Gen Z Broke the Marketing Funnel
New research from US youth culture agency Archrival and industry experts reveal how Gen Zs are rewriting the consumer path to purchase.
Over the last few decades, marketers have become obsessed with the “consumer funnel”, where shopping on or offline was linear. This predetermined path to purchase followed conventional stages:
- Awareness
- Interest
- Desire
- Action
— and prioritised reaching as many people as possible with, sweeping, general, adverts.
That consumer funnel was built for the old world — and Gen Z doesn’t live there anymore.
This generation is growing up with radically different priorities, influences, and technology than previous ones, causing their path to purchase to blur.
They’re grappling with the fact that their primary marketplace — social media — is also their entertainment centre, social hub, learning platform, and news source, making shopping a medley of influences and mindsets.
To better understand the shift, US-based youth culture agency Archrival conducted a qualitative and quantitative research study with Gen Zs (13-25) and their millennial (26-40) counterparts in the US. They surveyed a nationally-representative sample of 750 Gen Zs and 250 millennials, and conducted qualitative focus groups with dozens of Gen Zs.
With that, they discovered that consumption today is an infinite loop of inspiration, exploration, community and loyalty.
And from Madhappy and Represent to Rhode and Refy, the brands winning with Gen Z are those creating content and activations that touch each one.
Inspiration
Understanding Gen Z’s near-constant sparks of inspiration reveals how they really navigate the world — and where, how, and why they embrace brands along the way.
For young consumers, social media remains the main source of inspiration for fashion and beauty purchases. Globally, three in 10 Gen Zs use social media to source inspiration for things, and they’re 11 per cent more likely to do this than any other generation. Per Archrival’s data, 77 per cent of Gen Zs and 79 per cent of millennials in the US are actively seeking style inspiration at least monthly, with almost half of those looking for style inspiration on social media. When asked where they learn about new brands, products and experiences, video reigns supreme: YouTube is the most popular platform with Gen Zs, followed by TikTok, then Instagram.
As young people consume more content than ever, it’s getting more difficult for brands to cut through the noise. 80 per cent of Gen Zs agree that they are exposed to more brands and advertising than any other generation (compared to 73 per cent of millennials), per Archrival. And short form video — including TikTok, one of the most powerful inspiration channels for Gen Z according to Archrival’s research — is very unpredictable.
Instead of becoming overwhelmed and tapping out completely, Gen Zs want to find the gold among the clutter.
“Because Gen Zs came of age in an era where they’re constantly bombarded with content and information via social media, they consider inspiration and discovery foundational to their experience and even core to who they are,” said Ben Harms, chief growth officer at Archrival. “The challenge for brands is delivering that inspiration to them in the right ways at the right moments.” 71 per cent of Gen Zs say, “I’m always open to discovering new brands.” So how can brands reach young people and inspire them to buy?
Where do you most often learn about new brands, products, services, and experiences?
Source: Archrival
Influencers are still an important part of the inspiration journey. 51 per cent of Gen Zs believe social media influencers create new trends (versus 36 per cent of millennials) and 21 per cent of Gen Zs and millennials credited celebrities with creating new trends, compared to 15 per cent who said brands do.
The power of celebrities and influencers is evidenced by Hailey Bieber and her skincare label Rhode. Before Bieber launches a product, she often coins a phrase like “strawberry girl summer” on social media, launching an aesthetic micro-trend overnight that she then mirrors in her product offering.
Gen Zs are careful curators of their content who trust their algorithm implicitly to serve them what they want.
Due to the algorithm of platforms like TikTok, Instagram Reels and YouTube Shorts, TV, music and fashion and beauty content can spread like wildfire. It’s given a new level of exposure to culture (via “second screen” content of TV or film) and previously exclusive events such as concerts or fashion weeks are now more mainstream than ever, which is inspiring consumers and birthing micro-trends including Barbiecore and Girl Math. While the percentages remain low, young people are becoming increasingly open about having mainstream tastes in comparison to their predecessors: 13 per cent of Gen Zs said they are happy to embrace their mainstream taste, versus 9 per cent of millennials.
Source: Archrival
As a result, retailers are behaving more like media companies and media companies are behaving more like retailers, says Alex Hawkins, strategic foresight editor at agency The Future Laboratory. One example is Half Magic, a makeup line and joint venture between film and TV production studio A24 and makeup artist Doniella Davy, who created the beauty looks on A24 show Euphoria. Most recently, the brand has released a makeup kit inspired by the new Sofia Coppola film Priscilla.
