The Importance of Promotional Offers

According to the CFI Group's Retail Satisfaction Barometer for this year's second quarter, 77 percent of consumers said shipping costs factor into their willingness to shop online. This certainly reinforces the importance of "free" or "flat" shipping offers during the busy holiday season.

Shipping offers are a big deal to consumers shopping for holiday gifts. The decision-making process is greatly influenced by such offers. They can mean the difference between getting or not getting an order. Consumers actually look for sites that offer free shipping. The bottom line is consumers don't like to pay shipping and handling fees.

Promotional offers are used to motivate consumers to buy. They help prospects overcome any resistance to purchasing your product or service. An offer can encourage a buyer to order more of a given item (or items). Offers are used effectively to increase sales, but they need to be used correctly and viewed as a selling expense.

In order of effectiveness, the most common offers are as follows:

• free (or "flat") shipping;
• a dollar amount off (can be a tiered amount off);
• a percentage off; and
• free gift with purchase.

A free shipping offer will typically increase the revenue per catalog (RPC) by 20 percent or more based on years of testing we've done at Lett Direct. Obviously, there's a cost associated with free shipping and not all catalogers can afford to make this offer. If you've used a free shipping offer in the past and it didn't prove profitable, I suggest you test "flat" shipping (e.g., $2.95, $3.95 or even $4.95 per order) as an alternative.

If you want to maximize response rate, be careful not to set the dollar minimum to qualify for the shipping offer too high. For example, if your average order is $75, it means that approximately 80 percent of your orders fall below that threshold while 20 percent are above it. Setting the threshold at $99 or even at $75 means only a small percentage of buyers are going to be attracted to the offer.