Q: Does LERN have any research on what percent discount is most effective in getting people to act? Example: 5%, 10%, 15%, 20%, 25%.
A: The key to setting discounts is to make sure that the value of the discount is sufficient to increase response and not too high that it reduces your income to an unacceptable level. To set your discounts, you need to first do a bit of analysis of your program's performance. You should calculate your operating margin on the course or event you want to discount. If the operating margin (the amount you have left over after subtracting promotion and production costs) is 45% or more, you are in great shape. That means your discount will not necessarily reduce your income to a level that is not in your best interest.
Here is an example. Let's say you charge $100 for a course. Your promotion costs are 10% or $10. Your production costs are 40% or $40. This means your operating margin is 50% or that you generate a $50 "profit" for every course you sell. Now. If you discount your course 20%, you will be bringing in not $100, but $80. Your profit will drop from $50 to $30/ course. This is generally still an acceptable level of margin, and if your promotion brings in more dollars, your income will be fine.
If you limit the number of discounts or the period of time that the discount is valid, this can also be helpful in encouraging more and earlier purchases and registrations. The next issue is the level of discount. this depends somewhat upon the cost of the course or event. The discount needs to be big enough to make a difference in the perceived cost of the course. If it is too low, the savings will not be seen as sufficient. For example, if you discount your $100 course by 10%, the savings to the participant will be only $10. This may not be a sufficient incentive. However, if your event is priced at $3500 a 10% discount would mean a savings of $350, which is a much more attractive amount and thus a stronger incentive.
LERN has no information on the "ideal" discount levels, but typically 10% is what we see as a minimum and 20% as a maximum.