Random Discounts: Why Uncertainty Is the Cheapest Retention Tool There Is

For the past few months I've been living in a European capital, and I keep running into marketing and consumer-management practices that are different from what we know in Israel.

One of the most interesting is the way the two big supermarkets near my home bring customers back, or rather, get me to visit almost every day.

Earlier in my career I ran research projects on improving effectiveness at the point of purchase for some of the largest food groups in the Israeli market. Every time, the task was to crack the moment of product choice and grow the basket. And still, I have never seen anything quite like what I'm seeing here.

Random discounts

Completely ordinary products, suddenly 70 or 80 percent off.

And before the cynics jump in: no, these aren't products past their expiry date, and it isn't stock they're trying to clear. I couldn't find any guiding logic. I just walk in, and something I buy every week suddenly costs a third of the price. The markdown lasts a few hours, or a single day.

No alert, no announcement. These aren't the deals in the weekly flyer. They simply appear on the shelf.

The result? I find myself in the supermarket three or four times a week, as part of my daily walk. I fill the house with cheese, meat, fruit and vegetables, and above all coffee, and I'd rather not tell anyone living in Israel what my weekly grocery bill comes to.

Predictable sales versus surprise sales

Back home, sales are predictable. Everyone knows discounts arrive before the holidays, so they hold off on buying. The predictable sale teaches the customer not to buy before the sale.

Here, the unpredictable sale teaches the customer to come back.

This is operant conditioning at its finest. The customer learns that any visit might end with the dopamine hit of a big discount, and since there's no way to know when, they keep coming back. Exactly like a slot machine.

And what about profitability

For anyone worried about the supermarket's margins: in my experience, almost no customer leaves with only the discounted item. They come in for the cheap coffee and leave with several more products at full price. The discount brings them into the store, and the basket generates the profit.

So perhaps the question isn't how big a discount to give, but when.

Because uncertainty is the cheapest retention tool there is.