Increase E-Commerce Sales in 2009 With Purchase Incentives
A purchase incentive is exactly what it sounds like—something that motivates a customer to make a purchase. This can be anything—free shipping, a free product, a discounted price or a money-saving coupon—as long as it convinces more visitors to your site to complete their purchases and/or spend more per transaction. And this isn’t limited to your own product catalog; online retailers can easily (and affordably) offer a purchase incentive from another company to attract more customers.
These external incentives can be acquired at a fraction of the actual cost—or for nothing at all. This is because savvy online advertisers know that the lifetime value of the customer they will acquire by offering a coupon on another merchant's site is worth significantly more than the coupon itself. For the merchant offering the purchase incentive, the improved conversions, increased Average Order Values (AOV), and the edge you’ll gain over your competitors should more than make up for the cost of the incentive, if there’s even a cost at all.
Here’s a closer look at the profit-boosting benefits of purchase incentives, and why they should be a part of every e-commerce marketing plan this year.
1. To increase conversions
Customers are far less willing to hand over their hard-earned cash than they were, say, two years ago. Wanting or liking a product just isn’t enough to cause shoppers to complete their purchases. They need to be convinced to buy, now more than ever. A successful purchase incentive will help increase sales by sweetening the deal and persuading hesitant shoppers to continue with their purchases. If shoppers are torn between buying one product over another, a free gift card or free product will likely entice them to buy. Or if they think the shipping cost will drive the final cost up to high, free shipping will surely help them pull the trigger.
2. To boost AOV
As I mentioned in my earlier post, a good example of a well-known, AOV-increasing purchase incentive is Amazon.com’s Super Saver Shipping program, which offers free shipping on orders greater than $25. This clever purchase incentive ensures that the majority of Amazon.com shoppers will spend at least that amount—and often much more—to qualify for free shipping. Any compelling purchase incentive can be used to entice customers to put more in their carts. Just set the minimum spend amount at the price you’d like you average order to be and watch your AOV soar.
3. To gain an edge over the competition
A survey conducted by PayPal and comScore reports that nearly 30% of shoppers abandon their shopping carts in order to comparison shop at other Web sites to see who is offering the better deal. This means that in order to attract the most shoppers, online retailers must offer the most appealing deal on the Web. Price slashing can only go so far before it destructively cuts into profits. But purchase incentives are a cost-effective way for retailers to ensure that customers won’t search else where for a better deal—hence increasing the amount of sales completed on your site.
Are you interested in offering purchase incentives? E-mail us at pi@trialpay.com. And be sure to check back next week for our fourth and final post on how to increase your e-commerce sales through e-mail marketing.
--Lisa Contoyannis