How to run “Intelligent” discounts at any company

The following pointers are based on my experience working at Uber (India and Bangladesh) and GoJek (Indonesia).

In one of my previous posts, I briefly highlighted the criticality of the discounting/promotion strategy to the success of a digital wallet company (or any internet/consumer product goods company in general). I also proposed a simple framework — SSS (Scalable, Sustainable, Scientific) to arrive at an effective promo strategy.

In the context of this article, I might use the words discount, promotion, and reward interchangeably (same concept termed differently by different companies). They all point towards the definition below.

As per the Oxford dictionary:

Promotion is the publicizing of a product, organization, or venture so as to increase sales or public awareness.

To be on the same page, check the following representation of the common promotional strategies that we see around us:

Conceptually, promotions aim to cultivate habits and increase the switching costs to an extent that we no longer need to incentivize an activity. Keep this fundamental principle in mind while designing a promo strategy.

Since discounts aka promotions come in all different shapes and sizes, companies have varying ownership structures to manage rewards and promotions. Depending on the product/service, promotions might fall under either of the teams below:

• Marketing
• Pricing
• Growth

Also, let me take a moment to emphasize the significance of this topic:

• Companies spend anywhere between 6% - 24% of their gross revenue on (some form of) promotions
• On average, 61% of the new users for a product can be directly attributed to promotions
• ~52% companies acknowledge that they either don’t have a promotions strategy or struggle with running promotions effectively