Tuesday, 4 February 2014

The marketer’s dilemma: short term sales growth or loyalty?

It probably won’t come as a surprise to most switched-on marketers that the modern customer is highly promiscuous.  Shopping around has become a national pastime, particularly as easy access to the internet has allowed many customers to explore the range of offers available in the comfort of their homes without resorting to wearing out shoe leather on the High Street.

This promiscuity is perhaps no more marked than in the highly competitive world of supermarket shopping.  The modern British shopper has, it seems, become adept at taking advantage of price promotions to divide their share of food spend between rival operators as opposed to remaining loyal to one supermarket brand.  Chasing savings has become more important than the convenience of making one trip to one supermarket chain.

This creates a dilemma for marketers:  do you enter the fray and compete almost entirely on price to drive short term sales growth; or do you focus on building a loyal customer base and reap the benefits of lifetime value?  Immediate commercial concerns may well dictate the former.

The answer lies somewhere between the two in my opinion. 

Yes, price promotion may well be necessary in order to drive customers to your business.  But this has to be seen as a short term measure or you may find yourself in the position of continuingly competing on price.

The challenge is to create a shopping experience that is distinctive and gives customers what they want, over and above the attraction of a good deal.  This means making the purchasing process as simple and quick as possible – we know, for example, that a proportion of shoppers abandon their baskets because of queues at the checkout.  It could mean better trained staff with greater product knowledge.  And it could mean additional services and product ranges that make the attraction of shopping in one outlet greater than another.

Marketers outside the food sector would do well to take on board the lessons being learned by the large supermarket chains:  differentiation by price alone will not generate loyal customers.