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Delay discounting is a marketing strategy that relies on granting customers a fixed discount redeemable on their next purchase.
An example of a delayed discount can look like this: “Spend $200 at our store, get $30 off for your next purchase.” Frequently, validation rules can be added to the promotion – in order to redeem the given $30 coupon, you have to spend, for instance, at least $60.
A key to successful delay discounting is making coupons or vouchers offered as reward time-sensitive. For example, they will only be valid for a week or a month. This will incentivize customers to make a next purchase with your brand and consider the deals exclusive as those may be gone soon.
Why is delay discounting effective?
Encouraging FOMO – as mentioned above, your customers will definitely be incentivized to shop more while introduced to a time sensitive deal as the fear of missing out (FOMO) on the best offer will be crippling upon them.
Increasing customer engagement – offering discounts on future purchases has a high chance of turning one-time customers into your future regulars. Why? Well, they would not want to shop anywhere else after being offered a discount on more of your good-quality products. In the end, everybody loves being rewarded even for small things that they do.
Building loyalty– as your customers will shop at your store more frequently, you will have a chance to tailor your special discount offers to their needs and educate them about your brand and its values. By doing so you will build up a more consistent customer experience and brand loyalty.
Reducing customer acquisition costs – first time customers will be incentivized to shop more at your store as only their following purchase will be rewarded. As the initial customer experience will already be rewarded and incentives granted, you will have more time (and money!) to focus on customer retention and working on your loyalty campaigns in order to upkeep the best customer experience.
Delay discounting in practice
Many brands are already using this promotional practice in order to incentivize their customers and build consistent customer engagement.
Target, an American retail corporation, offered its customers a special discount which was granted after scanning Wallet in the Target app while making a payment. As a reward, the customers were offered $20 off towards their next Target purchase with a time limit imposed.
Uniqlo, a Japanese casual wear designer and retailer, gave customers the opportunity to gain $10 in cashback with the next purchase of at least $50 at Uniqlo store as a reward for making an initial purchase with them. The offer was time-limited and, additionally, only the first 80,000 customers were able to get the bonus.
Domino, a multinational pizza chain originating in Michigan, USA, granted its customers $10 off the next Domino’s order. The discount was granted after completing an order via Menulog containing any pizza from a New Yorker Range. This again was a time limited offer lasting only for two weeks.