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Less sale, more scale: How retailers can avoid discounting and still earn customer loyalty

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With the change in seasons on the horizon, many retailers will soon be turning to discount and sales tactics to help boost cash flow. But while sales are a tradition many retailers are comfortable with, this habit is ultimately costing them in the long term.

Our partner Klarna analyzed the impact of offering ongoing sales and determined alternative - and ultimately more successful - ways for retailers to attract customers to their stores.

To begin with, over half of retailers spoke with said that the "always-on" nature of sales is having a detrimental impact on their bottom line, with 11 percent revealing that discounting cost them over 25,000 pounds throughout 2017. So it’s no surprise that discounting can be a significant source of stress for retailers regardless of their size or sector. From the impact on profits to the operational difficulties that come with managing sales activity, it’s easy to see where the money can get lost.

Less sale, more scale: Focus on perfecting the customer experience 

While many merchants discount to shift unwanted stock, they could avoid the stress of sales by ensuring better, more educated purchasing decisions are made at the start of the season to ensure less discounting toward the end.

But relying on sales purely to clear stock could have more of a detrimental effect on overall business. There are a growing number of signs which indicate that shoppers are gradually turning away from extreme discounting and seeking out a more positive shopping experience - and our research shows that retailers can win over customers without slashing prices.

Instead of discounting, merchants should focus on perfecting the customer journey - from a smooth and simple browsing experience through to a seamless checkout phase, with multiple payment options and one-click repeat purchase options as standard.

Retailers who offer multiple payment options, both online and in-store, offer more choice, convenience, and flexibility. Ultimately, they provide an exceptional customer journey at any time of year, and it’s than ever-green approach to experience that can help retailers avoid dreaded discounts.

Retailers who want to take advantage of the changing tides should look instead to ‘surprise and delight’ shoppers in the everyday user experience. They can do this with features such as a mobile-optimized checkout, one-click purchases, deferred payment options and personalisation. Using discounting as a means for winning new customers and clearing stock is nothing new, but the difference today is that it seems to be more regular and more widespread than ever before. Instead of driving down costs, retailers who focus on getting the basics right will be much better off in the long run. By selling items that genuinely appeal to the target demographic, optimising areas of the experience to improve the shopping process for customers and providing a leading service compared to competitors – retailers and brands can be sure that they are employing the most effective method for increasing sales in a way that doesn’t rely on constant discounting.

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About Klarna

It's all about smoooth (yes, with 3 ooo's). Klarna is one of the world’s leading payments providers and a newly-licensed bank, which wants to revolutionise the payment experience for shoppers and merchants alike. Founded in Stockholm, Sweden, in 2005, the fintech unicorn gives online consumers the option to pay now, pay later or over time — offering a trusted, frictionless and smoooth checkout experience.

Klarna now works with 130,000 merchants, including ASOS, Topshop, H&M and JD Sports in the UK, to offer payment solutions to users across Europe and North America. Klarna has 2,500 employees and is active in 14 countries.