Restrict Discount Offers to After Restrictions

You offer shoppers a special bargain. That’s the good news for them. But there are the conditions: “When you buy three.” “On select items.” “For today only.” That’s the bad news, telling the shoppers they don’t qualify for the discount or how in some other way they’re not fully in control. Maybe the notice is boldly announced, such as with large type at the bottom of an ad, in a way intended to stimulate shoppers to buy now. Maybe the announcement is in small type, tucked away with the intent not to distract from the good news.
     But it does distract, say researchers from Baylor University, New York University, and University of Pittsburgh. They suggest that to maintain the shopper’s purchase intention, you lead with the bad news. “For today only, when you buy three items, 25% discount on the usual price.”
     A main reason is that the bad-good order provides the shopper a greater sense of control in the face of hurdles. Other research shows people generally prefer to deliver good news before bad news. But people like to receive bad news first and finish off with the good news. Related to this, the discount offer maintains higher salience using the bad news-good news sequence because of its logical if/then flow (if I qualify for the offer, then I get…).
     Salience through proper sequencing also applies to stacked discounting, where a retailer piles a second price break onto a first. The ecommerce shopper might see the first discount while browsing through the pages, then a popup reading, “For new customers, an additional 25% off!” Or a consumer might have seen an ad for the 20% discounted price last week and today sees the updated offering.
     If the shopper encounters both discounts simultaneously, the first percentage discount the shopper notices assumes an outsized role. If we’ve designed the announcement so we can predict which will be seen first, make that first discount the larger of the two. If we don’t know which will be seen first, it doesn’t matter which of the two discounts is larger.
     With sequential presentation, in which the second discount comes as a surprise to the consumer, it works differently. The second discount has more influence than the first in the shopper’s perception of how good a deal they’re getting. In this situation, it’s best if the second percentage is the larger of the two. 

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