As I write this, I’m in Dubai in the middle of a tenuous cease-fire involving Iran, US and Israel. I’m not going to get into the politics, just the impact of the war.

For businesses here, particularly in hospitality, it was immediate and brutal. Tourism paused almost overnight in an economy that depends on it. And the reflex is exactly what you’d expect: discounting. Hotels knocking down prices, in some cases making them fully redeemable against food and beverage; restaurants and other services impacted by the slowdown layering on offers, anything to generate movement.

It’s desperate. And it usually doesn’t work. Or at least, it doesn’t sustain itself. The places where it appears to work probably would have filled seats anyway because they have a loyal following. Others slash prices and still can’t get people through the door.

When demand suddenly softens, there are no good solutions. Keeping people employed and generating some volume—even at the expense of margin—is the natural reaction. Live to fight another day. Fair enough.

But if you believe you’ll survive the crisis, you also have to think about how you recover. And that becomes a lot harder when you’ve blown up your margins and muddied your brand with promotions that feel off-brand and reactive.

I’ve spent a good part of my career trying to stop companies from doing the one thing they instinctively do the moment things get shaky: slash prices. As if panic were a pricing strategy. I’ve sat in too many boardrooms watching otherwise rational executives turn into clearance rack managers overnight, trading brand equity for short-term cash, attracting bargain hunters who vanish the moment prices normalize, and creating those lovely peaks and valleys in sales that make forecasting feel like astrology.

My argument has always been simple: discounting is not evil. But undisciplined discounting is. And in a crisis, the difference between the two is the difference between protecting demand… and training your customers to wait you out.

I saw this play out in real time a few weeks ago. A restaurant I’d been to a few times offered 50% off brunch. That was enough to pull a group of us in one Saturday. It was excellent—lively, generous, great food, free-flowing drinks. We all said the same thing: it was worth every dirham at full price. At 50% off, it felt like a real bargain. A rare feeling in Dubai.  We said we’d come back.

A few weeks later, they ran another offer. This time, 25% off. And something strange happened. It didn’t feel like a deal. It felt expensive.

That’s the anchoring effect. The first price you experience becomes the reference point. Everything that follows is judged against it. By showing 50%, they didn’t just drive traffic. They reset the perceived value of the experience. At 25%, they weren’t offering a discount. They were asking us to accept a loss. That’s the problem with discounting. You’re not just changing price. You’re rewriting value. And in a crisis, that’s where most brands get it wrong.

Crisis doesn’t justify discounting. It demands precision pricing strategy. The smartest brands don’t ask, “How much should we cut?” They ask, “What behavior are we trying to trigger and what’s the least destructive way to do it?”

The Margin Grenade Problem: When Discounts Destroy More Than They Save

Most executives think discounting is a volume lever. In reality, it’s a margin trade-off that behaves exponentially, not linearly. Small cuts in price create disproportionately large gaps in profitability, which then require unrealistic increases in volume to recover. In a crisis, when demand is already fragile, that math becomes even more punishing—and yet it’s almost always ignored in the rush to “do something.”Deep discounts don’t just reduce revenue. They disproportionately crush profit. A 20% price cut can require a 50%+ increase in volume to recover the same profit depending on margins. That’s not a promotion. That’s a gamble.
According to McKinsey & Company, poorly managed discounting is one of the largest drivers of profit leakage across retail and consumer sectors. And yet, it’s still the first lever pulled in a crisis because it’s easy, visible and immediate. But easy doesn’t mean smart.
US fashion retailer J. Crew is the cautionary tale. Years of relentless promotions didn’t just move inventory. They trained customers to expect discounts. Full price became theoretical. Margins eroded. Brand perception followed.
Meanwhile, in the Middle East, many luxury hotels in Dubai and Abu Dhabi learned the same lesson post-COVID. Properties that held rates, even at lower occupancy, recovered faster than those that flooded the market with deep discounts and had to claw their way back up.
The math is simple. The consequences are not. The moment discounting becomes expected, it stops being a tactic and becomes your business model.
Too Big = Desperation. Too Small = Insult
Discount size is not just a financial decision. It’s a signal. Customers don’t see percentages. They interpret meaning. Too large, and you look distressed. Too small, and you look disingenuous. In both cases, you lose control of the narrative and hand it over to the market. A 50% discount signals distress. A 5% discount signals irrelevance. Both damage perception.
Research from Nielsen shows that over-discounting reduces perceived quality, particularly in premium and luxury categories. Price, whether we like it or not, is a proxy for value.
That’s why Burberry at one time chose to destroy unsold inventory rather than dump it into the discount market. Extreme? Yes. But it protected the one thing that matters in luxury: perception.
Contrast that with Target, which uses structured, progressive markdowns tied to inventory cycles. Not emotional. Not reactive. Systematic.
Even in hospitality, you see the difference. Jumeirah Group has historically leaned more on value-added packages—dining credits, experiences—rather than aggressive rate cuts. The signal is clear: value is being enhanced, not eroded.
Discounts communicate. If you don’t control the message, the market will.

Always Have a Reason or Don’t Discount at All

Pricing without context creates confusion. Confusion erodes trust. In uncertain times, customers are already questioning value, stability and intent. Random discounts only amplify that skepticism. A price cut without a clear rationale doesn’t feel generous. It feels suspicious. Discounts without a story feel arbitrary. Arbitrary pricing destroys trust.

