Make your discounts a bit harder to get

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📝 Context

Topics: Promotions
For: B2C. Can be tested for B2B 
Research date: April 2025
Universities: Nanyang Technological University, Singapore Management University, University of Washington, Virginia Tech University

How can you maximize the number of sales when you run a promotion?

We know that reducing friction in online user experiences is generally the way to go. For example, this is one of the principles behind one-click buy buttons, which increase spending by up to 28%.

Intuitively, that means you should make it as easy as possible to use or redeem discounts. For instance, making them already applied automatically at checkout.

Wrong. Science says that some friction is good for your sales. Just make sure it’s not too much.

P.S.: Learn more about how to make your promotions as effective as possible with our Science-based Playbook of Pricing & Promotions Optimization.

📈 Recommendation

When running an online promotion, require customers to make a very small effort to redeem it (e.g. manually type a discount code, solve a simple CAPTCHA, complete a short quiz).

People will be more likely to use the discount and buy, increasing overall sales.

🎓 Findings

• Sales during discount promotions are higher when people need to perform a small, trivial task (e.g. entering a promo code) to redeem the discount, as they’re more likely to redeem the discount or coupon.

• As part of a series of 8 experiments with over 100,000 people in the US, UK, and Singapore, researchers found that:

  • When a US-based coffeehouse required people to enter a promo code (SB15OFF) to obtain a discount, conversion rates were 59.3% higher as compared to automatically giving the discount

  • People were 62.8% more likely to say they would buy an $80 scooter with a 35% discount when asked to enter a “GET35OFF” promo code vs getting the discount automatically

  • In a hypothetical scenario, 154% more people said they would buy a pair of shoes with a 10% discount when required to complete a CAPTCHA compared to when given a discount automatically

• The effect:

  • Weakens when the task involves significant effort (e.g. solving 20 CAPTCHAs)

  • Disappears when the discount is very high (e.g. 70% off) because the promotion is already so attractive that completing a trivial task doesn’t impact redemption

🧠 Why it works

• When we make a small effort to get a discount, we feel like we’ve earned the discount.

• So we are more likely to use it, and buy, than if it’s handed to us with no effort.

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✋ Limitations

• The research looked at immediate redemptions of a promotion offered. It didn’t look at whether this had any impact on longer-term customer loyalty, satisfaction with the item bought, or product returns.

• They focused on online buying of everyday consumer products. It’s unclear if the effect holds for expensive items where people research extensively beforehand (e.g. houses, cars) as trivial tasks might not sway people’s decisions as much. Similarly, for small or low-cost items, (e.g. pack of gum) the effort may not feel worthwhile.

👀 Real-life example

Bedding and towels retailer The Company Store’s offers a limited time 30% off discount on their site available to all shoppers.

❌ Issue: Discounts are offered for different products, applied automatically without customers doing anything. This likely results in lower sales.

✅ Solution: The Company Store should:

• Use a coupon code (e.g., Comfort30OFF) via marketing emails and product pages ("Enter the code Comfort30OFF at Checkout for a 30% discount"). Requiring customers to input this code for a discount makes them feel they've earned it, boosting sales.

• Use italic fonts when advertising their sale, to increase a sense of urgency that the sale will end soon.

• Tie their sale to special events in the Fall, like a back to school sale, or Labor Day, instead of a generic Fall sale. Promotions tied to events can lead to up to 48% higher sales. They could even make their own special event (e.g. Fall into Comfort Week) to make people up to 25% more likely to buy.

• The company could also run promotions encouraging people to share an activity with their friends to earn a discount coupon. For example, to receive a discount for beach towels, people could be asked to share a picture at the beach with their friends. (Pro tip: Find more insights like these in our playbook on Pricing & Promotions Optimization).

🔍 Study type

Lab and online experiments and field experiments with a U.S. coffee chain (An email campaign with 6,623 people and an ad campaign on FB/IG with 92,826 people).

📖 Research

The Token-Effort Effect: Trivial Redemption Effort Increases Price Promotion Effectiveness. Journal of Marketing Research (April 2025)

🏫 Researchers

• Kuangjie Zhang. Nanyang Technological University

• Thomas Allard. Singapore Management University

• Nidhi Agrawal. University of Washington

• Rajesh Bagchi. Virginia Tech University

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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