UK high-street stores risk squandering consumer brand loyalty this Christmas through over reliance on money-off vouchers and heavy discounts, according to the 2010 Maximiles Loyalty Report.
Research, surveying of 1,054 people, from loyalty marketing specialist Maximiles.co.uk has shown that although 63 per cent of consumers will actively seek out discounts, eight in 10 (81%) will not continue to shop with a brand after a Christmas discount promotion has ended.
Guy Keeling, MD of Maximiles, commented: “This research overwhelmingly suggests that festive promotional initiatives will not generate the long-term value which beleaguered retailers should be focusing on. Boosting sales over Christmas is obviously a priority for retailers, and there are clear opportunities available from doing so, however when these sales don’t lead to an on-going relationship, brands are inevitably missing out.”
Brands failing to effectively market their loyalty promotions
The report also revealed that the myriad of loyalty cards and schemes open to consumers are not necessarily driving brand engagement with shoppers. 40 per cent of consumers claim they regularly forget to use their loyalty card when shopping on the high-street and a quarter said that they need to be reminded to shop at stores where points promotions are on offer. For brands hoping to incentivise their customers with extra reward points, the data suggests that they are not marketing their promotions effectively and could well lose out to rival stores offering more attractive money-off and other discounts.
Keeling continued: “All retailers want those peak sales for the Christmas period, however how many are thinking about the morning after? Our research suggests that more need to be thinking in the longer term. All retailers also know that high-value shoppers who are attracted by loyalty promotions and not just discounts are what will help them make the most of the festive period, but by offering discounts separately from on-going loyalty promotions, retailers undermine their reward schemes.”
Traditional direct offers outperform daily discount sites
Online retailers fare little better than their high street counterparts, as three quarters (72%) of online shoppers also admitted to failing to use their loyalty cards every time they make an online purchase. With online shopping due to account for £4.6bn of transactions in 2010, there is clear evidence that loyalty promotions are falling short of the mark.
Despite industry hype surrounding daily deal services, such as Groupon, retailers should be wary of relying on these kinds of promotions. Just a quarter of shoppers (24%) claim to have signed up to a daily discount email service, however with the emails offering a different deal from a different retailer each day demonstrably there is little opportunity for brands to relay a consistent brand message which promotes customer interaction. By contrast, two thirds of consumers have in fact made a purchase directly after receiving a promotional email from a retailer.
“Brands need to think smarter about their promotions; building in a reward element where money-off is directly related to customer loyalty. Online loyalty schemes really have the edge here, as they provide a one-stop portal where consumers can complete all of their shopping using money-off vouchers if available as well as providing special deals on preferred brands all year round. However, just having a scheme isn’t enough; you need regular smart communication with members to make sure they are properly engaging with your brand. Evidently, using promotional emails to drive sales is effective but what’s more is that it also affords far more opportunity for an on-going, personalised engagement,” Keeling added.
“Entrenching customer loyalty is not something which can be done with seasonal promotions, it has to be a sustained relationship building exercise and this research just confirms that flash in a pan deals are not what keeps customer coming back for more.”