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GUEST COMMENT Why peak discounting is hardly the Yule-tide gift brands want to receive

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Peak trading – traditionally a time for retailers to make the bulk of their annual revenues through full price selling in the run up to Christmas, but more recently it has become known for retailers battling it out on price. While this might be popular with consumers, it can quickly become a race to the bottom on pricing. With competition fierce among brands, heavy discounting can quickly erode precious margins and profits. So, what can savvy retailers do to avoid this scenario and still remain a destination of choice for shoppers?

By 2020 the customer experience will overtake price or product as the key differentiator for brands. Think about it; most customers will return to a brand they’ve had a good experience with, but are less likely to where the experience has been poor, even if they scored a bargain. It’s the intangible customer experience, comprised of things like brand engagement, service, support and convenience that retailers need to make the deciding factor for consumers, if they want to escape the downward spiral of price-based competitive advantage.

To be successful in creating a great experience, retailers must concentrate on using what they know about the customer to deliver a more relevant, more rewarding experience to shoppers through personalisation. What does this look like? For bargain hunters, it will mean highlighting discounted ranges, letting them feel they’ve found a fantastic deal. For designer fans, brand affinity or ‘exclusive models’ must surely take the lead. For others, service elements such as speedy delivery, extended warranties or the convenience of click and collect may be what tips the balance. In each case, tailoring the experience makes individual shoppers feel special, streamlines the path to purchase and will strengthen their view of your brand.

Some brands quite rightly would rather avoid the discount trap as solely focusing on price risks diluting their brand equity during the rest of the year. CEO of Fat Face, Anthony Thompson, has taken a tough stance on widespread discounting and the company’s ‘price promise’, which sticks to a policy of no discounts before Boxing Day to help retain margins during the peak trading period.

By providing a great experience online, with relevant, personalised content, tailored to an individual’s context, brands can build their following before peak season arrives. For many focusing on customer loyalty and customer lifetime value is a key strategy – especially given the costly exercise of converting expensively acquired PPC customers who (if they are lucky) purchase once, but then are never seen again.

In fact, Monetate’s global research found that during Q4 2015, only 1.9 per cent of new customers actually converted with 86 per cent making one purchase and never returning. These statistics paint a fairly clear picture; loyalty all but disappears during the discount period.

There’s no doubt that consumers are becoming savvier particularly during peak; looking at multiple options before choosing where to make a purchase, while often switching between device and browsing over longer periods of time. Ultimately, retailers must use their data and technology to draw in customers all-year round, all the while considering that consumers won’t stay in one place when it comes to online shopping.

Just like a dog, personalisation is not just for Christmas! Personalised experiences should be in place whether it’s a sale period or not, building loyalty and driving your business forward all year round.

Mike Harris is VP EMEA at Monetate

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