How To Improve Customer Loyalty When Discounting

improve customer loyaltyEver felt ripped off when you see discounts for new customers?

As a loyal customer you don’t get that warm and fuzzy feeling when you see these offers do you?

Discounting the price of your products or services as a marketing tactic can increase your sales if it is done correctly.

It can get your business new customers to grow your business. Especially if you have a product or service that is based on weekly or monthly purchases.

However if this is part of your pricing strategy it can complicate the relationship with your current customers.

There are many ways you can still attract new customers and at the same time improve customer loyalty.

The key is to make sure you have process in place so your current customers still feel appreciated. It is a way of using simplicity to improve customer loyalty.

In this article it is about products or services bought on a regular basis or subscription model.

Provide customers with discounts

It doesn’t have to be the same discount. Instead it could be a free month so loyal customers continue to buy but get a month’s worth of products or services free.

Or you could offer a small discount if they sign up for another year.

You do have to do your sums to see if it is worthwhile and will keep customers buying your products or services.

Reward them

One of the simplest ways to keep customers buying your products or services is to understand what motivates them.

Never assume price is the most important factor. It could be your service delivery or helping them achieve their outcomes. Once you know the factors and have segmented your customers you can offer other things that reward their loyalty.

This means it could be how to information, bonus packs, special service delivery times.

Ultimately though it is for you to decide what you do with your business. It depends on you have a focused marketing strategy in place and detailed knowledge of your customers.

Over to you: how do you improve customer loyalty? Have you experienced being a loyal customer and not get the discounts offered to new customers?

20 Responses to How To Improve Customer Loyalty When Discounting

  1. Haley says:

    Discounting is an art so we should use it wisely so that we can kepp good ralationship with out customer

    • Susan Oakes says:

      Hi Haley,

      You are right about using it wisely especially if you have spent time building the relationship.

  2. Blatantly advertising discounts to new customers in front of customers of have just spent good money on the same product is a sign of poor planning. Discounts should be handled in such a way that attracts new clients without alienating existing customers.

    Interestingly, the reverse happens in subscription based businesses – existing subscribers are the first to get the special offers and discounts as a reward for their loyalty.

    • Susan Oakes says:

      Hi Alex,

      You are right about poor planning and they just don’t think. I have seen the offers you described mainly in the offline world such as magazines. Do you have any examples online that you can share?

      • I use a lot of online subscription services like premium Usenet, Seedbox servers, and online locker sites like Rapidshare or Megaupload. I’ve noticed a lot of these sites offer great deals to retain their existing subscribers when their current plans run out. In some cases I have gotten as much as 70% off for the same service as a ‘thank you’ for staying with them. It’s a niche market to be sure, but the deals are there and these sites keep growing and growing so they must be doing something right.

        • Susan Oakes says:

          These are great examples Alex of how to look after current customers. Thanks for sharing your experiences.

  3. Delena Silverfox says:

    Hi Susan,

    What I see a lot of the bigger online marketers doing is setting their email lists to automatically switch customers to a separate list after they’ve already made a purchase, so that they don’t see discounts, etc., offered to new customers (and for other various reasons, like extending discounts to loyal customers, only!). This is actually a really neat idea, and I can see the value in doing something like that.

    Now, for those businesses with online stores who don’t have the benefit of email lists, then I can see how it would be a dilemma.

    Delena

    • Susan Oakes says:

      Hi Delena,

      I think that is fine as long as regular customers get benefits. The problem mainly arises with subscriptions and if they try and hide offers to new customers then today they do get found out often online. Separately lists and customers are a smart idea.

  4. elpidio says:

    thanks for the information you shared with your blog, I hope it will give an idea to the store owners as well as the clients also, Because i believe that marketing is a two way process between owner and costumer, give and take relationship,This is my own opinion as a costumer. thanks and God bless.