PwC has found that price transparency and fairness are critical drivers of consumer trust, especially during uncertain times. If a customer can’t understand why they’re getting a deal, they start questioning the original price.

Airbnb gets this right with long-stay discounts. The logic is obvious: commit longer, pay less per night. That’s not desperation. That’s behavioral economics.

Amazon does the same with Prime Day. It’s not random discounting. It’s an event. A moment. A reason to act now.

In the region, Emirates has historically used tactical fare promotions tied to seasonality or route launches, not blanket price cuts. Again, a reason.

If you can’t explain the discount in one clean sentence, don’t offer it.

The Smarter Move: Give More, Don’t Charge Less

There are only two ways to make an offer more attractive: reduce the price or increase the value. One weakens your position. The other strengthens it. The difference isn’t just financial. It’s psychological. Customers don’t evaluate price in isolation. They evaluate what they get for it. This is the hill I will die on.

Price cuts reduce perceived value. Added value increases it. Research from Deloitte shows that bundling and value-add promotions outperform straight discounts in driving both conversion and loyalty. Why? Because they preserve the integrity of the price while enhancing the experience.

Apple understands this instinctively. They rarely discount core products. Instead, they offer gift cards, services or bundles. The price remains sacred.

McDonald’s built an empire on this with Extra Value Meals. Not cheaper burgers, more perceived value. 

Spotify uses extended trials to lower the barrier to entry without touching the subscription price.

Even in luxury hospitality, value-add wins. Atlantis Dubai packages rooms with waterpark access, dining or experiences. The guest feels like they’re getting a deal, even when they’re not paying less.

A customer who gets more feels smarter. A customer who pays less feels lucky. Only one of those builds loyalty.

Behavioral Discounts Beat Blanket Discounts

Not all demand is equal, and not all customers should be treated the same. Blanket discounting assumes a homogeneous market. Real markets aren’t. They’re fragmented, behavioral and highly responsive to context. The smarter move is not to discount broadly, but to intervene precisely.

Not all customers are equal. Your pricing shouldn’t be either. Boston Consulting Group ighlights that targeted promotions can be 2–3x more effective than blanket discounting because they’re tied to specific behaviors.

Uber is a masterclass in this. Discounts appear when demand needs stimulation—off-peak hours, new user acquisition—not as a constant.

Sephora rewards its best customers with tiered benefits, not universal price cuts.

In the Gulf, Noon uses flash sales, app-only deals and targeted offers to drive urgency and behavior without permanently resetting price expectations.

Discounting everyone is lazy. Incentivizing the right behavior is strategy.

Crisis Promotions That Actually Worked (Because They Were Smart)

Pressure reveals strategy. Weak brands react. Strong brands adapt. The difference is rarely resources. It’s discipline. The brands that come out stronger aren’t the ones that avoided the crisis. They’re the ones that avoided the instinct to panic.

Each of these proves a different point, not just that they discounted, but how and why.

Nike leaned into member-exclusive digital promotions during COVID, protecting margins while accelerating direct relationships with customers. LVMH largely avoided discounting entirely, reinforcing the idea that scarcity often beats desperation. Peloton used financing to reduce friction without reducing price—a subtle but powerful distinction. IKEA pushed bundles and room solutions, increasing basket size instead of shrinking price. Starbucks doubled down on loyalty-driven, personalized offers rather than blanket promotions. Accenture found that companies maintaining pricing discipline during downturns recover margins faster. That’s not theory. That’s pattern recognition.

The winners didn’t avoid pressure. They avoided panic.

The Real Risk: You’re Reprogramming Your Customer

This is the silent killer. KPMG reports that promotion-heavy environments increase price sensitivity and reduce long-term brand loyalty. Discounting doesn’t just drive short-term demand. It rewires behavior. Customers start to wait. They compare more. They hesitate at full price because you’ve taught them not to trust it.

Macy’s has lived this reality for years where promotions became so frequent that full price lost its credibility. You see the same pattern across travel platforms. Constant “limited-time deals” that are never really limited create skepticism. Urgency stops working when everything is urgent.

Every discount teaches your customer something. The question is: are you teaching them to buy… or to wait?

A Better Framework for Crisis Pricing

Most pricing frameworks break down in a crisis because they assume stability. What you need instead is a decision model that works under pressure, one that protects long-term value while still allowing for short-term flexibility. That requires discipline, not instinct.

• Define the behavior you want (trial, volume, loyalty, urgency)
• Choose the least destructive lever (value-add, bundle, financing, exclusivity, timing)
• Anchor it to a reason (event, loyalty, duration, inventory, behavior)
• Protect your reference price at all costs
• Make it feel earned, not given away

Limited Time Only

Desperate times don’t call for desperate discounts. They call for disciplined thinking. The brands that come out stronger aren’t the ones that sold the cheapest. They’re the ones that protected their value while everyone else was busy giving theirs away.

Sources: McKinsey & Company: Pricing and promotion effectiveness research; Harvard Business School: Studies on promotions and consumer purchase timing; Nielsen: Pricing perception and discount impact studies; PwC: Consumer trust and pricing transparency research; Deloitte: Value-added promotions and bundling insights; Boston Consulting Group: Targeted promotions vs mass discounting; Accenture: Pricing discipline and post-crisis recovery performance; KPMG: Consumer behavior and price sensitivity trends

I don’t resent subscriptions because I dislike the content or because I don’t appreciate the business model. I resent them because at some point the whole system starts to feel like a scam.

