At a time when businesses— large and small — literally spend over $300 billion a year on customer loyalty plans, new research shows that retailers who have embraced product drops, flash sales and private events are reaping some of the best customer retention results in the business.
According to Product Drops: Retail’s New Conversion Play, a collaborative survey of 2,300 U.S. consumers done by PYMNTS (www.pymnts.com) and Scalefast, not only are these typically young consumers loyal and eager to spend, but they’re excited enough to wait in line to get access to a brand they love.
While the concept of retailers doing limited edition promotions is not new, the refreshed, three-pronged 21st-century version is definitely trending right now.
According to the survey, 75 percent of shoppers who attended a special product drop event said they were “very” or “extremely” satisfied with the experience.
Similar 70-plus percent enthusiasm levels were also reported with flash sales and private sales, with nearly half of respondents saying they had taken part in one of these types of buying events within the past month.
As far as why consumers seek out and go to these hyped shopping events, the survey showed a variety of reasons, ranging from “they’re fun” to a desire to avoid stores or gain access to high quality or difficult to find products.
However, more than anything else, 7 in 10 consumers said they went to these sales events because they offered good deals.
According to Joe Farrell, managing director, EU Operations, at branding and commerce adviser PFSweb, it takes more than trendy merchandise to win at this game. For example, Farrell said brands should also consider things like pop-up distribution centers to spread inventory and avoid delays, or launch hybrid stores that reallocate idle space and in-store retail staff.
“True loyalty is emotional and irrational and leads to customers feeling like they’re part of an exclusive membership group which then leads them to become loyal subscribers or consumer network participants,” Andjelic said. “People appreciate being part of a club — and feel badly when they’re not.”