Open your email inbox or scroll through social media and you’ll see the same thing repeated over and over again.
“25% off today”
“Flash sale ends tonight”
“Only a few left in stock”
Promotions are everywhere.
From Black Friday through Boxing Day and into the New Year sales cycle, it can sometimes feel like brands are constantly shouting for attention.
The reason is simple. Promotions work. They tap into powerful psychological triggers that push customers towards quick decisions.
But there’s a challenge here for brands. Used too often, promotions can start to undermine the very value a brand is trying to build.
Why promotions work so well
Promotions are effective because they tap into some of our deep behavioural biases.
1. Scarcity
When something appears limited or difficult to obtain, our perception of its value increases. A classic study from Worchel, Lee and Adewole in 1975 demonstrated this beautifully. The cookie jar study asked participants to rate the value and attractiveness of cookies that were either in abundant supply or scarce supply. Participants rated identical cookies as tasting better when they believed the supply was scarce.
2. FOMO (Fear of missing out)
Closely related to scarcity is the idea of FOMO.
Limited-time offers accelerate decision-making. Instead of carefully weighing options, customers feel pressure to act quickly to avoid missing out on a perceived deal. So the use of FOMO can be used to accelerate a decision.
3. Anchoring
Anchoring works by establishing a reference point.
If a product is presented as “Was £100, now £60”, our brain focuses on the comparison rather than the absolute price. The original number becomes the anchor that shapes our perception of value. After all, price and value are relative.
These techniques are incredibly powerful, and it’s easy to see why brands rely on them. But over time they can create unintended consequences.
The hidden cost of constant promotions
When promotions become too frequent, something subtle begins to happen.
Customers learn to wait. They are trained to hang fire. If they believe a discount will appear eventually, there’s little incentive to buy at full price.
Also, over time the reference point shifts. The discounted price becomes the expected price.
And once that happens, it becomes extremely difficult for a brand to rebuild its perceived value. Think of the comparison between the vicious and the virtuous cycles.
Margins shrink. Investment in product quality becomes harder. The brand slowly drifts from being perceived as premium towards being seen as a discount option.
Building value without cutting the price
Promotions themselves aren’t the problem. The real issue is how they’re used. Brands that maintain strong value tend to think more carefully about the role promotions play in their strategy.
Here are a few approaches that can help.
1. Frame the value
Customers don’t always understand what sits behind a product. Storytelling can play a powerful role in explaining why something is worth its price.
Take Jack Daniel’s as an example. The brand talks about generations of craftsmanship, the process behind the whiskey, and the heritage of the distillery. That narrative helps justify the premium.
2. Add value instead of reducing price
Rather than reducing the price, go the other way. Brands can create additional value.
Bundled products, exclusive access, limited editions or loyalty rewards can all encourage action without lowering the perceived worth of the product itself.
3. Personalise offers
Promotions can, and should, be targeted.
Instead of blanket discounts, personalised offers allow brands to reward specific customer behaviours or loyalty without resetting the perceived value for everyone.
4. Educate the customer
Sometimes the most effective approach is simply explaining what makes a product worth its price. That’s the Effort Heuristic in action. This is the tendency to associate the value of a product with the amount of effort that went into making it. When we believe an item is complex to produce or took significant time to create, we’re more likely to perceive it as valuable.
🧠 A thought for you
Promotions can be incredibly powerful tools when used with intention. But before launching the next campaign, it’s worth asking a simple question:
Is this promotion reinforcing our value, or quietly eroding it?
Short-term spikes in sales can feel great, and keep the CFO happy.
But the strongest brands are built by consistently reinforcing why their products and experiences are worth paying for in the first place. Because in the long run, loyalty isn’t built through discounts.
In this episode of The Customer Experience Lab , we look at rethinking the psychology of promotions.
🎧 Listen on Apple Podcasts
🎧 Listen on Spotify
🎧 Listen on Amazon Music
