Why This Common Gen Z Misconception Is a Waste of Money (and Possibly Costing Them Thousands)
Loyalty programs have become common in the U.S., partly because they’re so appealing to consumers. According to KPMG, 75% of consumers will favor a brand if it has a loyalty program. Younger consumers, such as Gen Z, particularly appreciate loyalty programs. According to a new study by Incogni, 78% of Gen Z respondents are enrolled in at least one.
On the surface, loyalty programs sound like a perfectly harmless and totally budget-friendly idea. Why not get points and/or discounts for spending at a business you frequently patronize? But Gen Zers may be thinking they’re getting a bigger payoff by being enrolled in loyalty programs than they actually are.
According to the study, on average, Gen Z anticipates saving $59 a month through loyalty programs – the highest average estimation compared to Millennials and Gen X.
But this just doesn’t add up. According to Incogni’s calculations, you would need to spend $2,360 at H&M, $1,283 at Starbucks or $296 at McDonald’s to save just $59.
“Many people dive headfirst into loyalty programs, thinking they’ll score big savings with zero strings attached,” said Darius Belejevas, head of Incogni, in a press release. “But in reality, the actual savings from loyalty programs most likely don’t live up to members’ expectations.”
Also concerning is the fact that some companies with loyalty programs share user data with third parties.
“Considering that loyalty programs usually require the disclosure of specific data points, such as name, phone number and email address, it may not be a fair trade considering the meager savings” Belejevas said.
Incogni found that 10 of the most popular companies that implement loyalty programs mine at least 7 different categories of personal data, and 8 out of 10 companies disclose that they sell user data to third parties. This is a potentially dangerous caveat, as cybercriminals use consumer data to commit fraud. Companies that store massive amounts of consumer data are prime targets for malicious hackers.
As Incogni highlighted, in 2022, there were 23.5 million leaked accounts and 1 million cases of identity theft in the U.S. Is sharing your data with a business in the quest for savings via their loyalty programs really worth it? Perhaps not, when you consider how meager those savings may actually be.
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