At last count, I subscribe to Apple TV, Amazon Prime, Peacock, Paramount+, Netflix, HBO, Disney+ and Hulu. I subscribe to The New York Times, The Wall Street Journal, Gulf News and a few other publications I’m sure once felt essential. On the work side, I pay for Canva, ChatGPT, Perplexity, Adobe Creative Suite and various SaaS tools that seemed indispensable at the moment I signed up. And countless others…some I have probably forgotten entirely, quietly billing me each month like digital ransom.

Every so often I hit the same breaking point. I want to unsubscribe from everything and start over. Not because the content is bad. But because the cognitive load becomes absurd. I find myself setting calendar reminders to cancel “introductory offers” before the anniversary date hits and the price suddenly jumps three, four or five times higher than what I originally agreed to. The Wall Street Journal is a masterclass in this. The journalism is excellent. The pricing feels like a bait-and-switch. It’s hard not to feel ripped off.

What bothers me most isn’t the money. I can afford these subscriptions. What bugs me is the auto-renew culture, the annual price creep with no additional value and the assumption that customers won’t notice or won’t bother to act. Of course I don’t use all of these services every month. Nobody does. And the worst offenders are still the ones that make cancellation deliberately painful. Easy online signup, but to cancel you need to call, email or argue with a chatbot trained to misunderstand you. That should be criminal. Frankly, auto-renew on credit cards should be opt-in every year, not opt-out. If a brand had to re-earn permission annually, behavior would change overnight.

When Winning Turned into Overreach
Subscriptions won because they removed friction at the point of purchase and turned commitment into convenience. Zuora’s Subscription Economy Index (Zuora is a subscription billing and analytics software company) showed subscription businesses growing 3.4x faster than the S&P 500 over a 12-year period, proof that predictability beats persuasion when it’s done right. Netflix, Spotify and Adobe trained consumers to accept “small monthly” as painless, while enterprise SaaS (software delivered via subscription rather than one-time license) followed with multi-seat, multi-year lock-ins that CFOs tolerated because growth disguised the complexity.
The problem was never the model. It was the pile-on.

Subscription Inflation Is Mental, Not Just Financial
Today, households juggle a staggering number of subscriptions. Deloitte (a global professional services firm) reports that the average US consumer manages between 10 and 15 paid services, many of which go unused in any given month. Klarna data in Europe (Klarna is a global payments and buy-now-pay-later platform) shows consumers regularly forgetting active subscriptions entirely, only discovering them during bank or card reviews.
This isn’t a budgeting problem. It’s mental clutter. When every brand insists it’s essential, the brain quietly rebels.

The Feature Subscriptions Forgot to Build: Mercy
What most subscription businesses failed to build wasn’t better pricing. It was mercy.
Life isn’t linear. People travel. Projects end. Budgets tighten temporarily. Attention shifts. When the only way to stop billing is to cancel entirely, brands turn short-term fatigue into permanent churn. In many cases, I don’t want to leave a service. I want to stop for a month or two without feeling punished or forced to make a dramatic exit.
Pause acknowledges reality. Cancel assumes betrayal.

Streaming’s Quiet Admission of Guilt
Streaming platforms didn’t introduce ad-supported tiers because they suddenly fell back in love with advertising. Netflix’s ad tier reached more than 40 million monthly active users globally within its first year because viewers wanted optionality.
Disney+, Hulu and Amazon Prime Video followed with bundles and mixed tiers, effectively admitting that one-size monthly pricing no longer fits how people actually watch. The smartest shift wasn’t ads. It was flexibility.

SaaS Learns the Cost of Rigidity
Enterprise software is going through a similar reckoning. Usage-based pricing moved from experiment to expectation. Snowflake’s consumption model (Snowflake is a cloud data platform that charges based on usage) reframed value around usage rather than contracts, aligning cost with real demand and enabling scale without resentment.
Atlassian’s move away from perpetual licenses toward flexible cloud tiers (Atlassian is an enterprise collaboration software company) reflected a simple truth: teams change faster than procurement cycles. Gartner (a global technology research and advisory firm) now reports that more than half of SaaS vendors offer hybrid pricing models, not out of generosity, but because rigidity kills expansion.

Consumers Aren’t Anti-Subscription, They’re Pro-Control
Consumers aren’t rejecting subscriptions. They’re rejecting helplessness.
McKinsey research (McKinsey is a global management consulting firm) shows churn drops when customers can pause, downgrade or temporarily suspend services without penalty. Spotify’s family and student plans reduced churn not by lowering prices, but by matching life stages. Peloton’s troubles (Peloton is a connected fitness subscription company) weren’t just about hardware fatigue. They were a warning about stacking premium subscriptions on top of premium commitments without flexibility.
Control has become the new loyalty program.

Bundling Is Back, But It Grew Up
Bundling is returning, but smarter. Apple One (Apple’s multi-service subscription bundle) works not because it’s cheaper, but because it collapses multiple decisions into one mental category.
In Asia, super-apps like Grab and Gojek (ride-hailing and payments platforms that bundle multiple services) bundle transport, payments and subscriptions into ecosystems that feel simpler despite enormous underlying complexity. Simplicity is a perception problem, not a pricing one.