Despite their reputation as digital natives, Gen Z shoppers still value in-person experiences. Bricks-and-mortar stores are an important component in their fashion and beauty consumption. 74 per cent of Gen Zs think IRL experiences are more important than digital ones (compared to 66 per cent of millennials). 73 per cent of Gen Zs prefer making a purchase in store while shopping, versus the 27 per cent of Gen Zs who prefer to make a purchase on social media. And while online rules for inspiration, 68 per cent of Gen Zs prefer to try before they buy (versus 61 per cent of millennials). Just 32 per cent prefer to buy without trying. However, typically, they conduct in-depth online research before making the purchase in store.
When it comes to shopping, which do you prefer?
Source: Archrival
During and after lockdown, brands from Balenciaga to Vans have invested heavily in the metaverse. Even though some labels have found success in platforms like Roblox, for many of Gen Z, the metaverse just isn’t that exciting.
While around half of Gen Z respondents had created a virtual avatar (52 per cent), used an app filter (49 per cent) or made friends in a virtual game (44 per cent), when asked what would make brands seem “cool”, just 32 per cent of Gen Zs said presence in a virtual world like Roblox or Decentraland (versus 28 per cent of millennials). Also, only 16 per cent of Gen Zs believe that branded NFTs would make a brand seem more cool, compared with 28 per cent of millennials. When interviewed by Vogue Business, many of Archrival’s Gen Z community didn’t know much about the metaverse at all. And those who did were ambivalent.
“I’ve heard about the metaverse, the virtual world thing, on Facebook. It feels as if they’re pushing it on us,” says 22-year-old Amaria Vail, who took part in Archrival’s qualitative research. “But for now I’m not interested.”
Have you ever created a virtual avatar?
Source: Archrival
Exploration
Gen Zs want the nitty-gritty product details now — the price, the fit, the materials, the mechanics. And they’re looking for frictionless access from brands, and beyond.
As social media became more important to the inspiration phase, platforms and marketers believed young consumers would be keen to impulse buy on social channels, with a convenient “swipe to buy” mentality. Many social platforms felt they could monetise this linear journey by creating in-app shopping, so users could purchase instantly when spotting a product they like. Platforms such as TikTok and Instagram, under this assumption, launched social commerce features like Instagram Shop and TikTok Shop, for seamless in-app shopping. While social commerce is popular in the APAC region, it remains to be seen whether TikTok’s Shop endeavours will pay off. Instagram removed the Shop tab from the app at the start of this year, signalling mixed results.
When it comes to shopping, which do you prefer?
Source: Archrival
In reality, many Gen Z consumers aren’t buying products impulsively at the point of inspiration. In fact, young people are increasingly using social media as a search engine, to research products they’ve seen online or IRL and hear from others about the item’s fit, quality, packaging and more.
TikTok search volume has increased “dramatically” over the last two years, says Kristina Karassoulis, head of luxury and auto brand partnerships for global business solutions at TikTok. “We’re seeing brands now come to us and ask what their search numbers look like, because it’s such an important factor.” Often after a brand releases a campaign, TikTok will see a spike in searches for the brand, as users research further following the point of inspiration.
The research phase is crucial for brand trust: 70 per cent of Gen Zs and 69 per cent of millennials only trust a brand after carrying out their own research.
And 56 per cent of Gen Zs said “brands often lie about their products/services”, compared with 47 per cent of millennials. Comments sections are also a key area of the research phase.
This method for buying is influencing how brands approach sales and marketing, says Hawkins. “For brands, there’s an opportunity to become educators during the research-to-buy process, offering informative content about the product and engaging with reviews, unboxing videos and online communities. It’s also crucial to create a seamless online and offline experience as Gen Z so often switches between the two. Their desire for information has also given them a real awareness of value.”
Meezab Murad, a 21-year-old student in Dallas who was part of Archrival’s focus groups, says she only makes impulse purchases if she’s read some reviews first. “I think it depends completely on where I see the product, if it is a social media influencer or a content creator with similar skin tone, body type and height, I’d be more inclined towards an impulse purchase based on their review.” She’s never used a TikTok or Instagram shop, “I wasn’t aware it was a thing.”
“There have been impulse purchases in the past but again, that is only after I read some reviews.”
Emma Wolan — 20
If young consumers know they need to buy an item, whether it’s clothing, makeup or furniture, 40 per cent of Gen Zs look for reviews from online influencers (versus 31 per cent of millennials), per Archrival.
