A recent retail discount strategy study came out that stated that customers are more likely to buy goods if they see discounts in dollars versus percentages.
In this first-of-its kind research from the Indiana University Kelley School of Business, the researchers indicated that, for example, holiday shoppers looking for gift ideas in electronics stores would be more inclined to buy items like digital cameras flanked by “$50 Off, Limited Time Only” than they would be if they received the same message via regular mail.
The study also found that customers are more inclined to make purchases when stores communicate discounts in ways that are instantly computable. Meaning, don’t make your customers work so hard. Doing the math for them may result in more impulsive buying.
THE REAL WORLD RETAILING TAKEAWAY
Not all studies apply to all retailers but you can still learn and should be testing discount theories in your own store.
To me, offering price comparisons and discounts in dollars feels a little bit like a grocery store or discount retailer. It doesn’t feel like specialty retail simply because discounting by price comparison feels cheap and may have an impact on your brand. The study did point out that there could be brand implications, especially as it relates to luxury retailers.
But I’m also a big proponent of testing. Maybe by trying different methods of discounting, you’ll find that your customers do actually respond better to dollar discounts. Beware. Only you can determine how to offer deals and discounts to make them the most relevant to your customers while preserving your brand integrity.
Photo courtesy flickr user ucarbroker