What's Wrong with Most Discount Programs?


First let’s list the wrongs…

  • Discounts at the wrong time - Some discount programs are “after the fact.” Customers get rewards, points, or discounts on future purchases after they make a purchase. That means they have to remember to use the discounts later.
  • Discounts in the wrong place - Some programs notify people about discounts when those people are in bed trying to catch some Zzz’s, driving down the highway, slaving over a project at the office, or far away on vacation. If the discount notification comes at the wrong time, it’s likely to be ignored or forgotten.
  • Discounts that are hard to attain - Some programs require participants to “earn” their discounts – “Spend $10,000 > Get a space-age toaster oven.” Customers have to meet a spending threshold to feel the benefit. Otherwise, they don’t get that nifty oven.
  • Discounts that require a change in behavior - Some programs require that people swipe a special card, manage coupons, or show a toggle on their key ring. Without the card, coupon, or toggle, they might not get the discount. And all those darn loyalty cards make for a very fat wallet!

So, what does it take for a discount loyalty program to really work?

  1. Deliver the perk at the right time and place – like when your customer is near the merchant offering the discount! (And not when he’s in the shower or meeting with his boss.!)  If your customer is searching online, send a browser alert to notify him of a pertinent discount.

  2. Deliver great and personally relevant discounts. Let’s say you’re 23 years old, and your bank sends you a discount for arthritis cream. You might say to yourself, “Why does my bank think I have creaky joints?” You also might decide that your bank doesn’t really know anything about you, even though you’ve been banking there for 5 years. Now what if you’re standing outside the GAP, and you magically get an on-the-spot discount (e.g. “Get 30% off at the GAP on behalf of your beloved bank)? Might you let out a tiny squeal of joy?

  3. Fit in with daily routines and make redemption easy. Consumers want discounts, but they don’t want to change our behavior. They don’t want to swipe a special card or remember to use a discount they saw three days ago. If you notify customers of discounts that matter to them while they are going about their busy days, they are more likely to redeem those discounts – because they are in context, easy to accomplish, and big money savers.

  4. Appeal to human behavior by sending frequent discounts. Human seek happiness. When we have a choice, we choose to be happy - over and over! Along these lines, according to Fast Company (link to http://www.fastcocreate.com/1681792/what-marketers-are-getting-wrong-about-loyalty), people prefer small repeated gains over one larger win. In the world of discount programs, this means most people prefer “half off 2 lattes” more than “one free latte.” People actually perceive more value in more frequent discounts. 

Right Time + Right Place + Great Discount = Loyalty (Y)

By sending your customers frequent “touches” at the right time and place (smartphone and browser alerts that are branded with your company’s name and logo), the ongoing efforts of your discount program will show your customers that you care because you are helping them save money in the moment.  In turn, those customers will show you that they are thankful for your help – by paying with your credit/debit card, referring their friends to you, and staying with you forever (until they actually appreciate a discount on arthritis cream).


For more reading on discount and loyalty programs, check out What Can You Give Customers Today to Ensure Loyalty Tomorrow?


Larky is a mobile loyalty platform that amazes and works to keep members happy and loyal.  To learn more, visit Larky.com or email us at hello@larky.com.

Posted on September 09, 2014 by AndrewB - No Comments

Topics: Financial Institutions, Perks and Discounts, Loyalty