Monday, May 3, 2021

Give 40% on One Over 20% on Two

When offering a multiple quantity discount, what difference does it make whether you say, “Buy two, get 20% off on both,” or “Buy two, get 40% off on the lower-priced item”?
     Studies at Tilburg University and Macquarie University found that overall purchase rates were about the same with either phrasing. Yet the two alternatives did result in different ways of selecting the pair of items to purchase. For the “20% off on both,” liking for the items and for the discount amount were balanced. For the “40% off on the lower-priced item,” liking for the item primarily drove selection of the first one and liking for the discount primarily drove selection of the second item.
     As a result, shoppers tend to select a more expensive second item than they would under the “20% off on both.” Helping this along is that 40% looks larger than 20%, even though the 40% applies to only one of the pair. Shoppers want to maximize the return from the 40% discount, so they’re more open to, and often even specifically seeking, a higher price point.
     It’s to the advantage of your business’s balance sheet to have shoppers spend more, so when assisting shoppers to get full benefit from this multiple quantity discount format, handle the selection of the first and second items differently. For the initial item, emphasize the shopper finding an item that will best meet their needs. As is the standard procedure in selling, give less attention to the price. For the second item, though, once the shopper is firmly attached to purchase of the first item, keep it easy for the shopper to notice and to compare prices among the alternatives.
     Other considerations apply when the requirement is for a larger minimum item purchase, such as in, “Buy at least five items today & get a 20% discount on your total purchase.” The issue here is whether the shopper can find five desired items from the store’s entire merchandise selection.
     If they can’t, the shopper starts putting into the basket items they don’t really want. They lose appreciation for the discount. To avoid this, keep in stock items attractive to shoppers. Then stay alert for signs that a shopper is having trouble filling the quota and offer to help by making suggestions based on what you know about the customer, including what items they have already placed into the basket.

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