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Psychology of Sales: Coupons, Flash Sales & Limited Time Offers


A friend told me a story about her husband that made us chuckle. He came home from the store with not one stick of deodorant but 10. My friend couldn't help but ask him why.


He explained:

“The deodorant was marked down by 20%. I didn't know when it would go on sale again, so I decided to buy 10.”


I think we've all been there!


This is an example of an action caused by time restriction. Time restrictions are a part of scarcity. A flash sale is a type of scarcity—it presents a product that's only around for a certain period of time.


Research shows that when we feel pressured to make a decision, the amount of information we process diminishes. We focus on features that can be quickly evaluated because the clock is ticking.


The same thing happens with time restrictions in a marketing or business sense. Stress influences our decisions.


Studies have found that, as consumers, we're sensitive to the deadline of a promotion. Time pressure can increase our intention to buy that product or service since we feel the price will go up soon.


Two main principles of sales psychology help explain how time pressure works.


Evaluation of Alternatives and the Psychology of Selling


One of the steps in decision-making for customers is evaluating alternatives. This is looking at the options available to you.


Evaluation gets skipped when there's time pressure. You suddenly realize you don't have all the time in the world to make your decision, so you stop looking for additional information to help you decide whether to buy something or move on. This is fantastic for the business.


As a consumer, you're accelerating your purchase. Depending on whether or not you made the right choice, that could be a good thing.


The Danger of Too Many Sales


Running too many sales or promotions can devalue your products or services. Customers who know you run promotions all the time can also feel like they’re competing against you, and they will take their business elsewhere.


A teenager named Mia told me about how she would go to Laguna Beach with friends. They would walk up to the shops after sitting on the sand.


One clothing shop had just opened in Laguna. The first time Mia went there, everything was 50% off. She had been saving her money for a big purchase. When she arrived and saw that everything was 50% off, she thought she had better take advantage of the sale since she didn’t know if there would be good prices on her next visit.


Mia loaded up. She was excited because she felt like she got a good deal.


Weeks later, Mia and her friends were at the beach again and walked to that same shop.


Everything was still 50% off.


This seemed odd to Mia and her friends. They wondered if it was just a longer sale.


However, the same thing happened every time they visited that store—the entire shop was 50% off. The store was inflating their regular prices and only saying everything was 50% off.


If you're using time pressure, make sure you're not using it too often. Also, use it in a way that won't cause your customers to feel deceived. Mia and her friends never went back to the store. They also told other people about the 50% off fiasco. The store is no longer there.


How does this story lead back to skipping alternatives and the psychology of sales?


Mia didn’t stop to look at other shops’ offerings before purchasing. Instead, she took advantage of the 50% off sale right now.


Perceived Control and Sales Psychology


We want to feel like we're in control of our environments and decisions. Having a perceived lack of control is problematic.


According to research, a situation where we feel out of control causes us to compensate by making a quick decision about something else.


Let’s say you turn on the television. The Home Shopping Network is on with 50% off a set of pots and pans. You see the time pressure and quickly decide to buy the set. Suddenly, you had control again—control over the purchase.


With time pressure, it can feel like we're not in control of the situation, which can then impact other decisions. If you feel a lack of control in some area, be mindful. Try not to compensate for it elsewhere.


Psychology of Coupons: Practical Advice


Now that we know how and why time restriction works let’s look at examples of time restrictions in business.


Limited Time Offers


Trader Joe’s offers many limited-time offer promotions, such as items only available for one season. They offer all things pumpkin in the fall. At Christmastime, they have all types of holiday-related products, like peppermint bark.


However, when the products sell out, they are gone. Customers load their carts and might buy more than planned because they know there is a time restriction—not knowing if an item will be available on the next trip.


Flash Sales


Flash sales are an important part of the psychology of sales and are a great example of a time restriction.


While working on research for one chapter of my book, The Power of Scarcity, I looked at different brands that capitalized on flash sales.


I soon came across a website called Gilt. This site sells designer items and is built on flash sales released regularly. As a customer, you never know what will be on sale from day to day.


I will let you in on a little embarrassment: this website has pulled me in. I even had to delete the app from my phone because of the impact flash sales have as a time restriction.


Countdown Timers


You might find yourself on a website that is running a sale. A timer shows how much time is left before the sale runs out. Suddenly, you feel time pressure as you compete against the clock.

I recently bought tickets to see Cirque du Soleil with my husband. I added our seat tickets to my cart, but I was still trying to decide for sure if that was where we wanted to sit. I then noticed a countdown timer. I didn’t finish my transaction in time and lost our seats.


On the second try, I felt even stronger time pressure from the countdown timer. I knew I had to take action now to make my purchase.


Looking back, I don't know if I would go through the process so fast again. With that countdown timer, I made a very quick decision.


Coupons


Coupons are one of the most familiar time pressures and are among the oldest marketing tools out there. The founder of Coca-Cola was using coupons in the late 19th Century!


In 2020 nearly $189 billion in coupons were offered in the US alone. It’s estimated that about 52 million Americans redeemed mobile coupons that year.


One study looked at coupons and their association with happiness. Half of the participants were given a $10 coupon for online shopping, and the other half were not.

According to the study, oxytocin—which is associated with love and happiness—increases when we receive a coupon. Those oxytocin levels spike more with coupons than when we kiss, cuddle, or even receive a gift! Think of it this way: if you give your customers coupons, you're making them very happy.


There are a few aspects to remember about coupons. The duration impacts the effectiveness of a coupon. This is the period between when the coupon is released and when it expires.


If you expect a large number of consumers to redeem your coupon, a shorter duration is better for higher profits.


If there is a long duration period, the urgency to redeem a coupon will diminish. You also risk customers forgetting about the offer or delaying their decision. On the other hand, the customer sees a short duration period as inconvenient.


One helpful study concluded that a time limit of fewer than two weeks maximizes a coupon’s success.


Personalization is another important aspect of coupons. Knowing customers’ locations and behavior can help you personalize coupons.


Dunkin’ sends digital coupons to entice customers to return. Customers are incentivized to download the Dunkin’ app because they get a discount. The company can use the app to monitor customers' activity, including when they return to the store.


All these time restrictions may not work for you. You may need to test them out to see what's right for your customers and business.


The Psychology of Sales: Takeaways


Time pressure is huge. As you've seen, it impacts how we make decisions and can influence our businesses. It can also help us in sales and marketing when used the right way.

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