Loss Leaders versus Loyalty

Posted Thursday, July 31, 2014 in Marketing by Ronni Marshak

This week, I wrote about the fact that taking advantage of daily deal vouchers to try new venues/merchants does not lead to repeat business nor loyal customers.

You see, daily deals aren’t like retail loss leaders, where a merchant offers a few items at extreme discounts in hopes that shoppers will pick up other merchandise—lots of other regularly priced merchandise—while in the store.

Daily deals are typically for a one-time event, such as a meal, a massage, a weekend getaway, or junk removal. While you might order more from the menu than the limit of the voucher’s value, or spring for the extra aroma therapy during your massage, the discounted experience is still something you are trying out because the price was discounted. And once tried, the relationship is over.Lost Leaders tag There is little incentive to come back at full price even if the customer has a good experience. At least, not on its own. There needs to be follow-up marketing efforts to encourage bargain shoppers to come back for another visit.

Walmart's Rollback DiscountsUsing daily deals to attract new customers is a solid marketing concept. But it needs to be part of a broader marketing plan that entices customers to return again and again. Loss leaders do not make loyal customers. Great products, service, customer experience, and nurturing of the customer relationship keep them coming back.

Are Your Daily Deal Customers Just One-Night Stands?
How Might You Convert Them to Loyal, Repeat Customers?
By Ronni T. Marshak, EVP and Senior Consultant, Patricia Seybold Group, July 31, 2014


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