Paid Simplicity Is the New Premium
The next premium isn’t access. It’s clarity.
Brands like Notion (a productivity and workspace software platform) and Canva (a design platform for non-designers) don’t win on price alone. They win because their pricing ladders are legible. Bain research (Bain & Company is a global management consulting firm) shows customers are more willing to pay higher prices when pricing structures are transparent and predictable.
A visible pause option is part of that clarity. It signals confidence, not weakness.

What Unbundling Actually Means
Unbundling doesn’t mean stripping value. It means separating commitment from consumption.
Adobe’s photography plan succeeds because it isolates a real use case instead of forcing an entire creative suite. Automotive brands experimenting with feature subscriptions learned the hard way that nickel-and-diming basics destroys trust faster than high sticker prices ever could.
Unbundling only works when it feels fair and reversible.

Designing the Exit Is Now Strategic
Zuora’s 2025 Subscription Economy Index shows subscription companies still growing 11% faster than the S&P 500. The leaders share one trait. They design exits as carefully as entries.
Pause, downgrade and resume paths are no longer edge cases. They are core product decisions. If cancelling feels respectful, returning feels natural.

What Marketers Should Do Now

If you’re a marketer and all this feels uncomfortable, good. 

First, stop measuring success only by acquisition and retention. Start measuring cognitive load. How many decisions does a customer have to make just to stay with you? How many reminders do they need to set to avoid feeling tricked? If your best customers need spreadsheets or calendar alerts to manage your pricing, that’s not loyalty. That’s fatigue.

Second, design the pause as carefully as the signup. A pause option isn’t a leakage point. It’s a trust signal. Customers who pause instead of cancel are telling you they still see value, just not right now. Treat that as intent, not abandonment. Build messaging, UX and lifecycle communications around pause as a normal state, not a failure.

Third, flatten your pricing story. Not cheaper. Clearer. Most pricing pages look like legal documents written by someone terrified of leaving money on the table. The irony is that opacity kills far more lifetime value than simplicity ever will. If a customer can’t explain your pricing to someone else in one sentence, you’ve already lost.

Fourth, stop punishing honesty. Customers who downgrade or reduce usage are not disloyal. They’re being rational. Brands that reward that honesty with flexibility get invited back. Brands that weaponize friction get ghosted.

Fifth, treat renewals as a moment of respect, not a trap. Customers should receive ample, unmistakable warning before a renewal charge hits, especially when pricing has increased. Silent auto-renewals and surprise price jumps don’t drive retention. They drive resentment.

Finally, treat exit as part of the brand experience. The way someone leaves you will define how they talk about you long after they’re gone. Cancelling should be as easy as joining. Don’t hide the cancel subscription button. Highlight it. It signals confidence in your offering. If cancelling feels respectful, returning feels natural. If cancelling feels like a hostage negotiation, they won’t come back, even when they want to.

This isn’t a pricing problem. It’s a marketing problem. 

The Rule for the Next Subscription Era
The subscription era didn’t die. It matured.

The brands that win next will stop asking how to lock customers in and start asking how to stay useful without demanding constant attention. Consumers aren’t cancelling brands. They’re cancelling the noise around them.

Sources: Zuora Subscription Economy Index (2024, 2025), McKinsey Global Consumer Sentiment Reports, Deloitte Digital Media Trends, Gartner SaaS Pricing Forecasts, Bain & Company Pricing and Loyalty Studies, Netflix Investor Updates, Apple Services Financial Disclosures, Snowflake Investor Materials, Klarna Consumer Spending Reports, Statista Global Subscription Data

I witnessed great loyalty systems as they were being were built. I even helped decipher how loyalty actually functioned. I worked with Marriott when they were creating Marriott Rewards, what would become one of the most influential points systems in hospitality and, arguably, the program that permanently rewired how the industry thinks about repeat business. In fact, my agency has built advertising campaigns and reward and loyalty programs for countless brands like Gillette, Goodyear and 3M across categories where repeat purchase is everything. “Build loyalty” has been our mantra. A north star. And yes, we tel ourselves it is about emotional affinity and brand love. But from the very beginning, we knew the quieter truth: loyalty doesn’t often happen by accident. It is usually engineered. Carefully. Systematically. Through marketing mechanics.

Marriott Bonvoy numbers tell you just how powerful those mechanics can be. Marriott Rewards became Marriott Bonvoy in 2019 to unify and reset its loyalty programs after the Starwood Hotels acquisition and is now approaching 260 million members. That kind of scale doesn’t come from warm feelings alone. It comes from structure.

The Loyalty Story We Like to Tell Ourselves

Brands love the romance of loyalty. The idea that customers stay because they feel something. Because they identify with the brand. Because they choose it even when alternatives exist. That story is comforting. It flatters marketers and reassures CEOs that they’ve built something meaningful. And sometimes its even true. But it also lets us avoid harder questions about what is really driving repeat behavior.

The reality is more complicated. Consumers today belong to a staggering number of loyalty programs at the same time. They swipe, scan and log in constantly. Enrollment has exploded. Engagement has not. When customers are “loyal” to dozens of brands simultaneously, what they are really loyal to is convenience and perceived value in the moment. Loyalty, in many cases, is just enrollment with a smiley face.

Marketing Mechanics: The Real Engine Behind “Loyal” Behavior

Points, tiers, status levels, bundles, subscriptions, contracts, defaults, stored preferences, learning curves. These are not emotional bonds. They are marketing mechanics. They work brilliantly. They reduce switching. They reward inertia. They make leaving feel irrational or expensive. The problem isn’t that these mechanics exist. The problem is that many brands mistake them for genuine loyalty and overestimate how durable that relationship really is.

