Free Shipping: Managing Downstream Consequences

This is important because if customers who purchase using free shipping promotions during the holiday season are unwilling to purchase again between January-October, then you don’t have to mail catalogs to these customers. Also, you don’t have to send nonpromotional e-mail campaigns to these customers. You can scale back, optimizing profitability.

Reinvest the cost savings in customer acquisition activities. Most important, understand the downstream consequences of the short-term strategies impacting the holiday season.

You have an opportunity to view loyal customers differently than you have in the past. Traditional segmentation and RFM strategies have served you well. Now consider using segmentation attributes to help you understand if customers who love free shipping are willing to purchase at other times of the year, or are willing to pay for shipping in the future. If your customers have established habits, don’t waste marketing expenses trying to force them to pay for something they don’t want to pay for.

Kevin Hillstrom is president of MineThatData, a database marketing consultancy. He can be reached at kevinh@minethatdata.com.