Consumers say that having to pay shipping and handling (S&H) fees is one of the major reasons they dislike buying by mail, according to numerous surveys. No surprise, then, that free shipping is a strong — if not the strongest — offer you can make. My colleagues and I have conducted many A/B split tests, i.e., free shipping vs. no offer (the control), and we see a lift in response every time.
In the testing we’ve done, a free- shipping offer consistently boosts the revenue per catalog (RPC) by 25 percent to 30 percent. The chart “Promotional Offers: Free Shipping vs. Control” shows actual results from a recent test designed to reactivate previous customers.
The test group, which received the free shipping offer, generated 25 percent more revenue than the control, which had no offer. The RPC also increased 25 percent, from $1.29 to $1.61. The offer increased the average order value (AOV) about 11 percent, with a 13 percent increase in the response rate.
There was no minimum spending level attached to this offer. The offer resulted in more people ordering — and those customers spent more.
Other Tempting Offers
What other effective offers can you make to customers and prospects? Here are a few to try:
- a dollar amount off an order;
- a fixed percentage off an order;
- a free gift with order; or
- a graduated offer (i.e., the more you buy, the greater the savings).
From my experience, a dollar amount off an order generally will outpull a percentage off an order. A free gift with order normally is the least-effective offer you can make. This isn’t to imply that an offer for a free gift with purchase doesn’t work at all. If you test a free gift, however, be sure the gift isn’t an item in your catalog but something totally different. Test different offers to see what works best. Bear in mind there needs to be a purpose and objective behind every offer you make. For example, do you want to increase your AOV or response rates? Don’t make unilateral offers to all customer groups and prospects. Rather, target certain groups.