If You Only Do One Thing – Part 9

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Welcome to the latest installment of our new weekly blog series, If You Only Do One Thing. Every Monday, we will discuss one thing that you can start doing today to improve your marketing performance.

With so much advice floating around from so many different sources, it can be tough for marketers and small business owners to know where to focus. This series aims to help you out. Last week’s thing was Promote Special Offers.

Today’s Thing = Free Shipping

Free shipping sounds so simple, doesn’t it? And it is. If your company sells physical products, you should offer free shipping.

Why? Because it works. In study after study, test after test, free shipping is the single type of promotion that works to increase sales and conversion. It’s why so many companies now offer standard free shipping on all purchases. It gets more people shopping and more shoppers to purchase.

If you don’t want to mess with your pricing, and you don’t want to be one of those companies that offers a lot of discounts, then you can use free shipping as your special offer. Even if you increase your prices to cover the cost of shipping, then promote the fact that you don’t charge extra for shipping, you should see an increase in sales.

You don’t have to offer free shipping on all purchases. You can offer free shipping for limited periods of time to increase urgency. Or you can offer free shipping on orders over and above a certain value, to increase the average order size. But you can’t afford to not offer free shipping ever. You’re sacrificing sales if you do.

If you only learn one thing about marketing from me, it should be that free shipping is the best offer you can ever make.

Share “If You Only Do One Thing” with all your marketing friends, and suggest future topics in the comments below or on Twitter @zheller. 

The Magic of “Free”

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If I gave you a choice between a Hershey’s Kiss at 2 cents or a Lindt truffle at 16 cents, which would you choose? Now let’s say I cut each of the prices by 1 cent. Which would you choose?

And now let’s say I cut the prices again, so that the Kiss was free, and the Lindt truffle was 14 cents. Which would you choose?

In a now famed experiment by Dan Areily, he found that in the first two cases, when the difference between the prices was 14 cents but neither was free, most people chose the better chocolate at a higher cost. But as soon as the Kiss was free, the results reversed, with people choosing the Kiss almost 3 to 1.

Why? His conclusion is that “free” makes us act irrationally.

And while I don’t disagree, I do think that is a bit simplistic. As humans and consumers, we don’t always make decisions by weighing the benefits against the costs, sometimes we just look at the cost. Because cost represents fear. And when we eliminate the cost, we eliminate the fear.

So “free” represents a risk free purchase. You won’t lose anything. You might not get the best product, or the highest benefit. But you won’t lose anything.

“Free” can do a lot for your business, if you can figure out the right way to use it.

  • Free shipping
  • Free add-ons with purchase
  • Free downloads with signup
  • Free warranty

What are some other ideas? Share yours in the comments below.

The Free Shipping Test: Try It

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There are endless studies out there that suggest that offering free shipping is the single best thing you can do to lift conversion on your online purchases.

Here’s why:

  1. When you promote “Free Shipping” in your marketing, it gets attention and makes people more likely to find something they like.
  2. Shipping charges are most likely to be added in later stages of the checkout process, which means that price that consumers saw until that point was lower. When the added charge knocks the price up, it’s a turnoff, and often the drop off point for what would have been a completed sale.

I think #2 is the bigger reason. And in my opinion, if shipping charges were listed up front instead of at the end of the checkout process, you would lose fewer customers. I don’t think it’s the actual cost of shipping, but the increase in price that occurs which triggers consumers to abandon the checkout process.

And I want you to test it for me. Instead of showing the regular list prices of your items online and adding shipping on during checkout, add the cost of shipping to the list prices of your items and make shipping free. I’m willing to bet your conversion rate will go up.

Give it a try. What have you got to lose?

Free Shipping vs. Discounts

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“For whatever reason, a free shipping offer that saves a customer $6.99 is more appealing to many than a discount that cuts the purchase price by $10.” – David Bell, Wharton School of Business

It’s true. Customers value free shipping. It’s a simple fact that every marketer must understand when we think about pricing and promotions.

What does it cost to ship your product?

Maybe your shipping cost is standard, maybe it varies based on the quantity of the order or the destination of the shipment. Regardless, there are several strategies that companies employ with regards to shipping costs.

You can charge the consumer what you are paying, the break even philosophy. You can charge the consumer more than it costs you, the profit philosophy. Or you can offer free shipping, no matter what.

Why offer free shipping?

Free shipping sells. It’s a tried and true selling point for products of all kinds. Many companies make a living out of promoting the ‘free shipping all day, every day’ line. But if that’s not for you, using free shipping as an incentive can be a very worthwhile effort.

Use your email marketing to generate a special promotion, free shipping today only, to drive a high volume of sales needed to meet forecasts.

Or use free shipping as a way to increase the value of each sale. Many ecommerce sites will promote “free shipping on orders over $xxx”. If the cut off is $100, someone who is making a $20 purchase may not be intrigued enough to spend another $80. But someone who has $70 or $80 of stuff in their carts are sure going to take notice.

Why not discounts?

Discounts can still work, but depending on what your shipping costs are, free shipping has been proven to work better. There is no real reason that marketers and business analysts point to when they try to explain why this is the case. It just is.

What if you don’t charge for shipping?

If you don’t charge for shipping, you’re ahead of the game. But why not promote it? Consumers who have never purchased from you before will take notice if they see “Free Shipping on all Orders, No Exceptions”. If you don’t charge for shipping and you’re not promoting it in as many places as possible, you are missing a huge opportunity.

I want to hear from you…why do you think ‘Free Shipping’ works so well as an offer?