Retailers risk losing two-thirds of customers with ‘new shopper’ discounts

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 66% of respondents said retailers which offer discounts exclusively to new customers ‘annoy’ them as loyal shoppers

For 53% of UK shoppers, missing out on an offer from their favourite brand as a result of them failing to communicate properly made them ‘unhappy’. Furthermore, 42% of shoppers saying they would be ‘annoyed’ if they received promotional information that wasn’t relevant to them.

Some 58% of shoppers said they felt ‘frustrated’ when promotions aren’t aligned in store and online, suggesting a need for retailers to keep their omni-channel experience consistent in order to retain loyal customers.

Other frustrations felt by shoppers around discounting included making them search for discounts – 53% of respondents said they would be ‘annoyed’ if they weren’t made aware of promotions directly. Also, 28% of respondents wanted variation with rewards saying they wanted experiences or prize giveaways and would be ‘unhappy’ with discounts and promotions.

Some 55% of customers said they would be ‘irritated’ if time-sensitive promotions were extended beyond the deadline and would damage their trust in a brand.

Steve Grout, director of loyalty, Collinson said: “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.”

He added: “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.”