Let Customers Win Their Discount

Should you gamify discounts?

Jordan's Furniture is a retailer near Boston, and occasionally they give away furniture for free depending on certain outcomes:

Buy anything — ANYTHING — at Jordan’s Furniture starting today and it could all be FREE if the Red Sox pitch a perfect game between July 19 and September 29 (Reidy, 2013)

Other gamified outcomes:

• Sports team remains undefeated
• Certain movie wins an Oscar
• Every 50th purchase

Do these promotions work? Indeed they do.

For example, a grocery store in the US tested two promotions:

• 1% off
• 1% chance it’s free

Both discounts were equal, yet customers spent 54% more with the gamified discount (Lee et al., 2019).

And it's been replicated. Many times.

Researchers bought a vending machine that sold $0.75 candies (e.g., Snickers, Twix, Starburst).

They ran two discounts:

• Pay $0.50 instead of $0.75
• Pay $0.75, but a 33% chance to get it free

The uncertain discount boosted sales by 50% (Mazar et al., 2017).

Customers also spent more on digital courses:

• Pay $15 for any course
• Choose one of three doors (all showed $15 off)

And fast food:

• Pay 1.50€ instead of 2€
• 50% chance to pay 1€ instead of 2€

(see Alavi et al., 2015; Hock et al., 2020).

In fact, you can even lower the discount.

Participants received a scratch ticket that revealed a discount for 0%, 10%, 20%, or 30% off.

The top performers? Any discount that was won.

A lucky 10% discount sold more merchandise than a guaranteed 20% discount (Hock et al., 2020).

Stronger For

• Price-Sensitive Customers. But gamified discounts can still work for expensive products (e.g., hotel rooms; Choi & Kim, 2007; Mazar et al., 2017).

Related Applications

• Randomize Which Products to Discount. Participants were 67% more likely to click a link to buy caramel chocolate on Amazon when this flavor was chosen to be discounted by a random number generator (Fulmer & Reich, 2024).

• Alavi, S., Bornemann, T., & Wieseke, J. (2015). Gambled price discounts: a remedy to the negative side effects of regular price discounts. Journal of Marketing, 79(2), 62-78.
• Choi, S., & Kim, M. (2007). The effectiveness of “scratch and save” promotions: The moderating roles of price consciousness and expected savings. Journal of Product & Brand Management, 16(7), 469-480.
• Fulmer, A. G., & Reich, T. (2024) Promoting a product without increasing the promotion budget: How chance in promotions can heighten consumer demand. Journal of Consumer Psychology.
• Hock, S. J., Bagchi, R., & Anderson, T. M. (2020). Promotional games increase consumer conversion rates and spending. Journal of Consumer Research, 47(1), 79-99.
• Lee, C. Y., Morewedge, C. K., Hochman, G., & Ariely, D. (2019). Small probabilistic discounts stimulate spending: Pain of paying in price promotions. Journal of the Association for Consumer Research, 4(2), 160-171.
• Mazar, N., Shampanier, K., & Ariely, D. (2017). When retailing and Las Vegas meet: Probabilistic free price promotions. Management Science, 63(1), 250-266.
• Reidy, C. (2013, April 3). Pedro Martinez pitches perfect game promotion for Jordan’s Furniture. Boston.com.