This is where the data undercuts the mythology. Global research shows most consumers actively switch brands even while enrolled in loyalty programs. Mechanics keep people in the system, not necessarily in love with the brand. When those mechanics are paired with daily habit and real convenience, as seen with Starbucks Rewards or Middle Eastern subscription bundles like Careem Plus, they can be extraordinarily effective. But effectiveness is not the same thing as emotional attachment and confusing the two is where risk creeps in.

Trapped vs Loyal

A trapped customer behaves like a loyal one until the second something changes. A better UX. A more attractive value proposition. A challenger that removes friction. When the mechanics weaken, so does the relationship. This is why entire customer bases can evaporate faster than brand trackers ever predicted.

I see this play out every year with my own subscription to The WallStreet Journal. I sign up at a bargain rate. It feels smart. Then the price quietly skyrockets at the end of the subscription term. They’re betting I won’t notice so they can automatically bill me a year in advance at ridiculously high rates. When I do notice, I cancel. And suddenly the discount reappears, sometimes steeper than before, offered instantly to keep me from leaving. What are they thinking? That this builds loyalty? The opposite of loyal isn’t apathetic. Oh yeah. It’s called “pissed off”.

Subscription churn tells this story with uncomfortable clarity. The moment content disappears, prices rise or value feels diluted, cancellation rates spike. That isn’t betrayal. It’s clarity. Customers were never staying because they loved you. They were staying because the marketing mechanics still worked. When those mechanics fail, loyalty is exposed as a temporary condition.

When Loyalty Programs Become Liability
As markets mature, the same marketing mechanics that once drove growth start to create fragility. Points inflation. Reward fatigue. Complexity that customers tolerate but don’t love. Leaders keep investing in the system because it looks like retention on a dashboard, while ignoring how thin the emotional layer has become. That tolerance is measurable. A 2024 PwC global consumer survey found that 32% of customers will walk away from a brand they like after just one bad experience, loyalty program or not. When the mechanics are doing most of the work, the margin for error collapses.
Airlines are the clearest case study in how fast goodwill can evaporate. In 2023, Delta Airlines announced changes to SkyMiles that sharply raised spending thresholds for elite status. The backlash was immediate and public enough that Delta reversed parts of the program within weeks. What mattered wasn’t just the outrage, but the indifference that followed. Customers didn’t boycott. They recalculated. Many downgraded their engagement or shifted spend quietly, treating status as transactional rather than aspirational.
The pattern repeated in 2024 when American Airlines adjusted AAdvantage earning rules, reducing rewards on lower-priced fares. Industry analysts noted that frequent flyers increasingly optimize across multiple programs rather than commit to one. That behavior is backed by data: IdeaWorksCompany reported in 2024 that airline loyalty program revenues continue to rise even as customer satisfaction scores for those same programs stagnate or decline. The mechanics are profitable. The sentiment is brittle.

This dynamic isn’t limited to aviation. In retail, the UK Competition and Markets Authority opened a review in 2023–2024 into member-only pricing tied to loyalty cards at major supermarkets, questioning whether “loyalty” pricing was misleading consumers. When loyalty mechanics attract regulatory scrutiny, they have crossed from brand asset into brand risk.

Even in markets where loyalty programs are expanding rapidly, the warning signs are visible. In the Middle East, subscription-based loyalty programs from food delivery and ride-hailing platforms have grown quickly, driven by free delivery and bundled savings. But RedSeer Consulting data from 2024 showed that a majority of users churn in and out of paid subscriptions based on short-term usage rather than long-term attachment. Customers are not rejecting the programs. They are using them tactically.

This is how loyalty programs become liability. Not through dramatic collapse, but through quiet reclassification in the customer’s mind. From relationship to utility. From preference to math. What was designed to lock in affection becomes a system customers learn to game, exploit or abandon the moment a simpler alternative breaks the rules.

When Loyalty Scales Faster Than Trust

Marriott succeeded not just because of points, but because the mechanics were aligned with real value and consistent experience. Many brands copied the structure without earning the trust. That difference matters.

The scale of that trust gap shows up far beyond hospitality. A 2024 McKinsey consumer study across retail, financial services and telecom found that while more than 75% of consumers are enrolled in at least one loyalty or rewards program, fewer than one-third say those programs influence where they spend when service quality or pricing transparency deteriorates. Structure alone doesn’t create attachment. Execution does.

You can see this clearly in financial services. Amerian Express has sustained high engagement with Membership Rewards because points are tightly linked to premium service, fraud protection and perceived status. By contrast, multiple European banks expanded points-based card rewards in the last decade only to quietly scale them back as customers treated them as interchangeable discounts rather than reasons to stay. The mechanics scaled. Trust did not.

Loyalty today is openly used as a distribution strategy, not just a brand strategy, in sectors well outside travel. In retail and e-commerce, steering customers away from marketplaces is an economic imperative. A 2024 Bain analysis showed that brands selling primarily through their own loyalty-driven channels retain up to 40% more margin than those dependent on third-party platforms. Loyalty programs become toll booths. Useful ones, yes. But toll booths nonetheless.

This strategy works until it doesn’t. In grocery, Tesco disclosed that over 80% of transactions involve its Clubcard, an extraordinary penetration. But UK regulators opened reviews into loyalty-linked pricing after evidence suggested non-members were effectively penalized. When loyalty mechanics drift into perceived unfairness, the emotional buffer thins quickly and scrutiny follows.

