Dan Bond explains why offers should be central to an eCommerce growth strategy rather than a reluctant last resort.
Includes data, examples, and a takeaway to start your journey to optimizing offers.
Summary
Offers, discounts, and promotions have been around for over a century. They started as metal tokens that could be exchanged for discounts and free gifts. Today, they are widely used to sell off excess stock or hit sales targets. However, offers can be much more than that. They can be a central part of your e-commerce growth strategy.
The challenge for retailers is to increase on-site conversions and reduce abandonment rates. The average e-commerce website has a conversion rate of 2.5% to 3%, meaning that 97 to 97.5% of visitors don't buy. Additionally, the average documented online shopping cart abandonment rate is about 70.19%. This translates to an estimated $260 billion worth of lost orders that can be recoverable.
There are many challenges that retailers face, including social media distractions, competitive pressures, and other financial priorities such as bills, holidays, and online courses. To compete with these distractions, retailers need to find ways to keep visitors engaged and prevent them from abandoning their carts. There are several ways to optimize on-site conversion, such as tweaking the user experience, social proof, site speed, and smart search. However, one of the most effective ways to improve conversion rates and reduce abandonment is through offers, promotions, and discounts.
Offers are active interventions that can nudge visitors towards taking a desired action. They can be used to change visitor behavior, such as encouraging them to buy a particular product or category. They don't have to be discounts; they can be any message or offer that affects visitor behavior and drives an outcome. However, discounts and promotions are the most effective.
The two big dangers of using offers are brand equity and margins. Using discounts and promotions can damage your brand and reduce your margins. To mitigate these risks, retailers need to use offers intelligently. They should avoid big, broad offers that give away a lot of value and damage brand value and margins. Instead, they should focus on using offers that reduce the risk to brand and margins.
To avoid the boom and bust cycle of sales, retailers need to plan their offers strategically. Instead of relying on big, splashy sales at the end of a quarter or year, they should focus on a steady, consistent growth strategy. This will help them to avoid the peaks and valleys of sales and make planning for the year much easier.
Offers, discounts, and promotions can be a central part of your e-commerce growth strategy. By using them strategically, you can increase conversion rates, reduce abandonment rates, and grow your brand while protecting your margins. Remember to use offers intelligently and plan them strategically to avoid the boom and bust cycle of sales.
