Retailers must focus on long-term relationships, argues Stuart Evans, general manager of specialist loyalty marketing agency ICLP.
Following news that Asda is offering discount vouchers to customers to entice them back into the shops following the poor weather and end of the festive sales, retailers should look at building a long-term relationship with their customers to maximise profits this year and not focus on short-term initiatives.
The Christmas sales lasted even longer this year and we’re still seeing some retailers offering their goods at bargain prices.
To combat a fall in revenues due to the big freeze, Asda’s money-off vouchers are available to customers who spend over £50 and £100 in-store. However, how do retailers keep these customers interested in their brands in the coming months?
I believe retailers must take advantage of the opportunity to maximise revenues during the busy times, they need to be careful not to limit themselves to short-term solutions.
Sales promotions and money-off schemes are excellent ways to attract customers and Asda is clearly exploiting this, making the most of the current thrifty attitude among consumers. With the recent bad spell of weather costing UK businesses more than £1bn, it is important for retailers to increase footfall in store and get customers to continue to spend. However, retailers must consider their sales strategies in the post-Christmas and pre-Easter lull and beyond.
Asda is missing a trick here and seemingly focusing on the short-term goal of increasing footfall. For retailers to maximise this opportunity, they must find a way of capturing data during the busy trading periods to thoroughly understand their customers’ purchasing behaviour, and utilise that data to leverage commercial opportunities over the next few months in the run-up to Easter.
Asda is infamously against loyalty schemes, but developing longer-term customer relationships does not need to be based on a formalised programme. They can use the data to provide insight and improve the personalisation and targeting of relevant offers.
Customers will therefore still be saving money by shopping at the supermarket, but Asda will be going a step further by giving them discounts in the areas they most want to save money in.
As individuals become savvier in the digital era, retailers must also place an emphasis on encouraging greater interaction, not just focus on traditional channels to drive customer behaviour.
By establishing an interactive relationship with customers, building up profiles and providing flexible offers for customers to engage with, retailers can create a robust loyalty proposition and recession-proof their future campaigns.
A loyalty strategy is not a short-term fix, but something which must be embedded in the long-term commercial plans of a business. In order to maximise ROI, any loyalty activity must be additional to a clear and valued brand promise which the programme brings to life with real benefits for the targeted customer groups.