The same pattern shows up in telecom. Vodafone expanded loyalty-style bundles combining data, entertainment and device upgrades across multiple markets. Customer uptake was strong, but churn studies showed that when network quality lagged competitors, bundled rewards did little to prevent switching. Customers valued the perks. They didn’t mistake them for loyalty.

This is the quiet risk in treating loyalty primarily as a distribution lever. As long as the experience keeps pace, the toll booth feels fair. When it doesn’t, customers don’t rebel. They recalculate. They optimize. Or they route around the system entirely. That’s when the illusion cracks and loyalty reveals what it has become: a pricing and access mechanism with a memory problem.

The Executive Question Too Few Leaders Ask

Boards and CEOs often ask, “How loyal are our customers?” when the better question is, “What’s actually keeping them here?” If the answer is mostly friction, contracts or accumulated points, the business is more vulnerable than leadership thinks.

Regulators have started asking the same question from a different angle. When member-only pricing and loyalty-linked discounts blur into fairness concerns, loyalty programs stop being a marketing conversation and start becoming a governance issue. That’s when CEOs discover that marketing mechanics are not neutral. They shape trust.

What Real Loyalty Looks Like Now

Real loyalty today is quieter and rarer. It shows up when customers forgive mistakes, recommend without incentives and stay true even when switching is easy. Marketing mechanics can support that kind of loyalty, but they can’t substitute for it.

Modern consumers are explicit about this trade-off. Younger generations are pragmatic. They expect value. They compare relentlessly. They are happy to extract benefits without emotional commitment. Older consumers behave differently, but even they prioritize tangible rewards over abstract brand love. Loyalty has become a value exchange and pretending otherwise doesn’t make it more noble.

What Marketers Should Actually Do About This

First, audit your loyalty honestly. Not how many members you have, but how many would stay if you removed one layer of friction tomorrow. Points, contracts, defaults or switching costs. If that number scares you, good! It should.

Second, separate mechanics from meaning. Marketing mechanics should make staying easy, not make leaving painful. If your retention depends on confusion, complexity or guilt, you are not building loyalty. You are borrowing time.

Third, stop optimizing loyalty programs in isolation. Loyalty is downstream of product experience, pricing clarity and service reliability. If those aren’t competitive, no tier structure will save you.

Fourth, design for forgiveness, not just frequency. Real loyalty shows up when customers tolerate mistakes because they trust intent. If your program only rewards spend, you are training mercenaries, not advocates.

Fifth, and this is really important, assume customers will leave and design for return. The best modern loyalty systems accept churn as normal and focus on making re-entry frictionless. Cancel and rejoin behavior is not failure. It is the new baseline.

Finally, be honest in the boardroom. Call loyalty what it is. Engineered when it needs to be. Earned when it matters. Confusing the two is how brands wake up one quarter and realize their “loyal base” was just temporarily trapped.

Loyalty Isn’t Dead

Loyalty still matters. Maybe more than ever. But the era of confusing engineered stickiness with emotional commitment is ending. The brands that will survive the next wave of disruption are the ones honest enough to admit which customers are loyal and which are simply temporarily trapped and brave enough to redesign their marketing mechanics accordingly.

In the Middle East, for example, this tension is playing out in real time. Loyalty markets are growing fast. Subscriptions promise free delivery, bundled benefits and exclusivity. The arms race is obvious. So is the risk. When everyone competes on mechanics alone, customers learn to treat loyalty the way they treat streaming services (or the way I treat the Wall Street Journal): cancel, rejoin, cancel again.

That may look like loyalty in your dashboard. But it’s not loyalty in the real world.

Sources: Marriott International annual reports and earnings calls, Financial Times coverage of hotel loyalty and distribution economics, BCG Global Loyalty Research 2024–2025, Capgemini Consumer Trends 2025, Business Insider and Antenna subscription churn reporting, Reuters coverage of airline loyalty program changes, Euromonitor International consumer loyalty surveys, Research and Markets Middle East loyalty programs market reports.

I wasn’t planning to spend too much. I just needed a roundtrip airline ticket from Boston to San Juan. It’s just a four-hour daytime flight. No need to fly fancy. The options popped up on my screen: Main Basic at $323, Main Classic at $393, Comfort Classic at $493 and First Classic for $873.
That $323 Basic fare? A punishment masquerading as a bargain (by today’s inflated standards). No seat choice. No changes. No upgrades. And baggage…are you joking? Main Classic at $393 suddenly felt like a life preserver. For $70 more, you get sanity: a seat, a bag, a modicum of dignity.
But here’s where it got clever. Once I’d mentally committed to $393, the $493 Comfort Classic fare—just a hundred bucks more—started whispering promises: extra legroom, early boarding, an air of superiority. And just like that, Delta nudged me up the ladder without ever pushing. Well, maybe a little shove. I mean, I no longer book airline tickets without expecting to get screwed. But at least I got to choose how I was going to get screwed. And where I would be sitting while I was getting screwed.

That’s the decoy effect.

And it’s not just for airline tickets. It’s one of the most quietly powerful levers in marketing psychology—and it’s everywhere.

There is a classic principle in behavioral economics known as the asymmetric dominance effect. But in the marketing world, it’s better known by its sharper alias: the decoy effect.

