It’s tempting to assume that you can drive more revenue with a larger discount. That certainly makes sense, and it’s an ongoing challenge to balance the discount with margin concerns. That’s why we tested offers at multiple levels, so that we could help focus on what we really needed to achieve that balance.
Alchemy Worx conducted three email A/B split tests and three SMS A/B split tests on behalf of Laura Geller cosmetics.
The offers tested in the six campaigns were $30 off plus gift with purchase on orders of $60 or more versus $20 off plus gift with purchase on orders of $40 or more.
The $30-off campaign delivered slightly more revenue from one-time and two-time buyers. But the $20-off campaign delivered 28 percent more revenue from nonbuyers, making the $20-off campaign the overall winner.
“It’s possible that new buyers were more interested in a lower threshold,” says Allan Levy, CEO of Alchemy Worx. “They were trialing so they were spending less.”
Whatever the reason, this test reaffirms the idea that different audiences will interact with a brand differently and respond to different offers. As a result, it’s important to put them in different buckets, such as non-buyers, one-time buyers and two-time buyers with an aim toward moving each segment up the funnel.
“You want to make sure you get as many orders as you can but sometimes the difference in revenue can make that smaller amount more compelling,” says Levy. “It’s not always a good idea to get all of your offers at such a high rate. Sometimes it’s better to go back three or four times with the smaller offer to make up the volume that way while preserving your revenue.”
One of the oldest adages in direct marketing is that the best time to pitch a customer is just after purchase. The idea is they just received their order, are happy with it and have generally good feelings about the organization.
As a result, Alchemy Worx has follow-up campaigns in place for the former non-buyers who are now one-time buyers.
“We do have post-purchase emails that offer the next logical purchase based on what they have bought,” says Levy.
Since the lower offer outperformed the higher one, will Alchemy Worx test an even lower offer?
“Definitely something we will test,” says Levy. “We’re always testing different offer sizes for this client.”
We test everything. You should, too. For more information on partnering with Alchemy Worx, contact us.
