Mastering the Psychology of Discounts to Make More Sales

What is the right strategy when it comes to discount marketing: presenting strong visuals, mystery offers, or the word "free" in your print ads?

Everyone is attracted to a deal, no matter the size. By using coupons or discounts, you appeal to shoppers in a unique way.

Incentives Prompt Action

When shoppers feel like they're getting a good deal, they are excited and more willing to purchase.

Incentives also create urgency, build goodwill with clients, and dissuade people from looking for other offers.

Want to move more products? Experiment with discount tactics like these:

1. Dollar or Percentage Off

This discount type is the most widely used, simply offering a reduction on the original price, such as $50 savings or 40% off.

Discounts can be placed on specific products or applied to an entire order.

2. BOGO

Short for, "Buy One, Get One," this discount type prompts customers to purchase additional items.

Examples of BOGO include, "Buy One, Get One Free" or "Buy One, Get 50% Off the Next Item."

3. Quantity Discounts

Quantity discounts encourage shoppers to increase their order value to receive a discount.

For example, "Purchase two items and get the third free," or, "Receive 30% off your $100 purchase."

4. Rebates

A rebate is an amount that's returned or refunded to customers after their initial purchase.

Often used for large-ticket items, the most common is a mail-in rebate. One example? Listing a price as, "$499 after rebate."

5. Free Shipping

Increasingly popular among online business owners, this removes the shipping cost associated with any order.

Many merchants offer free shipping for a specific order amount, such as "Free shipping when you spend $25 or more."

Test Discount Variations to Find A Formula for Success

Since there are so many ways to frame discounts, it can be helpful to test multiple variations of a discount to see which are most impactful.

For example, you could offer a segment of your VIP customers a percentage discount and another segment a dollar-off discount to test which discount best appeals to core customers. Or you can experiment with varying communication channels, length of promotions, or discount "add-ons" (like free shipping or store credit for a future purchase).

Here are some examples to consider:

Catherine's Women's Clothing: Private Offer

In an ad pitching swimwear specials, Catherine's framed a gleaming yellow swim ring afloat a dreamy blue pool.

The overlaid text offered one of two choices: a "Buy 1 Get 1 Free Clearance Item," or "Private Offer Up To $100 Off." Catherine's used imagery that transports viewers to a place they want to be, evoking an emotional fondness for swimwear. The bright floaty draws eyes to the deal, and the company wisely gave two sale options to accommodate the price points of individual customers.

J. Crew: Flash Sale

In a spread featuring outdoor apparel, J Crew positioned a yellow sailboat cruising the waves of a dark blue backdrop, using this pitch: "Smooth seas and clear skies – perfect conditions for a flash sale. Extra 30% Off & Free Shipping, Use Code: SetSale."

For this flash sale, J. Crew took advantage of good sailing weather to create urgency and nostalgia that tied to real life. Because this ad catered to unique preferences and behaviors of a particular market segment, the piece moved beyond a sale into the emotional story of its readers. This, combined with a compelling offer (and clever coupon code), brings a winning combination.

Once you have a better understanding of your most effective offers, you'll be a great position to mix up your campaigns and boost customer engagement.