The term was popularized in the 1980s by a group of behavioral researchers who showed that when a third, inferior option is added to a choice set, it can predictably shift consumer preference toward the option it’s meant to make look better. It’s not about offering more choice—it’s about shaping the choice architecture itself.

This third option—the decoy—isn’t supposed to win. It’s designed to make one or both of the other two options (usually the more profitable one) feel smarter, safer or more valuable by comparison. It might be more expensive but stripped of features, or cheaper but inconvenient. Either way, it’s the psychological scaffolding propping up your real target.

It’s also not always about upselling. It’s about anchoring expectations, reframing what counts as “value,” and nudging consumers toward the option you actually want them to pick.

The Loser Option

In the UK, Pret A Manger offers a £25/month coffee subscription to its caffeine-addicted loyalists—up to 5 drinks a day, no questions asked. But in certain trial markets, they quietly rolled out a £20 version that gives you only 3 drinks. The result? Nobody bites. The £20 plan isn’t there to compete—it’s there to lose. That’s the point. It’s a soft decoy that makes the £25 option feel like a steal without ever changing the offer itself.

A recent global survey by Growth Method in 2025 found that over 70% of consumers rely on relative comparison when evaluating product value, rather than assessing absolute price.

Making the Middle Feel Like Luxury

Uniqlo isn’t known for upselling, but even minimalists play the decoy game. Take their denim wall: you’ll find the €24.90 basic slim fit jeans—no stretch, basic washes, limited sizing—neatly stacked beside the €49.90 “Ultra Stretch” or “Selvedge” lines. The entry pair isn’t there to sell—it’s there to anchor. Once you feel the cardboard-stiff basics, the mid-tier jeans feel like Japanese-engineered comfort for just a little more.

You Don’t Need a Perfect Ladder

Nespresso mainly sells pods in sleeves of 10, 30 and 50 worldwide, and introduces seasonal or limited-edition bundles to create perception contrast and anchor higher-value choices among its core range. This approach leverages consumer reference points—highlighting premium capsules next to standard variants—which encourages buyers to select what feels like the smartest, most balanced deal.Marketing case studies show that the decoy effect works especially well in physical products and FMCG, with clear pricing contrasts guiding customers toward value-aligned mid-tier purchases—a strategy consistently used by brands like Nespresso and major retailers in 2025

Retail Theater: Stage Your Decoys

Sometimes the decoy is the most expensive.  At Dyson’s flagship in Tokyo, three vacuum models are theatrically lit like they’re about to give a TED Talk. The most expensive one—rarely purchased—sits dead center under a spotlight, while the more popular mid-tier models lurk on either side of it. The decoy is doing its job without ever leaving the shelf. It doesn’t need to move units—it needs to move minds.

Retailers globally use the decoy effect with physical staging—strategically placed decoy products in flagship stores guide consumer choices toward the desired models, as seen in electronics and FMCG sectors.

Subscription Psychology: The Middle-Tier Mirage

The New York Times sells three types of access: Digital for $4 a week, Cooking + Games for $5, and All Access for $6. The middle tier doesn’t get much love, but it’s not supposed to. It’s the decoy that makes All Access look like a no-brainer. Just a dollar more? Of course I’ll take everything.

In a famous test with The Economist’s subscription plans, nearly 84% of consumers selected the top tier when a closely priced decoy was added, compared to just 32% without it.

Prestige Pricing as Halo Generator

Lavazza’s “Tierra!” organic line isn’t just about ethical sourcing—it’s a high-margin beacon. At €7 per pack, it’s more than most Italians spend on coffee. But they don’t have to. The presence of Tierra! elevates everything else. Standard blends start to feel affordable, premium, even righteous by association.

A recent diamond retailer case study showed sales conversions for high-value products increased up to 3.2x due to well-placed decoy alternatives, with overall gross profit rising 14.3%.

Local Price Psychology: It’s All in the Name

Apple doesn’t just sell iPhones. It sells the iPhone 15, 15 Plus, 15 Pro and 15 Pro Max. Now it’s adding iPhone “Air” to the mix. They’ve tried bigger, smaller and now thinner—for the wild card slot (Hey, it worked for their laptops!). “Plus” sounds generous, “Pro” sounds elite, “Pro Max” sounds like your phone has a corporate card. “Air” whispers minimalist cool even before you see the spec sheet. The features shift slightly—sometimes barely—but the names do the heavy lifting. 

Most buyers confirm Apple’s strategy and state that model names shaped their perception of value more than tech specs. When every pixel counts and price gaps widen fast, naming isn’t just branding—it’s behavioral design.

Misdirection: The “Look Over There” Strategy 

Back in university, I had a side gig selling family photo packages in department stores. Our job wasn’t just to pitch portraits. It was to close on the spot. We didn’t ask, “Do you want it?” We skipped straight to, “Will that be cash, check or charge?”

That wasn’t just a hard sell. It was a perceptual redirect. By asking how they wanted to pay, we shifted the customer’s mental frame away from whether they wanted to buy and toward how they’d complete the purchase. It worked far more often than it should have.

This is the same behavioral sleight-of-hand behind many modern decoy strategies. The power isn’t just in the price—it’s in the framing. The decoy reframes your decision from “Is this worth it?” to “Which one should I get?” Once you’re asking that question, you’re already in the checkout aisle.

Neuroscientists call this attentional narrowing—when a brain under cognitive load focuses more on comparing available options than stepping back to question the premise. In pricing, that’s gold.

