Convert Shoppers with Lucky Discounts

For a special sale, you could advertise a 20% discount good on any one item. But a set of University of Colorado, University of Connecticut, and Virginia Tech studies suggest you should instead offer a game of chance in which the shopper might get a 20% discount, a larger discount, or a smaller one. You’re more likely to make the sale and, for most of the game participants, produce feelings of good luck which stimulate further purchases.
     As you’d guess, the larger the discount the customer ends up winning, the greater the feelings of luck and positive store attitude. But even a small resultant discount shows the effect. In the study, those winning a 10% discount spent more money than an equivalent group who were just offered a 10% discount without needing to play the game.
     The effect does seem stronger for hedonic than for utilitarian items. For all items, the promotional game increases the number of customers who will subsequently make purchases. There is less influence on how much each customer spends.
     What about those who don’t win any discount? It turns out that they are no less likely to spend money than for an equivalent group to whom a discount in any form was not even mentioned. There appears to be no downside to using the game of chance beyond the costs of producing and managing it.
     For almost all shoppers, this type of game of chance adds fun to what could otherwise be a routine transaction. Studies at The Ohio State University and Vanderbilt University indicate customers who believe they’ve gone above and beyond to patronize your store will be especially attracted to the game-of-chance discount. They already feel luckier when shopping with you. A shopper’s belief they’ve made an extra effort can arise in a variety of ways:

• High frequency shopping with you 
• Driving a longer distance to shop with you 
• Selecting an item with plans to use it in the future rather than now 
• Choosing an item for use by somebody else 
• Shopping with children in tow 

     However, the widespread attractiveness of such a game of chance doesn’t hold with loyalty program rewards. People with an Asian mindset prefer large loyalty rewards earned with an element of fate. They’ll like the sweepstakes tickets. But people with a Western mindset want more certainty. Small rewards for fewer points, big rewards for those who save up points.

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Shape Benefits As Hedonic or Utilitarian
Show Devoted Customers How to Get Lucky
Tailor Loyalty Programs to Customer Culture