  5. It’s a common mindset of business owners to find new customers but it doesn’t mean they will give to much credit to those new comers and not think about how their old and loyal customer would feel. You have a great eye for Susan, thanks for sharing this observation :)

  6. Hi Susan,

    I agree with you, discounting is a minefield for new and old customers. I recently joined the Chamber of Commerce in my town. One of the perks was a 6-month subscription to the WA Business News. The newspaper is expensive – in excess of $300 – so I viewed it as a real benefit.

    When I called to get my subscription, the paper told me I wasn’t eligible because I had received a free trial some months before. Here’s the deal, the trial was unsolicited on my part. It was for 2 months. At the end of this ‘gift period’ I had a series of phone calls asking me to buy the paper. I was interested at the time and said so.

    Now my business has changed prompting me to do thing like join the Chamber of Commerce and take interest in the WA Business News. But, because of the newspaper’s cockamamie discounting policies, I feel like I’ve lost out on 4 months of a benefit sold to me but the CoC. Do I blame the CoC. Nope, my ire rests with the newspaper.

    It’s a long way to say when you starting discounting to get new customers, you’re potentially chasing people away who already know your brand.

    • Susan Oakes says:

      Great point Sarah and most don’t even think about it that way. I do wonder why they can’t just make it simple instead of putting up barriers and technicalities in place. Probably CoC didn’t even know of the conditions that the newspaper had in place. Thanks for sharing your experience.

  7. Jana Quinn says:

    This is one aspect of marketing that drives me absolutely batty. I understand that people are excited by the prospect of getting a special discount that others aren’t privy to. However, the only way this works over the long run is if it is difficult for them to discontinue services with that company.

    Cable companies like Comcast make a killing on ultra-discounted 6-month introduction packages and then have prices skyrocket after the promotion ends. Getting a new cable company to come in and install the hardware is such a hassle that most usually let it slide by, and for many people, they only have one or two cable options to choose from anyway. Cable companies have limited competition, so this new customer courting tactic works well for them.

    And they wonder why people are moving more toward online entertainment…

    For industries with more competition, this generally backfires. Just like you get a raise at work for continuing to be employed with a company, you should be appreciated for brand loyalty.

    Boost Mobile is a cell phone service that offers a $5 discount on its monthly service for EVERY six months you stay with the company! The longer you’re a customer, the less you pay! That’s what leads to greater brand loyalty and long-term customers.

    Thanks for bringing attention to this great point, Susan!

    P.S. That was definitely not an affiliate plug for Boost Mobile. ;)
    Jana Quinn recently posted..How to Successfully Self-Market Your Band or Business- Interview with Nickolas Blazina from ‘State and Madison’My Profile

    • Susan Oakes says:

      Hi Jana,

      Boost mobile is a great example of one way to do it and it is good to hear about a company that is rewarding customers. As Dan said if a discount is there at the start then everything is upfront. Unfortunately small businesses giving a discount to new ones perhaps show that sales are not doing great and that is not a good image to have.

  8. Hi Susan, you know what, I have this saying that the first discount you give to a customer marks the end of your business relationship. Of course, discounts do work as a marketing tactic but as you write in the article, it all has to be done right. Many small business owners however, often do not plan their discounting strategy and start giving them out right there, on the spot which greatly hurts their brand and future client relations.

    • Dan O'Neil @Cracking Confidence Coach says:

      Hi Pawel,

      I’d second that idea that the first discount you give a customer marks the end of your business relationship.

      It’s much better to offer a loyalty discount – if it exists from the start, then it’s never going to upset anyone. There’s loads of companies who offer you the third month free if you sign today, that kind of thing. It’s a good way to keep people around if you have a time where most people cancel too!

    • Susan Oakes says:

      Hi Pawel,

      I agree with you and I have seen small businesses discount their fee for example to get a project and then are surprised when the client doesn’t want to pay the normal price the next time. I like your saying.

  9. Susan Oakes says:

    Your analogy is so perfect Kim and your comment should be read by so called experts as they could learn from your observation.