The largest home improvement retailer in the U.S. has been criticized recently for its conduct in the area of customer discounts-prevalently so for the benefit of its professional customers. A big issue is a $1500 cutoff before the discounted cash-out or credit. Some customers feel wrongly valued or ignored. Beyond the branding concerns of Lowe’s, many find themselves at this juncture: how to create customer loyalty in a competitive retail environment.
The Bar of $1500
Lowe’s has designed a program whereby purchasing increases an incentive to buy, usually invoked at $1500 or more, to gain other discounts or rewards. This bar is a strategy for enticing contractors and businesses to spend more money in the hopes of establishing goodwill. That very stringency has denigrated customers who feel their smaller but frequent purchases are not duly considered and recognized.
Recent Customer Complaint
Recently, Lowe’s customer service complaints on social media have been focused on customer service and discount policies. The customer tried placing an order for an amount of approximately $1500. While trying to resolve an issue with her cart, she waited while reports had been made on several, but only later to find promotional conditions-were both expired, making it an even larger loss, due to originally having the basket of an amount exceeding $2000 and additional savings of over $754, the amount shown through a photo of the register receipt totaling $1556.67.
That, therefore, highlighted the significance of good customer service and transparent discount policies. Not only was there an actual loss of money, but it would have also resulted in an irretrievable loss of faith in Lowe’s instincts to cater to any of the customer’s needs.
The Discount Blunder
A recent controversy arose when customers learned that Lowe’s changed its discount policy for paints and stains. Rather than a cashback reward, the company now grants a discount at the point of sale of 20% on eligible purchases at checkout. However, if customers opt to utilize their Lowe’s credit card card that typically qualifies the customer for a standard 5% discount-this 20% discount will not apply. This change is seen as an anti-stacking measure; however, it disappointed numerous loyal customers relying on these discounts to pay for business-related expenses.
Impact on Customer Loyalty
Such a change in discount policies significantly affects customer loyalty. Often, these incentives serve as vehicles through which professional contractors and businesses steady their profitability in choosing retailers. Disallowing such discounts to be used in conjunction with the Lowe’s credit card may cause certain customers to turn to Home Depot, which could be offering them trunk-loads of better rewards or cash-back bonuses.
Case Study: A Diamond Pro Member’s Experience
A customer party “Diamond Pro” has made purchases amounting to $300,000 at Lowe’s over the past year. “Today, I am frustrated because Lowe’s has decreased its benefits, and I am considering going to Home Depot.” The case highlights how reward programs became an issue of customer loyalty/revenue loss.
Lessons for Lowe’s
Capability to be Flexible in Their Various Rewards Programs: Lowe’s could consider a few ways to reward their customer customers with some flexible program where they can freely accrue benefits, rewards, discounts, and other promotional programs.
Communication and Transparency: Communication regarding policy changes is vital. There must be advanced warning for consumers about the changes that’s already been set ahead so that they may better sharpen their purchasing strategy.
Competitor Analysis: Regular competitor analysis could be done so that Lowe’s has basic ideas about what kinds of incentives will attract its customers and how to keep itself ahead of the competition.
Personalized Customer Service: Personal service via a discount or matching competitor offers would help retain high-spending loyalists.
The amount that Lowe’s offered for a $1,500 difference speaks volumes to underscore how important customer-oriented policies can be in retail. Lowe’s must balance the need of the management to set policies and procedures with the desire of its loyal customer base for high-caliber service. Lowe’s should build upon this occurrence so that it could engender still another core of satisfied and loyal customers. Some flexible rewards, some improvements in communication, and personalized service would establish an even more steadfast loyalty among professional customers in the home improvement market.
A good service, in cases like this, can yield long-term customer satisfaction rewards for the home improvement retail environment. For Lowe’s, it’s the perfect time for establishing such an opportunity to show that, given the recent engagement, they’ve got talent not only in fixing such incidences but also coming around to understand their customers.
