Carefree shoppers more likely to receive discounts, according to new research

Carefree shoppers are more likely to be targeted with "spend more, save more" discount codes — like "3 for 2" or "save £10 when you spend £50" — than cautious shoppers, new research from Durham University Business School shows.

The reason, the authors state, is that carefree shoppers are more likely to spend far beyond the stated threshold once they redeem a deal, whilst cautious shoppers stop close to the minimum.

As retailers personalise offers based on past spending, carefree shoppers will receive more deals and discounts over time, encouraging further spending.

These findings come from research by Arezou Ghiassaleh, Professor in Marketing at Durham University Business School, alongside co-authors Amanda Jiang (Newcastle University Business School) and Ji Yan (J.E. Cairnes School of Business and Economics, University of Galway).

The researchers wanted to understand how minimum purchase requirement deals – like those offering discounts to customers who spend a certain amount – affect purchase decisions.

By analysing a large dataset from a leading UK supermarket chain, they recorded how these deals impacted sales across a number of fast-moving consumer goods.

The researchers found that spending habits typically put consumers into one of two categories; cautious shoppers, who spend very little over the threshold to get their discount, and carefree shoppers, who spend significantly over it.

Interestingly, the more carefree shoppers use discount codes – and spend dramatically over the threshold – the more likely they are to receive personalised discount codes in future.

Cautious shoppers are less likely to receive such incentives to spend.

“Online shopping companies spend a significant amount on creating discount codes and deals in order to increase profit from customers who can be convinced to spend more. However, our research shows that not every customer has the same mindset when it comes to these deals,” says Professor Ghiassaleh. “These findings show that increased personalisation, even in making deals, can help companies to select the right customers to benefit from discounts.”

However, the results were not consistent across all types of retail. The researchers found that the type of product on offer can dramatically impact whether consumers overspend when such deals are offered.

Discount codes were revealed to be ineffective for what they call ‘preventive’ products – examples include sun cream, insurance, helmets, and health supplements – where the spend more, save more tactic is virtually ineffective.

Whereas ‘promotional’ products – such as cosmetics, soft drinks, jewellery, and experiential products – were more likely to see consumers overspend when a discount code is available.

“Our research also shows that for some companies, these types of discount codes and deals are completely redundant and have no positive impact on profits at all,” says Professor Jiang. “It’s a wise decision for preventive product providers to not even bother with discount deals, as they don’t boost sales at all with any consumers.”

The researchers say their findings offer important guidance for retailers in deciding how best to appeal to customers and generate more sales. The customer segmentation of carefree versus cautious could also help companies to further personalise their discount codes, ensuring they reach the right customers.

This research was published in the Journal of Business Research.

If you would be interested in receiving the full research paper, or speaking with the researchers, please contact Rachel Varnham at BlueSky Education – rvarnham@bluesky-pr.com,+441582341333.