Leading international convenience stores and forecourt chains are driving footfall and shopper spend through voucher offers and they are reaping customer loyalty as a result, claims TCC, a worldwide leader in retail marketing promotions
Targeting shoppers with low price offers is like using a sledgehammer to crack a nut.
Today’s shoppers are a promiscuous bunch. They shop across formats – supermarkets, discounters and convenience stores – and across ranges; dipping between budget own label lines and premium private labels and brands.
New research from the Institute of Customer Services (ICS) shows not only are the majority of consumers spending less (65%), they are taking more time to shop around (86%) and research the best deals (76%). Further, almost half (47%) say they are more likely to switch companies in the future.
It is against this backdrop, the top four UK grocers have launched significant price promotions this year, including The Big Price Drop from Tesco, The Price Guarantee from Asda, Brand Match from Sainsbury’s and Price Crunch from Morrisons.
However, if the latest supermarket share data from Kantar Worldpanel for the 12 weeks ending 30 October 2011, is anything to go by, the noise and price messaging has been for nil gain to date.
Edward Garner, director at Kantar Worldpanel, says: “It comes as no surprise that, as shoppers try to control their budgets, an aggressive stance on price is driving retailer communication strategies… but the end result would appear to be a zero-sum game, as the performances from the big four show only marginal differences this period, with no outright winner.”
Neil Saunders, managing director at retail research agency Conlumino, agrees.
“Among the supermarkets, price has become something of a blunt weapon in the battle to secure customers; with everyone claiming to be the cheapest, it is hardly surprising that most consumers are sceptical,” he says.
Yet, the ICS study found customer retention (and indeed acquisition) will be critical to future success among business leaders, as cash-strapped customers spend less and shop around more amid continuing economic turmoil.
Indeed, 44% said customer retention is critical in their ability to achieve growth and 58% describe customer retention as critical to the sustainability of the business itself. And, more than a third (35%) identify customer churn as the greatest threat to their business, said the ICS.
New research from secure payment specialist, Logic Group, supports this view. It found multi-scheme membership is fairly common for supermarkets and has driven a lack of emotional attachment within the sector.
In this scenario, the company questions what supermarket loyalty schemes can do to foster attachment to a brand as well as win repeat business.
Marketing promotions are one such tool. According to Saunders at Conlumino, they help give consumers a compelling reason to shop with one retailer over and above another store.
“Schemes such as voucher collection for rewards are more effective than using price alone, if only because they are addictive and ultimately deliver something of real value to consumers,” he says.
Tesco is now harnessing the power of voucher promotions in the UK and Ireland.
It has teamed up with TCC, a worldwide leader in marketing promotions, to launch campaigns which reward shoppers with big savings on branded cookware and glassware.
The current promotions follow an earlier campaign in the UK, which had a positive impact on shopping patterns, according to Tesco’s non-food marketing director, Kari Daniels.
“We are always looking for new ways to incentivise and reward our customers and build retention,” says Daniels.
“TCC worked with us to create a promotion that would appeal to our customers. We have seen positive behavioural change from participating customers – it has proved to be a great success.”
Tesco is tapping into a promotional technique, which has already driven shopper footfall and an increase in basket spend at leading international supermarkets and convenience stores.
Voucher promotions have been shown to drive shopper frequency and increase consumer spend.
As a result, retailers’ sales have increased, even by category, and they have won market share from competitors.
Equally importantly, campaigns have introduced in-store theatre, engaged consumers and made shopping fun – qualities not won from price promotions alone.
And, they demonstrate, winning customer loyalty is not such a tough nut to crack after all.
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