10% Off or Free Shipping?
Everyone loves a good promotion. When we are in the customer’s role our decisions seem very simple: if an offer saves us money then it’s a good offer and we should act upon it; but as retailers things can become a lot more complicated. We have different goals than the customer and more often than not the long term value of a customer is much more important to us than a single specific sale. While two different promotions might leave us with a different bottom lines, the conclusion over which one was the better choice isn’t always obvious.
Many of our clients opt to try and recoup visitors who abandon the shopping cart by offering them a promotion. An interesting question came up over which promotion would entice more visitors to come back and complete their orders. Would a customer prefer to get a 10% discount of the total or would Free Shipping sound like a better proposition?
So we tested. Two different cart abandonment email templates were prepared and A/B testing was used to see what works best. 50% of abandoning visitors received an email alluring them to the charms of free shipping while the other 50% were put in the tough spot of saying no to 10% off.
It’s worth noting that this particular test was run on an online shop that sells a wide variety of consumer items but nothing that would be considered a high ticket item. The average order value hovers around $60.
It didn’t take long to see that the competition wasn’t fair and a winner was quickly announced. Free shipping performed 100% better than 10% off. Since the goal of this promotion was to convert people who abandoned the shopping cart, offering free shipping ended up doubling the conversion rate of the campaign.
Considering the items sold, average order value and the segment of visitors this promotion targeted; automatically going for the higher converting promotion was not a clear-cut choice. In some cases the discount was too steep to turn a profit or make the promotion worthwhile for the business. This time our cart abandonment segmenting features really came in handy so after calculating the right cutoff point the cart abandonment campaign was adjusted to offer the free shipping promotion only to customers whose cart total was above the cutoff point. The rest had to settle for a 10% discount. I think both groups ended up quite happy. That’s the important thing, no?