Offering discounts over 30% can ‘impact retail businesses negatively’

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Customers whose first purchase is discounted by over 30% are less likely to buy from that brand again, new research has found.

In a blow to the sales strategies followed by many retailers in the upcoming holiday season, data from customer engagement specialist, Optimove, shows that as the discount rises over 30%, retail business  are in danger of attracting ‘cherry pickers’ who buy a single bargain, but will not be drawn by the discount to buy more from the company at a later date.

These customers have little future value, so the large discounts aimed at them can make a negative impact on the bottom line.

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Optimove also found that of the customers whose first purchase was discounted between 5% and 30% were more ‘charmed’ by the brand.

Up to the level of the 20% discount mark, the likelihood of this customer making a second purchase rises.

Alon Tvina, managing director of EMEA for Optimove, said: “Using discounts smartly to attract customers and keep them, will give marketers an opportunity over the coming months to convert one-time buyers into loyal, returning customers.

“But to do this they will have to look at the data, testing the impact of marketing strategies on customer engagement rather than short-term sales, and adjust offers accordingly.”

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