Last updated: Gen Z and Millennials are abandoning brands fast: Discover what’s behind it

Gen Z and Millennials are abandoning brands fast: Discover what’s behind it

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Customer loyalty is changing. In 2024, customer loyalty is no longer a simple matter of repeat purchases or brand recognition. The rapid growth of AI technologies is changing who customers choose to shop with, and how they shop.

According to the SAP Emarsys Customer Loyalty Index 2024, younger consumers are particularly drawn to innovative marketing and great customer experiences:
  • 33% of Gen Z, compared to 28% of all demographics, have tried a new brand because of its creative marketing
  • 33% of Gen Z are enticed by brands that use ‘cool’ content or imagery, compared with 27% of other age groups
  • 26% of Gen Z, compared to 20% of other generations, seek out brands that deliver memorable experiences

Put simply, your customers have more power – and higher expectations – than ever before. If their expectations aren’t met, they can defect to another brand in a couple of clicks.

For marketers, this shift presents both challenges and opportunities. If you want to stay ahead of the competition, you need to rethink your loyalty strategy and adapt.

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The role of AI in shaping customer loyalty in 2024

Today, AI’s impact can be felt across almost every channel and touchpoint in the marketing journey. Customer loyalty is no exception – and it’s making waves in a number of different ways:
  • Consumers can quickly compare products and switch with ease: AI enables customers to easily discover alternatives, reducing the friction involved in switching brands.
  • Brands can better serve these customers: Brands can leverage AI to create highly personalized experiences to newly discovered audiences that cater to individual customer preferences, a key driver in cultivating lifetime customer loyalty.

In a time when switching brands is easier than ever, AI helps brands stay competitive by delivering compelling experiences that keep customers engaged.

Customer experience can make or break loyalty

Customers are more demanding, both in terms of digital and in-store experiences.  It shouldn’t come as a surprise that consumers are prioritizing these factors as reflected in the global SAP Emarsys Customer Loyalty Index, which surveyed more than 12,000 individuals.

Creating memorable experiences has emerged as a crucial factor in fostering loyalty. The report reveals that 20% of consumers now cite memorable experiences as a key driver of their loyalty, showing that brands that prioritize exceptional customer service, unique in-store experiences, or engaging digital interactions are more likely to build long-term loyalty.

Additionally, poor shopping experiences are driving customers to seek better alternatives.

52% of consumers cited a bad experience, such as an app crashing, as their reason for switching brands.

The key to long-lasting loyalty lies in your ability to deliver a seamless experience, where the customer feels valued across all channels, whether in-store or online and at any stage in their lifecycle.

Generational differences in loyalty 

The SAP Emarsys Customer Loyalty Index 2024 reveals a fascinating divide in how different generations express and maintain loyalty:
  • Gen Z and millennials: For this digital-first group, it’s no surprise that online engagement is everything. These younger consumers are heavily influenced by social media and the voices of influencers, expecting brands to deliver highly personalized, real-time experiences that align with their values and lifestyles. For them, it’s not just about the product – it’s about feeling connected to a brand on a deeper, more personal level.
  • Older generations: In contrast, Gen X and Baby Boomers are more inclined to place their trust in more traditional loyalty drivers like product quality, reliable customer service, and long-standing brand heritage.
According to the SAP Emarsys data, younger consumers are particularly drawn to innovative marketing. Specifically, 33% of Gen Z, compared to 28% of all demographics, have tried a new brand because of its ‘creative marketing.’ Additionally, one-third of Gen Z (33%) are enticed by brands that use ‘cool’ content or imagery, compared with 27% of other age groups. Meanwhile, 26% of Gen Z, compared to 20% of other generations, seek out brands that deliver ‘memorable experiences.’

These differences highlight the growing importance of AI-powered segmentation. Brands that use AI to tailor their messaging and experiences not just to each demographic, but to the plethora of individual customer segments within that age group are able to meet the unique needs of their diverse customer base.

Illustration of a chart showing that 69% of Americans surveyed are loyal to a brand.

Customer Loyalty Index: Stats on changes in loyalty types

Loyalty isn’t one-size-fits-all. In the SAP Emarys Customer Loyalty Index, loyalty is broken down into five clear categories, which reflect the unique ways in which customers show their loyalty, and how this is starting to shift.

  • True loyalty: The most important, but hardest to attain loyalty type. Reflecting a deep, emotional connection to a brand, true loyalty increased from 27% in 2021 to 31% in 2023, and 34% in 2024. These customers aren’t just repeat buyers – they’ll also actively advocate for a brand, referring friends and family.
  • Inherited loyalty: Based on a brand’s tradition or long-standing heritage, or built through associations with other brands. Inherited loyalty has remained stable at 23% in 2024, showing the steadfastness of this loyalty type.
  • Silent loyalty: Characterized by passive customer retention, silent loyalty declined slightly from 56% in 2023 to 53% in 2024, suggesting that customers are now more active and engaged in their purchasing decisions.
  • Ethical loyalty: Driven by a brand’s ethical practices and core values, ethical loyalty has steadily increased over the last 3 years, from 24% in 2021 to 30% in 2024. As consumers become more conscious of the impact their choices have on the environment, prioritizing sustainability and ethical practices can help you gain a loyal customer base.
  • Incentivized loyalty: Driven by deals and rewards, incentivized loyalty, having dropped sharply in 2023 to 48%, remained at a similar level of 50% in 2024. Brands should beware of the discounting element of incentivized loyalty; non-personalized discounts can quickly create a downward spiral of price drops to prevent customer churn.

Customer Loyalty Drivers: 21% of Americans are now more loyal to brand with a commitment to sustainability; and 21% of US consumers now sign up for a subscription to show their loyalty.

Adapting your strategy: New rules for customer loyalty in the AI Age

As the SAP Emarsys Customer Loyalty Index 2024 shows, the rules of customer loyalty are changing. As AI and digital engagement become increasingly important, brands need to rethink their loyalty strategies to stay ahead.

By focusing on AI-driven personalized experiences  and value-driven solutions, brands can building lasting customer relationships and shine in this new environment.

52% of consumers switched brands because of a bad experience.
Get the report, data, and details you need to keep customers in this new era of loyalty HERE!

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