Boosting Sales with a Tiered Coupon Strategy

JJ TysonEcommerceLeave a Comment

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Do larger incentives always lead to more conversions? That’s the question we explore in UpSellit’s new case study, “Golden Opportunities: Increasing Conversions 5% With Tiered Incentives”.

As you probably know, incentives are a tried and true way of engaging abandoning shoppers. That being said, settling on an optimized incentive often proves challenging. As with any retailer, you want to find equilibrium – offering just enough to the consumer to maximize gross revenue. But where exactly does that happy medium lie? 

UpSellit’s new case study gets us one step closer to the answer. By utilizing a tiered coupon strategy to incentivize shoppers on three major jewelry websites, UpSellit was able to track the efficacy of incentives based on cart value thresholds. 

In this case, smaller incentives outperformed larger incentives in all metrics. You can click here to download the full case study here. To show you how valuable this case study is, we want to share a few more specifics about our findings. 

High and Low Tier Incentive Structures 

Abandoning shoppers were shown one of three offers, depending on the value of the user’s cart. 

The discounts were structured as follows: 

  1. $50 off orders $200+
  2. $100 off orders $300+
  3. $200 orders $600+ 

Finding 1: Lower Incentives Have Higher Click Rates

One of the first and most basic metrics that UpSellit tracked in this study was the number of shoppers who engaged with the abandonment strategy. 

One would expect that most customers would interact with larger incentives more often than the smaller ones. After all, saving $200 on a $600 purchase saves the users 33%+, while saving $50 on a $200 purchase only saves them 25%. 

However, throughout the campaign, shoppers offered the smaller incentive were 15% more likely to engage with the offer than those shown larger incentives. 

Finding 2: Lower Incentives Convert Shoppers 3x More Often

Although the tiers of the campaign had somewhat different click rates, an extremely valuable takeaway came from the resulting conversion rates.

On average, nearly 9% of abandoning shoppers converted when presented with the lower-tier offer of $50 off their purchase. On the other hand, only 3% of shoppers converted when presented with a much larger $200 off. Thus, the smallest incentive of the tiered coupon strategy proved to be the most effective.

Finding 3: Mobile Shoppers Are 6X More Likely to Utilize a Small Incentive   

The case study found an even larger gap in effectiveness between the two tiers on mobile devices. While 4.4% of shoppers converted at the lower incentive, less than 1% of shoppers converted with the highest. Why might that be the case? It’s likely a confluence of factors, including: 

  1. Mobile shoppers may feel less comfortable making a large purchase on their mobile device
  2. Mobile shopping may be less optimal than desktop for high consideration purchases
  3. Lower tiered discounts significantly outperform their higher-tiered counterparts overall, not just on mobile

Finding 4: Cart Preservers Help Fight Price Sensitivity

While abandonment was highest among mobile shoppers at the largest incentive, additional strategies were put in place to combat the high abandonment rates.

Since mobile shoppers appear to be less comfortable making large purchases on their devices, UpSellit gave users the option to save their cart and receive an email with the contents. UpSellit captured new-to-file lead information from nearly 12% of these abandoners without offering an additional incentive. 

Of the shoppers who opted to save their cart, UpSellit recovered over 5% of them, all without offering an extra incentive. 

Choosing an Incentive

While this case study looked at just a few clients, the implications are far-reaching. While it is often natural to assume that a larger incentive will lead to more conversions, this case study demonstrated otherwise.

Instead, intelligently tiering incentives appears to provide the most optimal outcomes. Rather than only offering large discounts on high-dollar purchases, offering modest incentives on lower order values can often be the push that users need to convert. 

Want to Learn More? 

For the complete findings of this study, make sure to download UpSellit’s new case study now. You’ll find broader coverage of the findings and an in-depth analysis of the results that you won’t want to miss. Like all of our downloadable content, it’s 100% free. Click the banner below to download now. 

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