High retail discounts don’t secure repeat customers, data shows
Customers whose first purchase is discounted by over 30% are less likely to buy from that brand again, new data has suggested.
A study from customer engagement specialists Optimove shows that as the discount rises over 30%, retailers are in danger of attracting ‘cherry pickers’ – shoppers who buy a single bargain, but will not be drawn by the discount to buy more from the retailer at a later date.
However, of the customers whose first purchase is a discounted item, discounts of 5%-30% do help to ‘charm’ individuals. Up to the level of the 20% discount mark, the likelihood of this customer making a second purchase rises.
But items discounted by 30% or more are likely to bring in ‘cherry pickers’. Optimove says that these customers have little future value, so the large discounts aimed at them can make a negative impact on the bottom line.
Alon Tvina, managing director of EMEA for Optimove, said: “Over the holiday period, retailers are waging all-out war for new shoppers, but acquiring one-time shoppers is extremely costly, especially when retailers use price slashes as a major acquisition strategy.
“Using discounts smartly to attract customers and keep them, will give marketers an opportunity over the coming months to convert one-time buyers into loyal, returning customers.”