6. Discount Promotions | $100M Lost Chapters Audiobook
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What is the significance of discount promotions?
Discount promotions. A discount turns wants into haves. Why pay more when you could pay less? Understanding discount offers. Fundamentally, free and discount offers operate very similarly from a money model perspective. Basically, they create a perceived value discrepancy that on its own can drive action. That being said, I personally am not a big believer in marginal discounts, say 5-25% off. It's just not enough to drive real behavior in my opinion, and basically just cuts into margins.
How do discounts influence consumer behavior?
Instead, we're just going to be talking about massive discounts, 50% or more. Those are the types of numbers that people respond to. And they drive action from a population that otherwise wouldn't act. And that's what you have to accomplish with a free or discount offer. It has to get people who wouldn't otherwise consider it to respond. Note, most of the time when talking about discount offers, they will only make up a component of your offering, not the entire thing. While there are a handful of notable exceptions, in most instances, a discount offer is a piece of the thing, not the entire thing. With hope, that makes sense. If it doesn't, the examples will illustrate it. Four ways to display discounts.
So let's imagine we start a lemonade stand. I say to you, I want to try one of these discount offers out. What do you think? I think we'll be able to get more people to respond to my efforts with some sort of discount, but I don't know where to start. You might say, great question. You're going to have to test it, but I'll show you my framework that I use to test discounts. It'll automatically get you thinking differently about how to display offers from here on out. You see, there are four ways you can display a discount.
What types of discounts drive customer action?
Knowing them is important. People respond differently to the same discount displayed differently. There are probably others, but these are the four that I find most common and have been tested and used effectively. Let's look at our own business and try all four. You'll notice that sometimes it fits and other times it doesn't. Whether we are selling something premium or in higher volume, the price of the offer many times informs what will make the most sense for us. Let's imagine we have an Ultimate Lemonade bundle that is three bottles a day for $30. The numbers don't matter, by the way. Well, that's what we're gonna promote four different ways. New client special, first week of Lemonade, $29 instead of 210.
Number one, percentage off. New client special, 87% off first visit. Number two, absolute amounts off. $181 off first visit, normally $210. Number three, relative equivalent off. A, save a steak dinner. B, less than going out to lunch. Four, simply the discounted price.
$29 new client special. Do you see how different all these look and feel? It's the same exact promotion, just communicated differently. By cycling through all four, you can test which resonates best in your audience. If you find multiple winners, even better. It gives you more bullets in the chamber when a promotion fatigues. Before you just read to the next section, think about other ways you could use a discount for your own offer.
Just do the exercise in your head and flex your brain muscles. Pro tip, use absolute prices when talking about understood products and services.
In order for a simple discounted price with no other elements around it to be effective, the service will usually have to be one that's well understood. People should already have an idea of what it costs. This is where discounts do well.
What are the four ways to display discounts effectively?
If you discount something that people don't understand, the offer won't be effective. The only way around this would be to state the price, then state the discount, like in the absolute amount off example. An example that would not work with this would be 50% off agency retainer. No one knows what the agency does or how, and agencies have a wide range of costs. So there would likely be a better offer that could be made that would be more easily understood. Just like before, we're going to flip roles and have you explain the pros and cons of discounts to me as though we were considering it for our business.
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Chapters
6 chapters
1
What is the significance of discount promotions?
0:00–0:26
2
How do discounts influence consumer behavior?
0:26–1:22
3
What types of discounts drive customer action?
1:22–3:02
4
What are the four ways to display discounts effectively?
3:02–12:53
5
Why choose discount offers over free offers?
12:53–13:20
6
What are the pros of using discount offers?
13:20–13:35
Speakers
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