Discount Dilemma: Remember, Customers Will Compare Online Prices They Find

Consumer Reports' Consumerist website is having some fun with an FTD customer's complaint that a "customer appreciation" special deal was actually more expensive than the price a new customer could find on the floral association's site.

It seems the customer had bought an FTD bouquet for a friend, then later searched the FTD site for Mother's Day bouquets. "My husband also started looking for FTD arrangements on his computer, and found that the prices listed for him were $3 to $5 cheaper than those listed for me," the customer wrote to Consumerist. Clearing all the FTD cookies from my browser made my prices drop precipitously. Clicking on the 'customer appreciation' email link to FTD brought the prices back up."

For customers, Consumerist's wisecrack—"Watch out for the Customer Appreciation price penalty"—seems pretty appropriate. For retailers, though, it raises a serious problem. You want to reward returning customers. You also want to entice new customers with low prices. The easiest way to tell who's returning (and link them with CRM data) is with cookies—but that's an invitation to embarrassment if new and returning customers happen to compare notes.

That sounds like an e-commerce dilemma that should have a technological solution. But it doesn't—and never will.

Why not? For the same reason this dilemma doesn't have a solution when two people sitting next to each other on an airplane discover one paid half as much for his seat—or when, a century ago, longtime butcher-shop customer Mrs. Smith overheard that first-time customer Mrs. Jones was paying less for lamb chops. That's not a technology problem, it's a communication problem—too much inconvenient communication between customers.

Of course, 100 years ago the butcher could mollify Mrs. Smith by giving her a one-time discount too. The Internet isn't that smart—or rather, it's just heavily biased in the direction of too much inconvenient communication.

There simply is no technical fix. Discounts have always been a sore point with some customers (mainly the ones who didn't get the discount). And short of abandoning discounts entirely—limiting your customer base to people who have no friends or relatives—they probably always will be.

For more:

- See this Consumerist story

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