Retailers risk losing two-thirds of their loyal customers when offering discounts exclusively to new shoppers
Collinson study reveals the deadly discounting sins that could damage customer loyalty
23rd August 2018 - London, UK – 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.”
Lucy Westman, Diffusion
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P: 020 7291 0230
Methodology: The research was conducted by Censuswide, with 1,006 UK respondents aged 18 and above – during February 2018. Censuswide abide by and employ members of the Market Research Society which is based on the ESOMAR principles.
About Collinson: Collinson is a global leader in loyalty and benefits. We craft customer experiences which enable some of the world’s best known brands to acquire, engage and retain the most demanding and choice-rich customers. Our unique expertise and insight into high earning, frequent travellers allows our clients to deliver the smarter experiences it takes to influence purchase behaviour and drive deeper customer devotion.
To expand our expertise and foster innovation, we have brought together all of our loyalty companies. This includes our global loyalty agency, formerly known as ICLP, our loyalty commerce specialism, formerly Collinson Latitude, and Welcome Real Time, our customer engagement platform business.
We have 30 years’ experience working with brands in the retail, travel and financial services industries globally to create engagement and loyalty, deliver enriched travel experiences, and protect and assist their customers in times of need. Our clients include Avios, Air France KLM, easyJet, Esprit, Hackett, Mastercard, Radisson Hotel Group, Sephora, Virgin Atlantic and Visa.
Rupert Andrews, Senior Campaign Executive
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