The Differences Between A Discount and a Free Gift Card

Different price reduction and related customer acquisition tactics work for different consumers.

Much of this seems to revolve around loss aversion, most humans inability to quickly process some basic maths and a general distrust of the value of something discounted.

Take the example of one enterprising marketer who realised that he could off a free $100 Gift Card to anyone who might buy.

Sounds like a great deal right?

You are probably thinking it’s too good to be true.

But the marketer explained that this was about one third the cost of his entry level package so it was in essence offering a 30% discount to acquire a new customer.

As he explained most business would jump at the opportunity to acquire new customers for a 30% cost.

But also that a percentage doesn’t have the same impact as a relatively high dollar amount.

People might throw away a 30% off voucher or coupon but they are unlikely to throw away gift cards because they feel like real currency even though they work the same way.

The new customer acquisition psychology also goes further than this around how offering % discounts can devalue the brand you are building as it can be seem to cheapen the main product offering.

Whereas offering gift cards will protect the product offering and its brand because you don’t devalue the product with a gift card and potentially grow the business brand when you ‘give out free money’

Equally whilst certain people love a discount and feeling like they are getting a deal you need to be sure you are wanting to attract that sort of customer for the long term as you’ll have to keep offering those discounts to keep them happy.

With your business you don’t have to offer $100 gift cards but think of offerings you can make to get new customers that are alternatives to percentage discounts or sales if you want to protect the value of your brand.

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