Selling Points: Optimizing E-Commerce

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

With online shoppers limiting their credit card use and relying more and more on alternative ways to pay, we’re seeing a higher demand for alternative payments than ever before. But that’s not the only motive for merchants to offer more payment options. Here’s a look at the top 3 reasons why merchants should offer alternatives to credit cards.

1. To lower overhead costs
For decades, costly credit card processing fees have cut into the profits of retailers—especially online retailers who are subject to higher “card not present” rates. Just as cash payments offer a bit of credit-card-fee-relief for brick-and-mortar stores, alternative payments can help online stores reduce the amount they spend every month on credit card transactions. Many alternative payment systems offer much lower transaction fees than credit cards, while others charge nothing at all. There is no charge for merchants that buy paid search terms on Google to use Google Checkout. And TrialPay is absolutely free for any merchant to use.

2. To access more customers
Today’s consumers have many payment preferences, and you can increase conversions by appealing to them all. Many shoppers prefer the security of alternative payment options that don’t require customers to enter their personal financial details on the Web. Some are shifting towards cash payments in an attempt to prevent getting further into debt, while others simply don’t have a credit card because so many banks are lessening their lending. As I said in my earlier post, more ways to pay simply means there are more ways to buy. Offering several alternative payment methods, such as Bill Me Later, Pay Pal, eBillme and TrialPay, ensures that you will attract shoppers no matter what their preference is.

3. To increase conversions
Not only do they are they cheaper than credit cards and help merchants appeal to more customers, alternative payments also inherently increase sales. CyberSource reported that in 2006, retailers who offered three or more payment options saw on average a 14% increase in conversions. And Forrester Research contends that alternative payment methods help increase sales and reduce shopping cart abandonment. For example, Google Checkout simplifies the checkout process, which can prevent cart abandonment due to a lengthy and complicated checkout. And TrialPay convinces shoppers to complete their purchases by offering a compelling incentive—a chance to get their products free just by trying or buying something else.

Be sure to check back next week for a look at the second top way to increase sales in 2009: purchase incentives.

--Lisa Contoyannis

The other day, I ordered my lunch from GrubHub.com, an ingenious Web site that helps hungry and busy (or lazy) professionals like me discover which nearby restaurants will deliver. While selecting my usual General Gau's Chicken and beef fried rice from a local Chinese food restaurant, I was offered several coupons: Spend $30 and Get Fried Rice, Crab Meat Puffs, Spring Rolls or Chow Mein FREE.

These coupons were intriguing, but not much different than those printed on the many takeout menus I regularly find tied to my front door handle. Sure they increase average order values (I enlisted a few co-workers to order from the same restaurant so I could enjoy part of my lunch for free). But they aren’t quite compelling enough to turn me into a repeat customer. Hey, I like getting fried rice for free, but I don’t really want to eat Chinese food every day of the week.

GrubHub.com is on the right track by increasing AOV with coupons, but why not take it a step further? They are a Web site after all, which means they aren’t limited to the same one-dimensional marketing tactics of the real world. They can harness the efficiencies of the Web to turn these coupons into powerful promotional tools, just like we do here at TrialPay.

What if I was offered coupons after I checked out, and not for more Chinese food, but for something I’d be likely to want to eat tomorrow? If I got some pizza coupons, I’d come back for a pie for sure. What’s more, GrubHub.com could actually profit from those coupon placements. It’s valuable ad space for restaurants to access quality customers who have already made a purchase, and therefore more likely to redeem those coupons at another restaurant.

Just some food for thought.

--Brennan Sherry

A dismal year for retailers that closed with the lowest holiday sales numbers recorded in nearly four decades has left online merchants searching for new ways to increase sales. But the good news is that they don’t have to look far. Merchants can actually increase sales from their current traffic by following these three easy steps. In the next three weeks we'll take an in-depth look at each one.

1. Implement Alternative Payment Platforms
Forrester Research reports that 74% of online shoppers have used an alternative payment system, and recommends that businesses should prepare for alternative payments to become the norm. With little or no transaction fees, minimal integration costs and the ability to reach a large base of customers who prefer cash-based payments, alternative payment systems are a cost-effective way to increase conversions. More ways to pay simply means there are more ways to buy—which ultimately results in more sales.

2. Offer Purchase Incentives
Incentive marketing is a great way to sweeten the deal and convince hesitant shoppers to complete their purchases. A purchase incentive can be anything—free shipping, a free product, a discounted rate or a valuable coupon—as long as it is compelling enough to cause a reaction. It is also an effective way to increase average order values. For example, Amazon.com offers free shipping on orders greater than $25, which means the majority of Amazon.com visitors will spend at least that amount—and often much more—to qualify for free shipping.

3. Begin (or Continue) E-mail Marketing
With consumers accessing e-mail on everything from computers, cell phones and PDAs to MP3 players, gaming systems and social networking sites, this low-cost, high-ROI marketing channel has more potential than ever. Tap into your database of customer e-mails to announce special offers, new product launches, seasonal campaigns and more to significantly increase your sales. Don’t be discouraged if you don’t receive an immediate response, though. E-mails should be sent in three cycles, ending with a friendly “final offer” reminder, in order to achieve the best results.

--Lisa Contoyannis

The tightening economy has taken it’s toll on the restaurant industry this year, with the National Restaurant Association forecasting 2008 sales to fall 1.2 percent from last year. The holiday season typically gives restaurants the chance to make incremental sales through gift cards. But many establishments met the same challenges retailers faced this holiday season—shoppers simply spent less. So some savvy restaurants implemented purchase incentives to help cash in on holiday gift card sales, such as Chevys Fresh Mex and Applebee’s, who gave away $10 bonus cards with every $50 gift card purchased.

Not only does this strategy help the restaurants sell more gift cards, but it also attracts two additional diners—both of whom will presumably spend more than the amount on the cards. And the gift cards, which will most likely be redeemed in January or February, will help the restaurant industry boost business during a quiet time of year for most eateries.

--Lisa Contoyannis