Exclusive and excessive discounts lead to losing loyal customers

The top reason retailers are losing loyal customers is offering discounts exclusively to new shoppers, according to the latest report.

Collinson, global loyalty agency, and Censuswide partnered up to conduct a survey for 750 consumers in the Hong Kong market this year to discover the deadly sins for retailers of losing loyal customers.

The research finds that the top deadly sin is retailers offering discounts exclusively to new shoppers. A hefty (68%) of respondents would be annoyed as a loyal customer when the retailers did so.  

Poor communications (63%) and misalignment of online and instore promotion (63%) are both major reasons for losing loyal customers. The report said, shoppers were unhappy as a result of missing out on an offer from their favourite brand due to failure of communicating properly.

The report suggests, shoppers today expect to be recognised by the brands they are loyal to, even during sales periods. Communication is critical for retailers to maintain the relationship with their loyal customers. Retailers need to keep their omni-channel experience consistent to help retain loyal customers.

Meanwhile, over 54% of respondents would be annoyed when retailers failed to use their data on preferences and past purchase behaviour to provide relevant product promotion and offers.

“Retailers are keen to offer discounts to acquire new customers and obtain an incredible stream of new revenue.” said Mary English, Collinson’s executive vice president.

She warned that retailers should beware the excessive use of the discount mechanic, which not only dilutes the brand, but also leads to damaging the relationship with their loyal customers.

“The real battle lies in designing a loyalty strategy to win the heart of customers with continuous data analysis and insights on their spending behaviour and preferences to provide relevant, personalised content and communications. This will resonate with the customer and lead to a deeper devotion and loyalty to the brand. When it comes to customer retention, brands will need to develop a long term customer engagement proposition to continually build trust by delivering on their brand promise and recognise and reward their customers’ loyalty.” said English.

Other frustrations felt by shoppers around discounting, which could result in retailers losing loyal customers, include: ignoring the desire for choice by continually offering promotions rather than experiences such as VIP access to new products or exclusive events(60%); Making customers search for discounts (59%); Extending a promotion  to other customers beyond the given deadline (60%).