To tap into that, youth-focused DTC fashion and beauty brands like Djerf Avenue, Refy and Rhode use user-generated content (UGC) of customers wearing or showing how they apply products to inform young consumers about their brand. Luxury labels are less inclined to share UGC because they fear brand dilution.
Almost half of Gen Zs (48 per cent) also use Amazon as a tool to hunt down dupes (lower-priced products that look or function like the original). 48 per cent of Gen Zs and millennials compare prices on Amazon if they know they need to buy something, per Archrival.
If you know you need to buy something, which of the following do you do prior to purchasing?
Source: Archrival
During the research phase, Gen Zs often collage images of products they want, either in wishlists online, Pinterest mood boards or even folders of screenshots in their phones, to save for later. “When I see [fashion or beauty] I like, I normally take a screenshot that has the influencer’s username in it so that I can go back to it if I need it,” says Emma Wolan, a 20-year-old student at the University of South Virginia, who regularly shops for fashion and gains inspiration mainly from TikTok. “I have a folder in my camera roll that’s just things that I want.”
What’s often overlooked is that Gen Z is also still very much driven by price, Hawkins says. “Because they’re price-conscious and value-driven, tangible rewards, discounts and exclusive access via loyalty programmes are all pretty effective.” That’s why in the research phase, before purchasing a product, popular actions among Gen Zs surveyed by Archrival include comparing prices on Amazon and looking for sales or special offers.
Which of the following would discourage you from making a purchase?
Source: Archrival
Community
The secret sauce for brands today is making Gen Zs feel that they’re part of a community — and inviting them to explore a whole universe of relevant touchpoints.
For many Gen Z customers, simply selling a product isn’t enough — brands need to build a universe. 54 per cent of Gen Zs say that their favourite brands are the ones that make them feel like they’re part of a community, Archrival found. In other words, “cool” brands are the ones engaging this generation with far more than just product. And with 84 per cent saying they’re more likely to purchase from brands that they see as “cool”, compared to ones they don’t, this universe building is key to winning their loyalty. While metrics for loyalty are often seen in terms of repeat sales, brands should consider other benchmarks, too.
Photo: Brain Dead
Gen Z is the loneliest generation, according to the Cigna US Loneliness Index. Insights platform GWI also found that almost a third (29 per cent) of Gen Zs say they are prone to anxiety. In spite of this, the connection brands provide can help young consumers feel a sense of belonging.
LA-based brand Madhappy is both a clothing brand and a wellness community providing mental health support and resources, as well as community events alongside selling hoodies and T-shirts.
“Our hope has always been to create a brand that goes deeper than something transactional. We believe that the beauty of Madhappy is the ideology, the embrace of a shared perspective and a way of looking at the world,” says founder Peiman Raf. “Tactically, we’ve accomplished this through our physical retail spaces and events — creating programming and ways to engage with the brand. Since the beginning of our retail presence up to now at our first flagship, we’ve always found it important to dedicate space to the ethos of the brand.”
At Madhappy West Hollywood, for example, the brand introduced a “Local Optimist Space” — named after its bi-annual periodical Local Optimist — as a multimedia room featuring work from a rotation of artists who would design an ethereal, audiovisual experience for individual viewers. “It’s a great example of the value we see in creating a world, rather than solely creating products,” Raf says.
Which of the following would make a brand seem “more cool” to you?
Source: Archrival (Gen Z Only)
Represent is a 12-year-old brand launched by Manchester brothers George and Michael Heaton. The brand turned over £50 million last year and is now building a presence in the US. A large portion of Represent’s customers are below 25.
“Creating a brand isn’t just the product for us, it’s about the story, the lifestyle and the way we show up with everything we do,” says George, writing from his new home in LA over email, where he’s building the US business. Alongside its online communities like the Rep Talks Facebook groups (which has 14,700 members), Represent holds a mixture of physical community activities that go way beyond product drops, to make its community feel part of the brand journey. This chimes with young consumers’ needs today: when asked which retail experiences would make them excited to shop in a physical store, over a third of Gen Zs and millennials said unique in-store events (e.g. live music, influencer meet-and-greets, pop-up shops).
Represent also hosted a Rep Talk day in Manchester last year, bringing more than 50 of its most-engaged customers to a Q&A session with George, Michael, James Gullick (chief product officer), and Stefan Lewis (chief digital officer). “We wanted to give them further insight into the brand’s future, and understand their feedback on product areas. It was very insightful to both sides,” says George. Represent’s activewear line 247 aligns itself with the functional fitness community, with the founders, employees and fans of the brand participating in events such as Hyrox and ultra marathons, inviting the community to take part with them. 247 even has its own app, where the community can access co-founder George’s daily workout routines.