Of course, when done with transparency, this isn’t manipulation. It’s designing decisions to feel intuitive. But the line between the two is thin—and how you cross it determines whether your customer feels smart or suckered.

Retail Theater: Stage Your Decoys
Sometimes the decoy is the most expensive. At Dyson’s flagship in Tokyo, three vacuum models are theatrically lit like they’re about to give a TED Talk. The most expensive one—rarely purchased—sits dead center under a spotlight, while the more popular mid-tier models lurk on either side of it. The decoy is doing its job without ever leaving the shelf. It doesn’t need to move units—it needs to move minds.
Retailers globally use the decoy effect with physical staging—strategically placed decoy products in flagship stores guide consumer choices toward the desired models, as seen in electronics and FMCG sectors.

Subscription Psychology: The Middle-Tier Mirage

The New York Times sells three types of access: Digital for $4 a week, Cooking + Games for $5, and All Access for $6. The middle tier doesn’t get much love, but it’s not supposed to. It’s the decoy that makes All Access look like a no-brainer. Just a dollar more? Of course I’ll take everything.

In a famous test with The Economist’s subscription plans, nearly 84% of consumers selected the top tier when a closely priced decoy was added, compared to just 32% without it.

Prestige Pricing as Halo Generator

Lavazza’s “Tierra!” organic line isn’t just about ethical sourcing—it’s a high-margin beacon. At €7 per pack, it’s more than most Italians spend on coffee. But they don’t have to. The presence of Tierra! elevates everything else. Standard blends start to feel affordable, premium, even righteous by association.

A recent diamond retailer case study showed sales conversions for high-value products increased up to 3.2x due to well-placed decoy alternatives, with overall gross profit rising 14.3%.

Local Price Psychology: It’s All in the Name

Apple doesn’t just sell iPhones. It sells the iPhone 15, 15 Plus, 15 Pro and 15 Pro Max. Now it’s adding iPhone “Air” to the mix. They’ve tried bigger, smaller and now thinner—for the wild card slot (Hey, it worked for their laptops!). “Plus” sounds generous, “Pro” sounds elite, “Pro Max” sounds like your phone has a corporate card. “Air” whispers minimalist cool even before you see the spec sheet. The features shift slightly—sometimes barely—but the names do the heavy lifting. 

Most buyers confirm Apple’s strategy and state that model names shaped their perception of value more than tech specs. When every pixel counts and price gaps widen fast, naming isn’t just branding—it’s behavioral design.

Misdirection: The “Look Over There” Strategy 

Back in university, I had a side gig selling family photo packages in department stores. Our job wasn’t just to pitch portraits. It was to close on the spot. We didn’t ask, “Do you want it?” We skipped straight to, “Will that be cash, check or charge?”

That wasn’t just a hard sell. It was a perceptual redirect. By asking how they wanted to pay, we shifted the customer’s mental frame away from whether they wanted to buy and toward how they’d complete the purchase. It worked far more often than it should have.

This is the same behavioral sleight-of-hand behind many modern decoy strategies. The power isn’t just in the price—it’s in the framing. The decoy reframes your decision from “Is this worth it?” to “Which one should I get?” Once you’re asking that question, you’re already in the checkout aisle.

Neuroscientists call this attentional narrowing—when a brain under cognitive load focuses more on comparing available options than stepping back to question the premise. In pricing, that’s gold.

Of course, when done with transparency, this isn’t manipulation. It’s designing decisions to feel intuitive. But the line between the two is thin—and how you cross it determines whether your customer feels smart or suckered.

When Decoys Backfire

BMW tried to charge South Korean drivers a monthly subscription for heated seats. Yes, seats that were already installed in the car. The logic? Make higher-trim packages seem like the better buy. The backlash was instant. Nobody likes the feeling of being charged rent on their own furniture. It wasn’t just tone-deaf—it made consumers question the brand’s integrity.

Recent industry surveys show that clear and transparent pricing structures are among the top factors increasing consumer trust and loyalty in brands across global markets.

Ethics, Transparency and the Marketing Line

The difference between marketing and manipulation isn’t the trick—it’s the tell. The best decoy strategy doesn’t con the customer. It collaborates with them. It assumes they’re sharp, not sheep.

Consumers aren’t naïve. They know there’s psychology behind pricing. They’re fine with that. In fact, they often appreciate it. The resentment only kicks in when the logic is hidden or the tradeoffs feel like traps. That’s when clever becomes cynical.

Want to build trust? Treat pricing like UX. Label the tiers plainly. Don’t bury fees in footnotes. If your cheapest plan is restrictive, say so. If your top-tier is worth the premium, prove it. People don’t mind nudges when they know where the hands are.

Marketing psychologists consistently find that transparent pricing and clear communication strongly correlate with higher customer loyalty and perceived brand trustworthiness in both B2C and B2B environments.

In a world where algorithmic pricing, drip fees and subscription fatigue are all eroding confidence, transparency is a competitive advantage. Done right, your decoy doesn’t just guide the choice—it reinforces the relationship. Because when people feel in on the game, they’re far more likely to keep playing.
Final Takeaway
The decoy effect isn’t a hack. It’s a scaffold. Smart marketers don’t push. They build structures that make one option feel obvious, framing decisions so customers feel clever for saying yes.
You’re not choosing what people pay. You’re shaping what feels worth paying for.

Sources: Growth Method, Lead Alchemists, Shopify Enterprise, Cognitive Clicks, 7Boats, Julien Rio Marketing