Restaurant Promotion: What Level Of Discount?
Following my blog ‘Restaurant Promotion: What discount should I offer” I was asked by a fellow marketer for some feedback on the level of discount. His question was ‘have you seen 10% work better than offering 5% off?’. From experience, better or higher discounts have a better chance of redemption for two reasons:
- The local discount program that has many 5% discounts (low value offers) is unlikely to attract attention of customers. Saving 5% on a meal isn’t that sexy compared with a 2 for 1 deal! So 5% discounts can lower the perception and uptake of the entire local discount program.
- For the customers who do take notice of the program, you should expect to get a better result from a 10% deal compared with a 5% deal….it’s natural selection!
I always encourage merchants to think about the discount in terms of ‘what is the perceived saving?’ (view the presentation below to find out more). If you are offering 5% on a meal the saving only equates to 50c on a $10 purchase and I don’t believe this is enough to motivate people to use the voucher. Put yourself in the shoes of the customer and ask ‘would this saving motivate me to use the voucher?’.
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May 6th, 2009 at 9:30 am
Excellent and insightful blog post on Discount Coupons and the perceived value of various options. Thanks Slade!
Cheers … Ben