Use discount psychology to make more money
Everyone is attracted to a business, no matter how big or small. By integrating coupons and discounts into your overall marketing and pricing strategy, you have captured the attention of buyers. However, if you offer discounts to stay competitive without considering customer behavior and the impact on your business, you will only face lower returns.
To take your strategy to a new level, you need to consider from a higher level how your customers perceive discounts and offers. Read on to learn more about how your willingness to offer discounts affects customer behavior, the most common types of discounts, and how you can make the most of these discounts for your business. How discounts affect consumer behavior: In addition to helping shoppers save money, discounts also affect how consumers interact with your products and brand. Here are some of the ways that lowering prices can affect your customers and their behavior:
1. Discounts create happiness
In short, saving money makes people happier-a study by the Claremont Coupon Graduate University supports this The implementation of a concept.com. Every time you provide customers with an opportunity to save more money than the value of the product, their oxytocin levels will increase. This, in turn, can create a positive connection with your brand, when customers remember your brand later, because they associate the positive feelings they experienced with your company.
2. Discounts Assuming that consumers trust you
Most consumers believe that any discount offered by the company is a legitimate reduction of the original price. In other words, technically, you can increase the price of an item by 20%, then reverse it and offer a 20% discount, but consumers rarely consider this option. This kind of trust in your company and the discounts offered will make people enthusiastic about your offer. However, please be careful not to take advantage of this sense of trust by offering shady deals to increase your bottom line.
3. Discounts reduce purchasing propensity
research shows that offering coupons or discounts can prevent consumers from looking for the same product elsewhere. This is because discounts create a sense of urgency to buy, which prevents buyers from looking for other options. The effect of preventing external purchases is particularly important in the online business industry. Due to the widespread presence of competitors in the digital space, comparison shopping is common.
4. Discount creates a sense of urgency
discount encourages buyers to buy as soon as possible. This can be partly attributed to the idea of scarcity, consumers understand that discounts do not always help them save money. In addition, "Psychology Today" pointed out that "foreseeable regrets" (regrets for missing a deal) are also the main priority when promoting sales. Urgency is the key factor that enables customers to exceed the purchase threshold, and can be supported by specific language in marketing communications.
5. Expecting discounts from your brand
One disadvantage of coupons and discounts is that they teach consumers to expect these discounts when buying from you. This expectation usually prevents buyers from buying regular-priced goods from your company and encourages them to look for competitive discounts. In the field of e-commerce, this expectation is always fulfilled through free shipping promotions. To prevent customers from shopping only at discounted prices, please consider strategically the type and timing of discount activities.
How discounts are presented Changes in perceived value
Generally speaking, the success of discounts is based on a common theme: buyers don’t like calculations. They don’t calculate numbers, but focus on specific numbers in discounts or promotions and draw conclusions based on that amount.
Consider this example: In your opinion, which of the following points represents the maximum discount percentage that is not calculated?
- 999 USD TV off 1,200 USD
- A sunglasses 50 USD off 35 USD
- Purchase a 60 USD shirt and get a 50% discount
If you choose B, congratulations-you have successfully passed some clever wording Find the best deal with discounts. If you choose another answer, don’t worry-most of your customers do this. In fact, savvy marketers rely on this consumer behavior to drive sales.
If you look at option C, most consumers will pay attention to a 50% discount instead of doing a simple calculation to see if they really only save 25% of the total purchase. Because of this, buyers feel that they are getting better deals than they actually are. The most important lesson of
is that although the main rule of economics is that consumers will behave in the most rational and self-use way, the way in which discounts are offered has a significant impact on buying behavior.
Different types of discounts
Now that you understand the impact of discounts on customer behavior, you can start planning how to use these behaviors to your advantage. However, before trying different strategies, it is best to familiarize yourself with the most common types of discounts, as summarized below:
Dollars or Percentage Discount:
This standard discount is the most common and only offers discounts on the original price, such as B. 25 USD or 20% discount. These discounts can be applied to specific products or the entire order.
The abbreviation of "Buy One, Get One". This discount encourages customers to purchase additional products to qualify for discounts. Examples of BOGO are "Buy one, get one for free" or "Buy one, 50% of the next item".
Tier threshold discounts:
These discounts encourage shoppers to increase the value of their orders to a certain threshold to receive a discount
A discount is an amount that is refunded or returned to a customer after the customer’s first purchase. The most common form used for large items is Mailin discounts. For example, specify the price as "$349.99 after discount."
More and more popular with online business owners, free shipping completely eliminates the shipping costs associated with each customer order. In order to offset the cost, many retailers provide a certain order value, such as B. 49 US dollars, and provide free shipping.
These discounts apply when the company offers price reductions for joint purchases of certain items, for example,
Free Gift With Purchase:
This discount is usually offered at a certain price threshold for an order, and it motivates customers by providing pre-ordered goods for free Make a purchase. The item can be any product, from a sample of your product to a branded coffee cup.
Let the discount work for your business
You have considered the psychology behind the discount and the type of discount you want to offer. Now is the time to plan your discounts, offers or promotions from start to finish. Make sure to include these action items in your workflow when preparing to launch:
1. Keep the goal in mind:
offering coupons or discounts for no reason will definitely lead to bad results. Do you want to increase sales in the weak months? Promote new products? Inspire enthusiasm for less popular product categories? The more targeted the discount you offer, the more strategic you will be in how you offer the discount.
2. Check the cost:
Don't forget that discounts can easily affect your profit margins. Therefore, before you start or test any type of discount campaign, please perform internal mathematical calculations so that you know what you can afford or are ready to achieve success.
3. Consider any restrictions you may need:
make sure that all your quotation details, including any exceptions to your quotation, are easy for customers to view. Restrictions can include expiration dates, dollar thresholds, prohibited products, etc. Adding more details will help avoid potential conflicts in the future.
4. Test your offers with others:
The easiest way to determine which discounts are best for your business is to test different types of discounts against each other. The A/B test shows whether Variant A (your first transaction type) performs better than Variant B (your second transaction type) so that you can use the relevant data to plan future discounts.
5. Analyze the result:
When your quote window is closed, check its success. How many customers have used discount codes? How many products did you sell in the reduced category? In some cases, you reach your goals and see a lot of sales; in other cases, you need to investigate factors that may cause poor performance, such as: B. Inadequate marketing or simple disinterest.
Now that you have a better understanding of how discounts affect your specific audience, you can better plan your events to drive sales and retention. All it takes is a little bit of math and a deeper understanding of the impact of discounts in the minds of customers.