High retail discounts don’t secure repeat customers, data shows

Customers whose first purchase is discounted by over 30 percent are less likely to buy from that brand again, new data has suggested.

A study from customer engagement specialists Optimove shows that as the discount rises over 30 percent, retailers are in danger of attracting ‘cherry pickers’ – shoppers who buy a single bargain, but will not be drawn by the discount to buy more from the retailer at a later date.

However, of the customers whose first purchase is a discounted item, discounts of 5 percent-30 percent do help to ‘charm’ individuals. Up to the level of the 20 percent discount mark, the likelihood of this customer making a second purchase rises.

But items discounted by 30 percent or more are likely to bring in ‘cherry pickers’. Optimove says that these customers have little future value, so the large discounts aimed at them can make a negative impact on the bottom line.

Alon Tvina, managing director of EMEA for Optimove, said: “Over the holiday period, retailers are waging all-out war for new shoppers, but acquiring one-time shoppers is extremely costly, especially when retailers use price slashes as a major acquisition strategy.

“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.”