Basically, “free” and “discount” offers create a perceived value discrepancy that, on its own, can drive action. Most people do not respond to “marginal” discounts (5 to 25% off) unless they are already ready to buy that product or service. It rarely brings in new clients or customers. These discounts cut into the margin and may only change the time of a purchase, not whether they will purchase.

 To drive action requires massive discounts (50% or more). Those are the types of numbers that people respond to. And they drive action from a population that wouldn’t otherwise act. And that’s what you have to accomplish with a free or discount offer to get people who wouldn’t otherwise consider it to respond. Also, it is important to consider that when you are talking about discount offers, they are only 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”.

 So you have a lemonade stand and want to offer a discount to attract more customers. But you are not sure where to start. You’re going to have to test it, but I’ll show you the framework used 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. Knowing them is important. People will respond differently to the same discount, depending on how it is displayed. There are probably others, but these are the four that are most common and have been tested and used effectively. Let’s look at the stand, try all four. You’ll notice that sometimes it fits and other times it doesn’t. Whether we are selling something premium or at a higher volume, the price of the offer often informs us what makes the most sense to use. Imagine the ultimate lemonade bundle is three glasses a day for $30 per day (the numbers don’t matter). Here is how we could discount this four different ways.

Our sale would be: “New Client Special” First Week of Lemonade $29 Instead of $210”

We could advertise this as:

 1) Percentage Off

“New Client Special,” 87% off first visit

 2) Absolute Amounts Off

“$181 Off First Week” (Normally $210)

 3) Relative Equivalent Off

“Save A Steak Dinner,” said in negative (what you save in relative terms)

 or

·   “Less Than Going Out To Lunch,” said in positive (what it costs in relative terms)

 4) Simply the Discounted Price

$29 New Client Special

Do you see how different these all 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. And if you find multiple winners, it’s even better! It gives you more bullets in the chamber when a promotion fatigues, without changing the math behind the promotion.

Can you apply this to anything you offer or know of?

What are the other ways you could use a discount for your own offer?

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