Discount promotions undermine loyalty schemes

Retailers have been warned to invest in loyalty programmes rather than heavy discounting to maintain long-term engagement with shoppers.

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Maximiles’ Loyalty Report found that retailers are undermining their own loyalty programmes by relying on promotion and discounts in the run up to Christmas. Eight out of 10 shoppers will not continue to shop with a brand after a Christmas promotion has ended, the report found.

Guy Keeling, managing director of Maximiles, says: “Brands need to think smarter about their promotions by building a reward element where money off is directly related to customer loyalty. By offering discounts separately from ongoing loyalty promotions, retailers undermine their reward programmes.”

According to the study of 1,100 consumers, retailers are not marketing their loyalty programmes effectively as 40% of consumers forget to use them regularly.

Separately, Asda has been named as the retailer that most UK consumers want to launch a reward scheme, according to research from loyalty firm ICLP.

The supermarket, which currently opts for “Every Day Low Prices” rather than a loyalty programme, came top of a survey carried out by loyalty specialist ICLP to find out which retailer shoppers wanted to introduce a scheme.

It was closely followed by high street fashion chain Next.

The research found that 60% of consumers believe a reward programme “strengthens their relationship with the brand”.

Tesco and Boots, which operate two of the most popular loyalty schemes in the UK, topped the poll of retailers shoppers have the strongest relationship with.

Stuart Evans, ICLP UK general manager says: “It is clear that customers want something in return for their loyalty. When UK shoppers feel the pinch of the VAT increase next year, this call will surely get louder and go out to more and more top UK brands.

“These brands need to heed this warning, to ensure that the best loved UK companies stay in the hearts of their customers going into 2011”

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