Discount Offer A Smart Scarce Offer – Pricing Psychology
A thrilling offer by one of the broadband internet providers in Egypt that Discount Offers 50% discount for the first 9 months of subscription. Invincible! No? It’s a good and ordinary marketing way to attracted new clients and let them get used to the product and service, but it drawbacks in two important matters;
First, once the offer is approaching its end, the customer is already used to the 50% price he pay, and a deep conviction that the service deserves just that amount and more will be implanted in the minds of the customers, so finally it will lead them to change the provider even if they will pay the same new amount they would pay at the first one after the end of the discount offer period, just not to experience the emotional pain that we call in our book as the “Loss Aversion” which is a human instinct to run away from pain even if it leads to a significant gain.
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The solution of such dilemma is to reduce the discount offer period to three or four months so the client’s mind doesn’t develop the habit of the correlation between the discounted price and the provided service, and by doing so the client would be more resilient to the price surge, and if the provider desire that the discount last for more months nine or twelve months, then the last days of such long discount period is so crucial and painful for the customer, so for example after the end of the long discount period, there would be an extra offer for the next three months with just 25% increase, and after that the price would return to the normal rate, this would reduce the loss aversion effect, so the customers would accept it easily without nagging.
The Second drawback of this marketing tool, it lacks much the power of scarcity technique that can drive more customers to subscribe and get advantage of the discount, and a good way to do that is to limit the time of the offer which is a very common way to induce the scarcity emotions.
But the smart way here is to how intensify this scarcity emotion in the hearts and minds of the customers? So, In order to do that, we might reduce chunks from the offers as time lapses, for example if the offer would last for six months from Jan to June for 50% discount, so we may announce that for the first month the discount is 50% for all the consecutive five months, and for who subscribe beginning from the second month, the discount will be 40% for the next four months of the offer, as shown in the chart;
This technique would put the customers’ minds and hearts in such a race not to miss the marvelous yellow zone, and then not to lose the good green area and so on. I believe that this method would urge and intensify the innate scarcity feelings to the customer and drive them to hunt the chance of the discount offer period, then by applying the proper techniques to avoid the loss aversion inflected on the clients when the discount period is up as we mentioned earlier, the service provider would successfully hook more customers and more noticed growth in subscription will rush in.
Good to mention that marketing, persuasion, and any techniques applied to change and rectify consumer behaviors are rather heuristic than algorithmic, which means that they don’t belong to the science of 1+1=2, they belong to the family of the trial and error, control groups, sampling, filtering …etc. So in order to get the best outcome is to observe tightly the output and applying precise feedback to modify and enhance the techniques in order to progressively obtain better results which is “long-lasting, loyal and satisfying customers.”
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