Black Friday frenzy puts customer loyalty in jeopardy

Steve GroutThat’s right, it’s Black Friday once again, meaning retailers up and down the country are attempting to serve the mobs of customers frantically on the hunt for cut-price bargains. According to IMRG, the amount spent on UK online retail sites on Black Friday 2017 was up 11.7% on the year prior, reaching £1.39bn. Surely, then, with this event driving billions of pounds of additional revenue for brands ahead of the Christmas period it is welcomed with open arms?
News of some of the UK’s major retailers, including Marks & Spencer and Selfridges, withdrawing themselves from the event, would suggest otherwise. In fact, the benefit to retailers of flash-sale events has come under scrutiny from retail analysts in recent months, suggesting the impressive financials aren’t all they seem.
Slashing prices on what would otherwise be full-price fashion lines in the run-up to Christmas, as well as the chaos of mass returns from customers, who deliberately over-buy in order to only keep one or two items, are among the charges against Black Friday. For many years, retailers have had to deal with this sort of frenzied activity during the festive period, but this is usually spread over one or two months, rather than the now week-long phase at the end of November.
Beyond the logistical challenges of navigating Black Friday, there are fundamental questions about what it means for customer loyalty. Do customers seek out deals from brands they are loyal to, or do they shop around for the best deals from retailers they wouldn’t consider visiting at any other point in the year? It can be a real challenge for retailers to track this sort of customer sentiment during the event, which could be one of the reasons spurring this year’s notable absences.
So, is it possible for brands to cash in on the queues of customers – physical and virtual – while also developing customer relationships, so that consumers come back time and again, throughout the year?
Get their data
Be it in-store or online, customers represent data. Retailers that choose to ignore this data are forfeiting the chance to understand who is shopping with them and what their motivation is for doing so. Capturing customer data becomes particularly important during the influx of Black Friday shoppers as it provides brands access to a whole new pool of people they might not otherwise see again all year.
Asking customers to sign up to an email newsletter is nothing new. However, if brands go further by offering tailored product recommendations based on the individual’s prior purchasing or wish list choices, shoppers will begin to feel as though the brand is attempting to create a connection with them. This helps incentivise them to share their data and opt in to communications.
We conducted research with Censuswide to investigate the impact of discounting on customer loyalty and found that over 40% of UK consumers are annoyed if a brand they are loyal to sends them promotions and offers about products that aren’t specifically relevant to them.
If, for example, a customer has mostly bought sports garments recently, they shouldn’t be getting generic suggestions about winter clothing, which will most likely be disregarded. It isn’t rocket science, but many brands are still not taking notice and continue with broad-strokes marketing content, which often leaves customers opting out.
Avoiding the race to the bottom
Undeniably, competitive pricing can attract new customers, however, it can also create a ‘race to the bottom’. This is a race which retailers need to be mindful of, given the price matching that happens between brands. When one retailer sets a particular price point, often others will try to follow it.
Retailers should look for other ways of competing for loyalty which aren’t price-based. For example, by prompting customers to sign up for a members’ newsletter to get an exclusive Black Friday deal, they have helped progress communication and potential repeat custom. While brands can offer subscribers special Black Friday deals, they should consider offering exclusive deals for the most loyal subscribers among them.
In addition to traditional sales discounts, retailers can also utilise relationships with loyalty programmes such as Avios to incentivise purchases and differentiate from a focus purely on price. For example, members can earn double Avios on their spend with retailers such as John Lewis and Apple Store during this peak period. By embracing this channel, retailers can also gain more ground in the fight for visibility.
The key to any relationship: communication
It’s extremely competitive trying to engage consumers via their inboxes around Black Friday. Retailers would do well to incorporate other ways to drive share of wallet and visibility, potentially using different routes to engage consumers.
Brands can do more to develop relationships with customers during and after the event to motivate them to return. If, for example, prompts are made for customers to identify themselves as part of the brand’s customer base and culture, a more personalised connection beyond the initial transaction can be made.
Engagement can also be sought by enabling user-generated content for product feedback. Those customers that leave a detailed review with photographs or videos have made far more effort to interact with the brand. This experience lasts longer in the memory and the brand becomes more than just another retailer offering big discounts. It demonstrates that it is trying to connect with customers and truly cares about their feedback.
Reward loyalty, even during Black Friday
For loyal customers shopping with their favoured brands during Black Friday, they must also be kept feeling cherished alongside new ones. Our research found that 66% of loyal customers are annoyed if new customers are offered discounts which they cannot benefit from, so it needs to be a balancing act of appealing to both new and old customers.
Ultimately, communication and consistency of marketing are crucial before, during and after Black Friday, and this cannot happen without a wealth of customer data. If brands can keep tabs on customers by collecting their personal information at every available touchpoint, they can tailor future offerings with targeted product recommendations and promotions. This helps to create a more personalised connection beyond the transaction, helping brands to remain front of mind throughout the year, so that next Black Friday, they are the first brand on shoppers’ hit lists.

Steve Grout is director of loyalty at Collinson

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