Freebie e-commerce promotions – why they work
It’s a sad fact that, on average, only about 2% of visitors to your site are likely to connect with or buy anything from you. It’s possible to improve this percentage though with clever use of conversion tactics. In this blog we’ll be talking about e-commerce promotions, which is one, very effective way to do this.
E-commerce promotions are important
As shown in the survey below, there’s no doubt that e-commerce customers are highly influenced by promotions.
If you discount everything though, you won’t be making enough profit to keep your business going and you will be diluting your brand. For this reason, some e-commerce businesses don’t offer promotions at all and rather focus on building their brand to a point where their customers are happy to pay full price. At Comalytics, we believe in building a strong brand, but that discounts, done strategically, do have a place in a good marketing plan.
Types of e-commerce promotions
Promotions can take many forms, for example:
- Discounts of a certain amount or percentage of the total
- A free gift with your purchase
- Sweepstakes, competitions or lotteries
- Free shipping
You may choose to apply these for all purchases or for selected items only or for purchases over a certain minimum “threshold” amount.
We find that offering free gifts with a purchase, or any promotion over a certain threshold, works especially well, creating a perception that the customer is getting something for free.
Why does ‘free’ work?
The power of “free” is both surprising and irrational. In a Marketing Science Journal study, scientist Dan Ariely noted that “People appear to act as if zero pricing of a product not only decreases its cost, but also adds to its benefits.”
Essentially, and against all logic, customers feel they are getting more of a bargain when they receive something for free with their purchase than when they get a discount on that purchase, even when the free gift is worth less in monetary value than the discount they would get. From a retailer’s perspective then, it’s cheaper, and also creates a perception of more value, to give away a free gift than to offer a discount.
Benefits of well thought through e-commerce promotions
When you’re planning an e-commerce promotion, bear these things in mind:
- Encourage customers to try new products
- Motivate them to add specific items to their shopping cart and think about including excess inventory, higher-margin products or out-of-season goods
- Assist them to discover new products
- Motivate them to buy more than they planned
- Make sure any loss you are taking will result in a bigger gain, which could take the form of profit, brand awareness or good will
- Limit the deal and prevent people from taking unfair advantage by stipulating something like “one coupon/xyz product/discount per customer”, “while stocks last” or “one day only”
How can Comalytics help you with e-commerce promotions?
Our Comalytics B2C software automatically includes the functionality to offer Rand/Dollar amount or percentage discounts. We also have available on request the Free Gift Promotion Plug-in, to help you successfully run your “Free Gift” promotion based on a threshold amount, selected items in the cart or other conditions set by you.
The bottom line….
E-commerce promotions like offering discounts or free gifts are a proven way to engage with and convert visitors to your site. A carefully thought through strategy can make a big difference to your business’s success, both during the promotion period and going forward.
If you’re interested in using promotions to build your business, contact us to discuss integrating this plug in, or many others, into your own e-commerce store.
What successful promotions have you run in the past, and why do you think they were so successful? Let us know in the comments section below.
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