Take the 2-minute tour ×
User Experience Stack Exchange is a question and answer site for user experience researchers and experts. It's 100% free, no registration required.

In the past we've typically used promotional codes on our site in either banners or other advertisement placed images. And I was wondering if anyone has any information on performance of banners with using Dollar amounts off or Percentage amounts.

For example...

Save $10 off orders of $100 or more

As opposed to

Save 10% off your next order*

A disclaimer at the bottom of the page would then state: *10% discount applies to first $100 in your order

I see a few companies in our competition using the 10% with a disclaimer at the bottom and my personal feeling is that it's misleading, but I do believe that with the use of 10% more people are going to click on it and order.

share|improve this question
4  
This sounds like the perfect thing to A/B test. Then you can come back here and tell us what you learned! –  Rahul Feb 9 '12 at 15:29
    
It will ultimately depend on your database... A/B test this and see which option has a bigger conversion rate! –  slustgarten Feb 9 '12 at 15:32
2  
Not sure if this question is relevant here... –  Tony Bolero Feb 9 '12 at 15:38
    
@Joe You need to clarify if you are concerned with clicks or purchases. While more people may click on a banner; it's irrelevant if the purchase is never made. –  Aaron McIver Feb 9 '12 at 15:53
2  
Free shipping all the way! But is this really a UX question? –  Kato Feb 9 '12 at 23:50

6 Answers 6

up vote 3 down vote accepted

Behavioral economics looks at this type of question, and would be a good area for you to investigate. http://en.wikipedia.org/wiki/Hyperbolic_discounting talks about how people perceive discounts. My immediate thought for your specific issue is that people will minimise cognitive load - a % discount requires them to think a bit more than a $ discount, so the greater response is likely to be from a $ discount.

share|improve this answer

There's a lot of marketing chatter on this topic but there is one main thing to consider; which sounds like the more attractive deal in your * specific case*?

There's an interesting Donut Hole graph from Dealicacy Showing how both can offer better value to the consumer:
enter image description here

The relative (%) benefit remains constant, while the absolute benefit ($ off) has a complex curve. Logically with the relative benefit it's easy to tell how much of a benefit you're getting; it's always the same, it just scales to what you buy. But with the absolute benefit you always know what you're getting. Never underestimate the power of less thinking.

A marketing study conducted by Evo A/B tested relative vs absolute benefits and found the following results:

  • $50-Off Coupon generated 170% more revenue than the 15%-Off Coupon.
  • $50-Off Coupon had 72% higher conversion rate.

I think the issue here is twofold; as mentioned, it's easy to understand how much I'm saving if you say I save $50: I save $50. Additionally, 15% really doesn't sound like much.

Consider the following bargains, both yielding equal savings on a certain product: 75% off or $5 off. Clearly the value of the relative benefit seems higher. Roughly speaking, a benefit of 40% or more starts to sound pretty significant. A dollar amount of $50 or more sounds significant.

If one value clearly appears to be a better value, it's probably best to offer that option as long as it's not misleading (like the terrible, lying asterisk in your question). Otherwise it would probably be best to A/B test your specific case if there's no clear winner.

share|improve this answer
    
The conversion rate is key. Misleading a consumer (can we say asterisk?) initially to gain interest will most certainly hinder the conversion rate. –  Aaron McIver Feb 9 '12 at 16:55
    
@AaronMcIver or if the user doesn't realize the disclaimer/price change from what they expect and you hit them with an unexpectedly high bill you'll just lose the customer in the future. –  Ben Brocka Feb 9 '12 at 17:05
    
If I had the option of 1$ or 10% , the second one would be better as it is a higher number? –  Marek Andreánsky Mar 5 at 21:56

I work in the financial industry and during tax season, this always comes up. Which do we offer:

  • 20% off, or

  • $25 off tax prep?

Typically our software will calculate the most advantagous and offer that price to the client. With verbal confirmation that they are receiving the best "deal", clients always seem satisfied.

Of course tax preparation can get pricey, so the % off generally wins. But this assurs the client of the most savings either way, without having to calculate each discount on their own for the better deal.

share|improve this answer

The $ is definately more relevant in this case. This will eliminate confusion and avoid misleading buyers. Last thing you want to do is trick buyers into buying something at a price they were not prepared to pay to begin with.

Generally, the reason why retailers use % as oppose to $ in most discounting situations is because it can be applied to a range of products as oppose to just 1 item regardless of the original price.

% is used in cases where buyers don't know exactly what they will be buying to quantify the dollar value saving. Suppose you have "$10 off all items in store", the buyers decision to buy would then totally depend on the item's original price. Way too difficult... unless as in your example above where you specify the exact value.

share|improve this answer
    
Do you have any references for all of this? What are you basing it on? –  Rahul Feb 9 '12 at 22:37
    
Just experience mate. Been directly involved and consulting with retailers for over 12 years, both online and shopfronts. Common sense plays a big role in this type of situations. You couldn't effectively apply a $ value discount on all store items unless it was a discount on a specific value as with the above example. There are just too many variables. Retailers also calculate markups based on percentages. –  Ely Solano Feb 9 '12 at 23:08

I think that the best is to make the value look as better bigger deal.

  • on a product of 10$ the 10% looks better than the 1$ off

  • on a product of 200$ the 10% is less than 20$ off.

  • on a product of 100$ the 10$ is better because contains all ready the calculations, less thinking.

  • on a product of 8$ that you won to cut 1$ you do not actually write 8.899% discount

so I think that the number that looks bigger and better deal wins here and this is not standard.

share|improve this answer
1  
"on a product of 100$ the 10% looks less than the 100$ off" ...that's because it is less, 100$ off makes it free! –  CaffGeek Feb 9 '12 at 20:25
    
@Chad sorry error :) –  Aristos Feb 9 '12 at 20:26

Having already posted these links on a slightly related post, now the second link is what you are looking for. With some further reference in the article. And like always: it depends, but they tell how ;)

share|improve this answer

Your Answer

 
discard

By posting your answer, you agree to the privacy policy and terms of service.

Not the answer you're looking for? Browse other questions tagged or ask your own question.