#3 >Discounts vs loyalty – what’s the big deal for brands?_

The role of discounting to encourage brand switching can be a powerful one. And it’s played a part in the recent change of shopper behaviours. But it’s a double edged sword for your brand…

EVEN A SMALL DISCOUNT CAN PAY BACK BIG
Undeniably, discounts drive volume – on average, a 10% discount returns a 30% sales uplift. And many categories are even higher – e.g. almost 50% uplift on a 10% discount for premium whiskey.

In Q3 21.8% of sales were on deal – down from 25.4% a year ago. But much higher than April’s 16% (as lockdown 1.0 hit). More interestingly, the differences between categories massive

BUT IT’S EASY COME EASY GO
Despite the £25.5bn spent on discounts in the 12 months, increased switching and reduced loyalty mean that discount-led trial or penetration growth is usually transient. And with loyalty (historically) being achieved after at least 6-8 purchase occasions, brands will need to think bigger.

SO HOW CAN YOU BUILD ON THESE QUICK WINS?
Create ongoing relationships with your new triallists
And actively defend your loyal shoppers. e.g.

Establish why your brand matters in the hearts of your customers – its role & relevance
Where appropriate, actively inspire current, and future, usage occasions.
Remind them of the benefits of your offer.
Optimise all your online and offline touchpoints – actively engage with them across each comms channel.


Source: Nielsen Total Till, Nielsen Homescan week sales through to 03 October 2020 compared with the same 12 week period in 2019

/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /

Need more fresh insight & ideas? Click or call to pop us a question.