Retailers risk losing two-thirds of loyal customers by offering discounts exclusively to new shoppers

Facebooktwittergoogle_plusredditpinterestlinkedinmailFacebooktwittergoogle_plusredditpinterestlinkedinmail

Retailers are at risk of losing their most loyal customers if they don’t change the way they execute sales periods. Research commissioned by Collinson, a global loyalty and benefits company (formerly ICLP), found that the deadliest sin for retailers to commit is offering discounts exclusively to new customers, which two-thirds (66%) of respondents say would annoy them as loyal customers.

Communication is critical for retailers to maintain the relationship with their loyal customers. For over half (53%) of UK shoppers, missing out on an offer from their favourite brand as a result of them failing to communicate properly makes them unhappy. Equally important is recognition, with 42% of shoppers saying they would be annoyed if they received promotional information that wasn’t relevant to them. Over half (58%) of shoppers feel frustrated when promotions aren’t aligned in store and online, meaning that retailers need to keep their omni-channel experience consistent in order to retain loyal customers.

Other frustrations felt by shoppers around discounting, which could result in a retailer losing them as a loyal customer, include:

  • Making customers search for discounts 53% of consumers feel annoyed if a retailer doesn’t make them aware of the promotions directly
  • Ignoring the desire for choice by continually offering promotions rather than experiences – just over one in four (28%) customers would be unhappy if their loyalty was rewarded with just discounts instead of experiences such as VIP access to new products or prize giveaways
  • Extending a promotion beyond the given deadline – more than half (55%) of customers would be irritated if time-sensitive promotions were still available to others beyond the stated deadline, potentially damaging their trust in the brand

Steve Grout, director of loyalty, Collinson commented: “Sales may be an attractive prospect in offering a short-term revenue boost for retailers, but in reality they can have a much more detrimental impact on loyalty and the customer experience if handled poorly.

“Using data effectively, retailers have never been more empowered to understand and meet their customers’ changing needs. There is no excuse to let personalisation slip – even during a sales period. As the research demonstrates, failure to send relevant offers could cost a retailer the loyalty of nearly half their existing customer base. Retailers should be using their data on personal preferences and past purchase behaviour to customise the experience, rather than simply sending generic sales messages. In addition, showing favouritism to new customers, breaking the trust of loyal customers, and poor communication are all deadly discounting sins that could damage valuable relationships if retailers are too focused on a short-term win.”