How offers affect brand loyalty

In his second blog about the state of European retailing, Epson's Adrian Clark discusses how promotions can impact a retailer’s bottom line.

How offers affect brand loyalty

Brand loyalty and the link to money-off vouchers

In my second blog examining the findings of our ‘State of European Retailing’ research, I’m looking at the impact of retail promotions and asking ‘how well do shop offers and promotions work?’

The good news for retailers is that, according to our new research on the European retail sector, they are overwhelmingly popular with customers. They help to increase brand loyalty and drive footfall into shops.

What’s more, personalised incentives are likely to continue having positive effects for years to come despite the growth of online shopping. They are very popular, with 81 per cent of those surveyed saying that generic offers and incentives from brands are very or fairly important. A lower proportion (72 per cent) says the same about personalised offers and incentives.

In some countries, consumer support runs a lot higher. In Italy (90 per cent) and France (89 per cent), consumers say generic offers are fairly or very important. In Italy and Spain (both 89 per cent) there’s the same support for personalised offers and incentives.

Opinions vary between consumers of different nationality

Altogether, 58 per cent of consumers say a personalised shopping experience is important to them, although the range of opinions between countries is wide – only 37 per cent in the UK, compared to 80 per cent in Spain.

But significantly, 65 per cent overall think personalisation will become more important over the coming years. Almost the same proportion (64 per cent) says that personalisation and targeted offers are likely to encourage them to be more brand-loyal.

The same (64 per cent) are happy for brands to record their buying habits and tailor communication and offers based on them. German consumers are least in favour of this happening (50 per cent). Those in Spain and Italy are most enthusiastic (73 per cent and 71 per cent respectively).

However, slightly more overall (67 per cent) would prefer personalised offers to be based on what they tell retailers rather than on past buying habits.

Where consumers expect money off vouchers

Most consumers (65 per cent) think it is very or fairly important they receive printed discount vouchers when paying for their shopping in grocery stores. However, vouchers also appear to be important for other types of shop, with 61 per cent saying the same about high street stores, 60 per cent for gadget/white goods stores, 53 per cent for restaurant or coffee shops and 54 per cent for luxury goods stores. Electronic discount vouchers are as important or slightly less so, depending on the type of store.

The impact on a store’s footfall is evident with 18 per cent of consumers saying that an offer, voucher or incentive always encourages them to visit a store, while another 39 per cent such offers will often do so. The weakest impact is in Germany with only 13 per cent saying a voucher will always entice them into a store and 34 per cent saying that it often will.

Which offer is best?

All of this begs the question: What is the best type of offer or incentive?

For grocery stores, it doesn’t appear to matter whether the offer is for regular small amounts off, larger infrequent or seasonal reductions, or ongoing loyalty/stamp or voucher collection offers. All are likely or certain to be redeemed – the figures are 74 per cent, 71 per cent and 73 per cent respectively.

However, consumers in high street stores are most likely to redeem ‘infrequent/seasonal, more significant percentage off offers’ (60 per cent). Perhaps this is because consumers do not frequent these shops as often as grocery stores. Coffee and sandwich shops that offer any of these incentives are likely to find at least five in ten (53 per cent) being redeemed.

Whatever the type of store, the positive impact on customer traffic shows that promotions are a tactic that should be invested in by retailers.

Next week: Consumer behaviour in the omni-channel age

If you missed my first blog, you can read my thoughts about the impact of long queues here.

For more information about Epson’s retail solutions, click here.