Smarter discount that converts with “Buy One, Get One Free” promotions

Guest Author

(I’ll let you in on a secret… This is not just an educational post, but also announcement of a fantastic new feature that we have available today. Read to the bottom. ??)

Discounts and / or offers are a key part of most Ecommerce brands’ promotional activities and are a good way to increase engagement and conversion rates from marketing campaigns.

Too much of a good thing is however not good. If your marketing initiatives are too reliant on discounts, over time one of two things happen:

  • You make your customers dependent on discounts and coach them that there is probably another discount or offer around the corner. So they never purchase anything at full-price and always wait for a promotion (delaying their purchase and your revenue).
  • Because they get discounts so often and they expect more soon, it’s more likely that they will ignore individual campaigns which lowers your overall marketing engagement.

Neither of those are good outcomes. ?

The other challenge about discounting is about how it erodes your gross profit margins.

Consider a recent survey we ran (which included more than 500 responses from Ecommerce businesses), which showed that 27% of respondents had a gross profit margin of 25% or less. When you then run a 10% discount for example, you might end up making sales, but the profit is not-existent.

(That same survey shows that 21% of respondents did not even know what their average gross profit margin is, which means many of them could be using discount and running promotions that are losing them money. But that’s a story for another day…)

Why free is better than a discount

When Dan Ariely, Professor of Psychology and Behavioral Economics at Duke University, published his book Predictably Irrational in 2008, he stunned many marketers about his research into the psychology of money.

In short, what he found was that consumers would pick the free option over the discounted option even if the discounted option had a greater absolute value.

How can you then use the “psychology of free” within your promotional activities and discounting strategy?

Say hello to “Buy One, Get One Free” promotions. Or BOGO in short. ??

BOGO promotions convert better than other discounts, so your engagement rate will already get a boost. But BOGO promotions also has two other benefits in that it helps you clear out specific inventory (which helps your cash flow) and are generally more profitable too. Consider this example for a moment:

  • Take Product A that sells for $10 and has a $2.50 cost. If you sell that for a 50% discount, you’ll end with $2.50 in profit ($10 * 50% = $5 minus $2.50).
  • Now instead of a 50% discount, the promotion is to buy one of Product A and get another one for free. The sale value is $10 now and the total cost of sales is $5, leaving $5 in profit, doubling the profit compared to the 50% discount promotion. ?
  • In some cases, you can profit even more… By giving away a specific product in a sale, you can possibly move some of your older stock that you are struggling to sell otherwise. Getting cash for slow-moving stock means you can reinvest that cash elsewhere.

This is powerful stuff that can boost most marketing campaigns, which is why we wanted to make BOGO campaigns available to you in CM Commerce.

Introducing the new BOGO block for your CM Commerce emails

Starting today, you can quickly build a “Buy One, Get One Free” promotion and include it in any email you send from CM Commerce.

Here’s a quick look of how this works:

We didn’t however just want to leave it there… When you combine some of our existing, advanced functionality, you can launch the best BOGO promotion ever:

  • Specify both the buy and get quantities to do whatever combo you want. Like “Buy 8, Get 2 For Free”. Or if you don’t want to give away anything completely for free, you can issue a discount instead (like “Buy One, Get Another One for 50% less”).
  • Enable the setting to let the discount coupon auto-apply when your customer clicks through from the email. Less work and friction for your customers means a higher conversion rate.
  • Use our advanced, custom segmentation to segment your campaigns based on which products a customer has purchased and then only send the BOGO offer to those that are likely to take you up on this offer. This would also work especially well for products that needs to be replenished or bought regularly.
  • Create some urgency with your BOGO offer and set an expiry date on the coupon code. Use our recently released feature that can resend your newsletter to those customers that didn’t engage with your BOGO promotional email.
  • When using the BOGO block in your email newsletters, you can specify the name of the discount coupon to use. Makes tracking simpler for individual BOGO campaigns.

Boom! ?

What do you think about this? Been dying to have an easy way to create BOGO campaigns? How are you planning to this new block? Let us know in the comments!

(For further reading… We previously published two great Academy articles about discounts, promotions and strategies that you might find valuable as you work on your new BOGO: What Science Says About Discounts, Promotions and Free Offers & Smart Strategies for Issuing Ecommerce Coupons.)

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