In the digital age we live in, coupons and discounts are more than just a way to save money; they also utilize certain psychological cues that have a direct effect on consumer behavior. Whether or not it is a clipped piece of paper, a promo code, or a cashback offer, the feeling of “saving money” will likely outweigh the actual savings a shopper expects.
Consumers like the act of shopping for deals; brands are competing for a consumer’s attention; so it is useful to understand the psychological reasons for a consumer’s desire for discounts to drive the marketing agenda for consumer loyalty and sales. In this vein, we will consider some of the reasons to understand the importance of coupons, and the ways they influence buying behavior.
How Discounts Hack Your Brain: The Psychological Triggers
1. Limited-Time Deals Create Urgency and Foster Impulse Buyers.
The number 1 discount strategy is creating urgency. “3 hours left!” or “sale ends tonight!” triggers our brain’s fight-or-flight response and stress response, and triggers buy now or lose out. When buyers have a sense of urgency they often are not thinking as rationally, which is what impulse buyers thrive on. In fact, studies show that 68% of shoppers report that they made an unplanned purchase due to a sale item. Shoppers are experiencing FOMO or fear of missing out. FOMO obviously creates a strong emotional brain response, often resulting in impulsive purchasing, and in turn, instant gratification. The idea of having someone order an item they were just casually browsing and have them instantly turn into a paying customer is great almost for you instantaneously.
2. Millennials: The Deal-Hunting Generation.
Millennials have made coupon usage a refined shopping experience. Almost 70% of millennials say they search for deals before making any purchase, and utilize everything from browser extensions, like Honey, to newsletters with deals, to even shopping deals specified in fashion newsletters to timed promotions on Instagram. When brands use timely and relevant discounts, they are meeting the value-first, deal-hunting mentality of millennials. Coupons are not an add-on product and/or extra, or bonus offering to millennials, coupons are often viewed as expected for smart shoppers. Understanding coupon usage is really important.
3. Coupons Introduce Customers to New Brands and Products
While there are people who are brand loyal and committed to their favorite brands, coupon discounts can cut through brand loyalty. An irresistible promotion can encourage consumers to try a branded product or brand they wouldn’t have considered as a result of the lower perceived risk. For example, would anyone pay the full price to see “what the new pizza is all about”? Probably not. But a 50% off coupon takes away so much of the risk, that it feels like “why not, let’s give it a try?” That messaging of overcoming hesitation to sampling is powerful for brands, especially when trying to acquire new customers.
Data also shows that 80% of consumers will change a purchase based on a coupon or deal, or new promotional offer. When a product is discounted, it creates a risk-free opportunity to try a new brand, product, or especially new alternatives when the default brand in mind is no longer an option.
4. The Anchoring Effect of Price
Have you ever noticed a product with a tag that reads “Was INR 2000”, now reads “INR 1000”? It’s amazing how our brains format the price comparisons. The original high price tag serves as an anchor in our brains and the discounted price for that product now feels like a BIG deal to buy (even if INR 1,000 is the true value of that product) related to the discount claimed.
The anchoring effect takes advantage of the way that humans recognize and formulate evaluations of value with respect to reference points, and brands have been capitalizing on this phenomenon by “enhancing” the perceived value of the discount of their discount.
5. The Freebie Effect: Why “Buy 1 Get 1 Free” is King
The concept of “free” has an effortless appeal in a way that the words “50% off” simply cannot match. When it comes to the typical “Buy 1 Get 1 Free” offer, consumers often feel greater satisfaction than when they receive the equivalent discount in percentage discount form, even though they are related mathematically.
Forbes reports research showing that “freebies” can increase the likelihood of purchase for consumers by 88%. When humans gain a product with zero loss, it causes an emotional reaction that is extraordinarily powerful. They become addicted, and it works very well for marketers.
6. Creating Brand Loyalty Through Personalization
Modern coupons are not one-size-fits-all anymore. Brands are starting to use discounts personalized and individualized based on a customers’ browsing history, their purchase habits, and whether they are loyal to the brand or another company. This personalization makes the customer feel valued, while helping the target company to get a clearer insight into its customer.
In addition, exclusive and personalized offers also create in the consumer a feeling of valuableness which helps to build emotional connections that keep the customer loyal even when they become aware that another brand is offering similar promos.
7. Discounting Builds Social Proof and the Bandwagon Effect
Humans are social beings. In making decisions, especially while shopping, we look to see what others are doing. To make matters worse, most behavior that is contagious is based on group behavior. Discounting provides the ultimate social proof, or group behavior. There is a distinct bandwagon effect created by the best seller tags, or crowded stores or even something labeled as most popular. People will buy things just because everyone else is buying them.
According to the India Retail Report data, 60% of shoppers said they are more likely to purchase during a sale just because other people are shopping at the same time. In other words, discounts enhance social proof and make us feel smart and safe about joining the crowd.
The Value of Price Transparency
Today’s consumers are cautious and informed, so price transparency is a must. Misleading markdowns, and the inflated “was price” erode trust for consumers who are online, or countless price comparison options.
According to research, more than 60% of consumers compare prices across 3 or more websites before buying. With the confirmable price comparisons available, it is much easier to identify fake sales. Brands that create a clear price point and communicate that clearly will build credibility with consumers and create repeat purchasers. Transparency in discounting is sustainable; it is not just ethical and builds customer loyalty and direct repeat business.
Why Discounts Affect Consumer Behavior So Powerfully
Discounts tap into many psychological triggers simultaneously: urgency, the fear of missing out (FOMO), emotional fulfillment, social influence, and the appeal of “free”. They create a perceived value that compels impulsive purchases and allows for brand exploration.
It may be the thrill of a limited-time offer, or the excitement of getting something at no cost, or perhaps it can be the comfort level of a personalized deal that makes customers feel clever and satisfied, but there is another level of cognitive connection and trust that have lasting impressions long past the savings.
Conclusion: Coupons More than Savings
Coupons and discounts are not only powerful ways to reduce price, they can unlock deep emotional and cognitive triggers that affect consumer behavior. This could prompt impulse purchases, switching brands years or even decades old and support a lasting loyalty to a brand through a personalized offering.
For brands, it is important to understand the psychology behind coupon uses means delivering authentic, timely, and relevant offers customers can relate to. It is about creating feel good shopping experiences that transforms first time buyers to enthusiastic loyalists.
At BigCoupons our mission is to deliver these smart discounts to customers at ease, while allowing them to discover something new to enjoy and save! Check out our large assortment of deals curated to fit any taste!
Experience how great coupons can go beyond savings to open the door to exciting possibilities.
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