Forget Discounts and Coupons, and Gift Up Instead!

March 26, 2015 Simona Hodek Martin


As business owners, we have all, at some point or another, grappled with questions of whether we should provide discounts or coupons to acquire new customers or retain existing customers. Though coupons and discounts are ubiquitous, let’s see why they aren’t always the best option.

From a merchant’s perspective, giving gift vouchers to prospective customers is without doubt a better option than more common marketing tools like coupons and discounts, which devalue the item in question.

We saw this firsthand when Pizza My Heart sent $20 Yiftee gifts to contest winners. Yiftees are digital gift vouchers oriented towards local merchants that can be redeemed just like a credit card.

In the case of Pizza My Heart, not only was paying full price reinforced, but the psychology of receiving a gift as opposed to a coupon cannot be overlooked.

“By giving a 50% discount, I would be telling my customer that a $20 pizza was really only worth $10,” says Chuck Hammers, the owner of Pizza My Heart.

The flaw with the discount model is that customers often do not return because the customer is judging his or her experience based on paying only half price. Even if they like the product, they cannot justify the leap of paying double in the future.

But on the flip side, giving a gift reinforces paying full price, and maintains the value of the item. And additionally, the potential for upsell is high when customers receive Yiftee gifts as promotionals.

“The customer is so happy to receive a $20 pizza for free that he does not mind spending a bit more…In every single $20 Yiftee studied, customers chose to buy more than just the $20 pizza.”

For Chuck, the real kicker was that there was not a single transaction in which the customer used a discount coupon along with their Yiftee. Paying full price was cemented, and if the customer enjoyed their experience, the results are twofold: repeat customers are ensured, and product value is maintained. And from a business owner’s perspective, this is nothing short of excellence.

Blog by Yiftee, Local Gifts | On-the-Go

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