Free Shipping! 50% Off! Free Gift with Order. These are all common catalog offers that inspire customers to order. Obviously, promotional offers work. They boost orders and gross revenue. But which offers work best, and when and how can you use them most effectively? Should you make the same offers to both customers and prospects?
To be effective, you need to know what to avoid when making promotional offers.
First, don’t condition your customers to look for offers every time they buy. Over-promoting an offer may result in a decline in your response rates. Also be careful how you use order minimums; they can work against you.
Some catalogers, for example, offer free shipping twice a year to prospects and customers. Often, a housefile starts to hold off ordering from regular mailings because they know a free shipping offer will come around soon. This can have a negative effect on all drops. The more offers are used, the less impact they have.
There’s no real call to action, since offers (e.g., free shipping) become run of the mill. Buyers are smart. Your housefile and prospects know there will be another offer again soon, so they may wait to buy.
Making an offer — such as $20 off an order of $50 or more to your best customers during your best season — most likely will increase your revenue per catalog. But there’s a trade off. It can cheapen your catalog and give away profits by more than the resulting increase in revenue and gross margin. For example, customers who normally spend more than $100 per order actually may lower their spending to hit the $50 minimum.
To avoid conditioning, limit offers to prospects, catalog requesters, reactivation groups, bounce backs and end-of-season groups. If the offer appears event-driven or action-based, there’s less expectation that the offer will be made repeatedly. And be careful when making offers to your best customers. Don’t give away more than you need to.