I’ve seen so many price deals on the high street: after the months of “Closing Down” sales went by, when we saw retailers going under immediately after the crisis hit, we then saw another wave of front-windows crowded with posters intended to lure us into stores promising £s off. A price war had broken out. Now I’m sure I’m not the only one keeping a closer eye on my cash and not spending at my discretion but one thing I am not about to do is simply chase the cheapest deal. I will plan and cut down on my spend but I’m still thinking about value, service and getting what I need – not whatever the cheapest option is.
The Logic Group worked with Ipsos MORI on a survey into loyalty earlier this year and discovered that consumers’ feelings of loyalty have dropped over the last 12 months, especially when it comes to supermarkets as compared to any other sector. Meanwhile we found that consumers are feeling loyal to brands in sectors like mobile carriers, restaurants & coffee shops, fashion and even insurance and banks (if you can believe that!); the supermarkets sector however was the only one to see a downward trend when it comes to consumer loyalty. And this must be nothing other than their agility in playing on price. Ironically enough this seems to be a double edged sword, what brought new, deal-chasing customers into supermarkets may have switched loyal ones to the competition. All of a sudden, the price battle between supermarkets and retailers has loosened ties with their loyal customers, encouraging them to look around. So what role does loyalty have to play in all of this?
My concern is that we have all forgotten about the inimitable cornerstones of retail success: service and brand value. Consumers don’t become loyal on price – we have just seen Asda post a fall in underlying sales for the second quarter in a row, with consumer confidence buffeted by the prospect of the cuts driven by the new government, rising taxes and job losses. It seems that “Everyday low price” is not enough.
The bottom line is that good deals must go hand in hand with relevant offers; otherwise, I will not give you my business in return for a cheap purchase. And that’s where I think loyalty can play a significant role in bringing more business to a retailer.
Read more about the survey on consumers’ feelings to loyalty – you’ll find useful information and maybe it will give you some new ideas; if not, it will re-confirm if your strategy on loyalty is right and that you’re not just trying to buy loyalty on the cheap.
Enjoy!
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Discount Loyalty = Discounted Customers
I am a firm believer that far too many companies get loyalty wrong - the term loyalty scheme and loyalty card has come to mean giving stuff away and consumers are aware of exactly what they get.
We must go back to basics and understand that loyalty begins with satisfaction. Making sure the customer is happy with their purchase and the experience is more than just price. Price is just the tactic to get you there.
Once satisfied then it is about buying again - the inevitable spiral of discounts consuming our shopping experience just leaves customers feeling cheap and feeling cheaper about the offers you put in front of them. If someone likes what you have and enjoys the benefits and the experience, then the next time they have that same need they will consider you. Let me just repeat that last bit - the next time they have that need - surely this is the bit where loyalty schemes work; using data to identify the triggers and events that create a buying need and acting on them - not a coverall blanket for discounts. Therefore timing is everything. How much money is wasted promoting discounts and targeting individuals who will buy and would probably have paid full price if only we understood when they would be most likely to buy and not felt the need to maximise comms planning to get spread our offers on a volume basis - is process efficiency driving pricing innefficency?
It is also important to note that doing what you can to remind them how good their purchase was is a great way of customers ratifying their initial decision. What is wrong with saying thanks? Just look at a twitter search for O2 and their chocolate thank you mailing or even Halifax sending thank you cards for renewals.
Then we move to nirvana of customers recomendation and the value they place on your offer. Everyone has their price AND surprise it is not always the cheapest. When it works and feels good and creates a good experience people will value your product or service. This does not mean we crank up the commercials and rip people off, but we find the true value our customers place on what we offer and use that to our advantage. Discounts create a false sense of value and undermine everything else we do - loyalty allows us to build premium in what we do and charge the right price.
Therefore I would suggest we spend less on driving disloyal customers on mass to our cheapest offer and more time on getting the right customers to buy again and again at the right time and at the right price.