Discounting might help you shift stock and increase short term sales, but it won’t help you attract loyal customers.
Research shows that when price plays a significant role in getting customers to make their first purchase with a new retailer, even online, the chance of them becoming a long-term and loyal customer can be low.
As we enter the holiday season, it is important that retailers fully understand the reasons they are discounting their prices. As part of a longer-term strategy and mix of marketing, they should also consider non-price driven ways to keep those customers coming back.
Short term gain but long term pain?
A marketing data firm compared consumer purchases based on various discounts over time. The data showed that while discounts and special offers cause a short-term spike in sales, they rarely attract customers who are loyal beyond the first transaction.
The research found:
- Customers who visit an e-commerce site for the first time and make a purchase at full-price are more than twice as likely to make a second visit.
- Returning customers spend 150% more per visit compared to those initially motivated by a sale.
- Over the lifetime of the relationship, a customer whose first interaction with a retailer does not involve a discount is worth at least 2.5 times more than a customer who responds to a short-term discount or promotion.
How MaCher can help
We want our clients to move away from discounting. We don’t want them to condition their customers to only every purchase when discounts are on. This devalues the brand. Contact MaCher to find out how we can help with strategies that are proven to build loyalty.