Getting your name out there as a new retailer can be extremely difficult – especially if there’s a focus on bringing in customers online. Discoverability is one thing: it’s another thing entirely to actually convince a customer to trust in a new retailer and to commit to a purchase.
So, many turn to classic, tried-and-trusted marketing approaches to convince onlookers to give it a go. There’s a lot of debate around how effective new customer offers can be, and equally, if loyalty programs should be offered thereafter. Here, we’ll explore how these function and their suitability for new retailers.
Inspiration from across the business world
In particularly competitive industries, new customer offers are a standard, and some will go further to keep the promos rolling in. Take the trusted casino online site as an example. New players can get 50 no wagering free spins after spending £10. After that, at the time of writing, existing players could spin the prize machine for more.
It’s a structure that immediately informs the new user that, not only are they welcomed to try out the experience with a bit of a bonus to extend that foray into a new platform, but that more is on offer. It’s not exactly a loyalty plan, but it is a setup that suggests being loyal comes with perks.
Another commonplace sector for the new customer offer is broadband. All competitive brands will offer a special price that’s fixed for a set number of months, usually within a two-year contract. Now, they don’t really need to worry about loyalty after that first purchase, but those that do often run perks for those who renew.
It’s also good to note that the most effective loyalty programs are those that can essentially be personalised while being more perk than deterrent. This is a case made around the supermarket loyalty card surge. Some will see the “real” price tags and data moving as off-putting, while smaller retailers who offer stamps generate true loyalty.
Keeping them through the door
There isn’t any doubt that a half-decent new customer offer will manage to convince many to commit to a purchase. It might be ten per cent off, a special price, or even an additional free item. However, the immediate downsides to this may in fact be decreased customer loyalty and an erosion of brand value.
It’s known as a discount trap, where increasing discounts and promos are needed to keep getting those target customers who peruse for discounts. This can be avoided, however, by using a new customer offer as the clear launching point into a loyalty program. There can be an offer combined with their first loyalty points for buying.
This way, they get through the door with that all-important first purchase where you prove yourself as a solid retailer – from dispatch time to communications and product quality – and are then encouraged to stay. After all, they have those loyalty points now, and with a clear setup, they could know they’re not far from more perks.
Importantly, loyalty schemes on their own can struggle to have similar weight. Here, you’re asking customers to commit to the usual prices to then get on the ladder, which may seem somewhat laborious. Chaining the “welcome in” with the “you’re welcome to stay” promotions helps to both acquire and retain customers.
As a new retailer, you don’t have to run any kind of promotion or loyalty plan. Should you wish to make the most of the benefits on offer from these schemes, though, it’s best to see them as a tandem rather than a choice of one or the other.