Gen Z may be one of the most-informed generations, but they’re also one of the least committal, according to Harms at Archrival.
“Gen Zs are reinventing the very notion of brand loyalty. They’re largely open to it, but they expect brands to earn it — and to continue to win them over in new and innovative ways for the long haul.” Ben Harms — Chief Growth Officer at Archrival
To earn Gen Z’s elusive loyalty, brands need to keep consumers engaged for the long haul — and that means creating a whole universe of touchpoints for them to traverse and explore, beyond simple transactions. Brands that are successful in building loyalty know that the post-purchase journey is not actually just about the product.
Loyalty
The old model of brand loyalty centred around consumers’ repeat purchases, but Gen Zs seek brand relationships that feel far more reciprocal.
If the old model of brand loyalty centred on how the consumer served the brand through repeat purchases, Gen Zs seek brand relationships that feel a little more reciprocal. While the loyalty programmes, discounts and early access to products that brands have always offered customers are still important to this generation, they expect brands to offer them benefits, even if they’re not
In fact, loyalty to a brand isn’t defined by purchase, according to Gen Zs. This crowd are much more likely than their millennial counterparts to say that showing brand loyalty means simply telling your friends about a brand (54 per cent versus 41 per cent), according to Archrival. When asked about the most important ways to show loyalty, Gen Zs said simply loving the brand even if they don’t purchase it (40 per cent) and following the brand on social media (29 per cent) are enough, says Archrival senior editor of thought leadership, Bayla Metzger. Teens (13 to 18) are especially likely to consider themselves loyal to a brand simply because they love it, even when they have no intent to purchase (46 per cent).
UGC is another key factor in community building for fashion and beauty players. It creates the idea that post-purchase, consumers can remain part of the brand’s story.
What are the most important ways to show brand loyalty?
Buying that brand as often as possible
Source: Archrival
The Frankie Shop is an affordable luxury label that’s played into UGC via celebrating customers post-purchase. The brand’s Instagram and TikTok accounts feature regular customers styling and wearing its cult tailoring and separates. While The Frankie Shop’s consumer base is predominantly millennial, the brand is building Gen Z users via UGC on TikTok.
“We dress people with real lives, real jobs and real problems, so sharing how our consumers wear our pieces is the best possible way to inspire others to try these outfit formulas,” says the Frankie Shop founder, Gaëlle Drevet. “Seeing Frankie Shop pieces on real-life people helps our customers envision themselves in these designs, knowing that they are not just for the runway but practical and elevated choices for every day.” Similarly, influencer label Djerf Avenue also reshares customers wearing its tailoring and separates, naming them the #djerfavenueangels.
Beauty brand Refy was launched by influencer Jess Hunt three years ago. Unlike makeup-artist-led beauty brands or megabrands, Refy prioritised nano and micro-influencers on its social feeds, resharing all different types of women using their products.
“Our products are all high-performance and they have very innovative formulas and applicators, so educating with tutorial style content is essential to make sure the audience knows how to use the product properly to get the best results,” says CEO Jenna Meek.
To respond to the growing importance of UGC, TikTok launched “Branded Mission” last year, meaning that brands can approach users with over 1,000 followers to participate in a challenge, and on the back end it can access all the UGC in one place to easily reshare. Asos used this technology during Halloween 2023 on a spooky outfit challenge. “The user benefits because they go viral on the platform via the brand’s page and the brand wins because they’ve got an amazing creator or something that feels so authentic building that content,” she says.
“Loyalty is the essence of why we’ve been able to grow quickly over a short period of time,” says Madhappy’s Raf. “I think it’s about a mutual relationship between the brand and its community.”
“Our most loyal customers really want to see us evolve — they’ve loved what we’ve done already, but to replicate that again and again would be oversimplifying things. Continuing to build that bond with a wider community is always our goal.” Peiman Raf
In the old world, brands were at the centre of the consumer journey — today, people are (and, you could argue, always should have been).
Brands need to be where the people are: traversing the infinite loop of inspiration, exploration, community and loyalty.
Because there's no start or end point to the purchasing path today, Gen Zs can inspire others whether they’re at the beginning of the journey, in the research phase or whether they’re at the review [post-purchase] phase, says Kristina Karassoulis, head of luxury and auto brand partnerships for global business solutions at TikTok.“It's about entertainment. It's about participation. And most importantly, it's about connection.”
Brands that get it right in 2024 will win with Gen Z consumers.
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