The New Discounting Playbook – a report commissioned by data-driven loyalty and engagement platform, LoyaltyLion has launched today. Carried out across 2,009 consumers in the UK (by independent research firm Censuswide), the findings reveal key attitudes towards the discounting period and Black Friday Cyber Monday (BFCM) in particular.
“Once a feel-good Friday of deals, our research found that the now month-long BFCM event is one that customers no longer altogether trust,” said Charlie Casey, CEO at LoyaltyLion.
“Traditionally a golden opportunity to acquire new shoppers, the retail event is in danger of leaving existing customers feeling undervalued, underappreciated and deprioritised. Whilst it is fair to say that there will no doubt be some good bargains out there, a worrying proportion of shoppers feel that the discounts aren’t all they’re cracked up to be.”
Disappointment reigns amongst UK consumers
The research found that over half (57 per cent) of consumers feel that BFCM discounts are never as good as they expect them to be and 58 per cent reported that products they want aren’t usually discounted making the retail event less relevant to them. A significant number (58 per cent) also felt that BFCM discounts pressure them into making purchases they wouldn’t otherwise have made.
Negativity towards brands dishing out BFCM discounts
Even more concerning than shopper sentiment towards discounts, were the feelings targeted at brands peddling these reductions. 54 per cent of UK consumers expect brands to push lower quality products during BFCM and 53 per cent said that the deals and offers provided during this period impacted their trust in brands. Just over half (56 per cent) of the consumers surveyed felt that brands care more about selling products over supporting causes or living their values during BFCM, disappointing given the rise in conscious consumerism. Furthermore, 55 per cent felt that brands focus on winning new customers over making their existing customers feel special during BFCM.
Poor preparation cited by consumers as key issue
Despite the months of planning that go into BFCM preparation and strategy, consumers still don’t feel brands have got it right. 54 per cent feel that brands don’t do enough to prepare for the rush of orders they’ll receive during BFCM and 50 per cent believe that they don’t communicate enough post-BFCM purchase with them. On the flip side, 54 per cent feel that brands send too many promotional messages in the run up and during the BFCM period.
Alternatives to discounting
Traditionally, retailers have relied on heavy discounting during the BFCM period, but this often comes at a cost to a business. The research findings indicate that it is possible to replicate the surge of oxytocin that comes with bagging a discounted bargain and garner a feel good factor towards a brand, but through alternative methods that won’t harm profit margins.
Brands would do well to note that 61 per cent of consumers cited that they’d feel positive towards those that offered the opportunity to contribute to a charity or initiative aligned with their values.
Whilst 78 per cent said that offering free or discounted delivery would encourage positive sentiment towards a brand, as would giving out loyalty points that consumers could redeem against future purchases (73 per cent).
Special birthday offers (72 per cent), promotions offering early access to sales (66 per cent) and early access to new products (65 per cent) were also cited as ways to enhance sentiment.
Charlie Casey, CEO at LoyaltyLion concluded: “Consumers expect discounts over BFCM, however as it stands today, they’re also expecting a negative shopping experience. This might result in attracting new customers and shoppers in the short term, but it’s unlikely to generate a long-term relationship and repeat business. Brands need to rewrite the rules this year and balance the impact of BFCM discounts by using alternative incentives to build emotional connections. This will in turn increase the chance of customers returning to spend with a retailer again, even when the peak trading period is over. This strategy can be just as effective as discounts in encouraging customers who have abandoned their carts to return, winning back at-risk customers who haven’t visited the site for a while, and encouraging customers to make a commitment in the form of either starting a subscription or joining a loyalty program.
“Gone are the days where brands can afford to rely on heavy loss-making discounting. The focus must be on creating positive sentiments AND driving BFCM sales to result in stronger, long-term customer relationships that keep both profits and customer lifetime value high, all year round.”
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