Cultivating Customer Loyalty Goes Beyond Offering Discounts

Posted by on December 3, 2012 in Business Start Up Advice [ 0 Comments ]

customer loyaltyWith the holiday shopping season now fully upon us, small businesses are looking to get as large a piece of the consumer holiday spending pie as they can. To do so, many merchants will offer special discounts and promotions to compete with larger retailers who typically dominate the first few week of holiday shopping.

However, small business owners and entrepreneurs should take heed before they make the decision to offer discounted merchandise or services in order to attract new customers. Ultimately, discounts don’t encourage long-term customer loyalty.

Devaluing Your Product

First of all, consistent discounting can carry with it a negative connotation. Companies that provide discounts all the time can end up with the reputation of having an inferior product or service. Many consumers believe an inexpensive price tag means a lower-quality good or service compared to a more expensive product.

Ask yourself: how often does Apple provide discounts? I’d say, rarely, if ever. Because Apple knows that by consistently discounting a product you run the risk of devaluing it against your competitors’ products.

The Rumor Mill

By discounting your merchandise or services, you could also incite rumors that your business isn’t as successful as it is. If this word of mouth begins to spread, it can stall your business’ growth and ability to attract new customers.

Moreover, in an odd paradox, discounting may actually drive your business to create items or services of a lesser quality. You may find yourself tempted to cut corners in the manufacturing of your product or the delivery of your service to make up for the loss of profits when you offer discounts.

Discounts Won’t Expand Your Customer Base

In addition, offering customer discounts isn’t a viable strategy for expanding your customer base. You’ll attract buyers, yes, but you’ll attract buyers who continually look for the best deals before making purchases. If you happen to offer these deal hunters the best value today, they’ll buy from you.

However, if your competitor offers them the best value tomorrow, they’ll buy from them. Discounting tends to attract the types of customers who make choices based on price alone. Not customers who will be loyal to your brand.

Cultivate Customer Loyalty

Instead of offering discounts, work on finding new methods and strategies to attract retail customers. Being known as a company with honesty, integrity and high quality increases your reputation, making customers more likely to buy from you in the future.

Additionally, offering special incentives like reward points to frequent customers is more likely to motivate them to shop with you than offering the lowest price alone. Customers actually prefer business loyalty programs where they have the ability to earn better rewards by being more loyal. Keep your business’s integrity this holiday shopping season and encourage customer loyalty rather than one-time discount shopping.

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Bio: Aaron Kesteloot is a Sales Manager for eFood-ERP. He writes about topics related to food ERP software and food safety.

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