Can discounting put ‘your customer’s loyalty at risk’?

We answer a latest discussion on the marketing magazine website.

Yes and no, depending on your business, the customer and whether or not you’re offering a discount or a loyalty scheme.

Many people love a good discount or loyalty scheme and at the moment Waitrose are doing a good job on the loyalty scheme front. Every time you visit a Waitrose you can get a free hot drink, but not just any hot drink, tea, coffee, lattes, cappuccinos…! This entices people to come in and have a drink, but while walking to the Café you might suddenly see something you need and buy it, or, it might encourage people to visit for just the odd item…knowing that they will be able to have a drink too will certainly make them want to visit.

However if you are a marketing agency offering discounts you want loyal customers, who like Waitrose customers will come back for your services again and again. Many businesses believe discounting prices will get them more business and money…however, it only really creates loyalty for those looking for low prices. Which means in turn many of these customers won’t stay with you if they can go to another company and get a better deal at a lower price. Basically, customers are loyal to the price and not your company. The key to real loyalty is more than a low price or fantastic product; it takes an attention to customer service. The companies that are customer focused who build a relationship rather than a quick price have loyal customers that are less focused on the price and more focused about the results you can bring them.

Many companies believe the fundamentals of ‘old fashioned discounts’ are dying out. Such as back in the early days of retail the local grocer knew their customer liked strawberries in the summer, so offered them at a discount. The local baker knew when it was their customer’s birthday, and gave them a free cake on the day to celebrate. But instead now people want to save as much as they can and won’t mind switching to another grocer or marketing agency, as so many companies are offering cheaper short-term prices, discounts or loyalty schemes.

But really the companies are no more loyal than the customers are. It’s and in and out job, get the customer in with grabbing discounts, use the discount, and then you’ll never see them again. Rather than building a relationship like companies used to do.

All in all, discounts will kill your business no matter what line of work you are in, because once a discount is over the customer will go to the next shop looking for that knockout deal. Whereas loyalty schemes… the answers in the name, will keep customers using you as it’s an on-going process. But the all-important point is customer relationships, which drives them to continue coming back and with all these discounts floating about it’s at risk of being lost.

That’s all from me, watch this space for more discussions on latest trends and in the news topics.