New research from Which? has revealed that many of the so called ‘special offers’ supermarkets are using as an enticement strategy are actually leaving their customers worse off than before, with some even breaking government guidelines.

I’m all for retailers reducing the number of discounts they put in place for their customers. Instead, they should look to focus their time on promotions and loyalty programmes ahead of price reductions, which will give them a more grounded customer base and add value to the company as opposed to discount the value of the products. Not only do these programmes reward customers for their loyalty but also retailers, by securing long term customers as opposed to fickle bargain hunters.

Dropping prices can plant a seed of doubt and accrue distrust over time as customers may start to suspect they have overpaid previously. Reductions should only be utilised as a short term approach for selling longstanding inventory or time sensitive merchandise. Cutting prices to induce consumers is not a good tactic for businesses that pride themselves on the value of their products. Being viewed as being cheaper will hurt the long-term brand value and reel in fickle customers who won’t return if they spot a better bargain in the future.

It is also important that existing schemes and promotions do not become too familiar for customers. As they do with discounts customers can, over time, begin to view loyalty rewards as an entitlement rather than a gift. By regularly refreshing or enhancing a programme there is always something new to please and engage the customer. This is vital for prolonged success and ultimately retaining loyal customers. It demonstrates an understanding of consumers which is more effective than reeling in customers with attractive prices, who won’t return if they spot a better bargain.

 

By Ian Horsham, Divisional Director for Promotions and Incentives at The Grass Roots Group. 

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