to brand participants and should work in unison with new parallel channels. Gen Z are open to brand interaction, but only on their own terms: in their feed, on their phone, and preferably with something in it for them now.
They are loyalty ‘outsiders’ not because they reject brands outright, but because traditional loyalty mechanisms have not been designed around them. Gen Z are simply challenging FMCG brands and retailers to align with their emerging needs and mindsets.
Steve Smith is Chief Commercial Officer at savi
