Testing a New Promo Upsell for the Holidays

I’ve mentioned on a few different occasions that offering free shipping all of the time, say for orders over $100 or $200 doesn’t work well for a business like ours. We’re in a unique industry where weight doesn’t correlate at all to money spent – you can spend $60 on three heavy gallons that cost us maybe $20 to ship to CA, or you can spend $200 on a wax that costs us $8 to ship to CA. We’ve found that as a policy it’s much more fair to everyone if we charge you based on weight, not on amount spent. In the end this allows us to be really accurate with our shipping estimates and not undercharge or overcharge any of our customers.

That said, we still use free shipping as a promotional offer from time to time, and in particular during the Holiday season we do exactly what I just said we don’t normally do – offer free shipping to customers who spend over $150 in hopes of upselling all customers over the $150 during a season where people spend more freely. For us, the Holiday season starts on 11/1, and like last year we have the free shipping banner across the top of every page:

DI Holiday Shipping Upsell

This year we also programmed in a new feature. On the Cart page – the page where you can delete items, change quantities, and get a shipping quote, just before you proceed to the Checkout page that requires a log in – users are now shown just how much more they need to spend to qualify for the free shipping. As they add/remove products on the page, the shipping estimate updates accordingly using AJAX:

DI Holiday Shipping Upsell

I’ll plan on following up with a post on the results after the Holidays. To gauge success, I’ll look at average order value to see if that increased, and I’ll also look to see what percentage of our orders crossed the free shipping barrier.

The interesting thing about this is that this same system could be applied to other promotions that we run. Say, for example, when we give away free products. You could say “Spend $x more and get two free towels”. Really any promo that requires a min-spend could be potentially enhanced with the system. Will be interesting to see how well it works.

8 comments on Testing a New Promo Upsell for the Holidays

  1. Tim says:

    Pretty slick the way you integrate the function using AJAX, this way the user can see changes to their cart as they alter their purchase on the fly!

  2. Rob says:

    Very slick.

    Do your promotions like this result in higher revenue overall, or do they simply shift revenue from one month to the next (eg. if people know there’s a sale like this coming up, they hold off on purchasing / purchase more than they usually would so they don’t need to purchase again soon).

    How are you calibrating to remove general month-to-month bias, growth on internet spending etc?

    A good way (that I juuuuuuust though of!) might be to take a subset of customers who have been with you a while and see how their average spend has changed over the years.

    • Adam McFarland says:

      Do your promotions like this result in higher revenue overall, or do they simply shift revenue from one month to the next

      I wish I knew the answer to this. We have this debate/discussion frequently. For instance, we ran a big promo in October. Does that take away from November sales? Would people have spent more on the same purchase during November because consumers in general spend more around the holidays? We’ve hypothesized but don’t yet know of a good way to measure this. We have a good amount of people who order regularly no matter what (sale or not), we have a good amount of people who only order 1-2x per year, and we have a good number of people who only order once in a while. I’d imagine our sales impact each of these people differently (and subsets of those people differently).

      The only thing I think we know for sure is that we can’t push our sales and promos too much further in terms of frequency – at some point if everything is on sale all the time it loses it’s luster. Right now though I think we do a great job of managing this so that the sales are just infrequent enough that they still have a big impact (and by “we” I mostly mean Mike who creates our sales schedule). It’s definitely a balancing act that I think is as much an art as it is a science. The days after a big sale are always slow so you do wonder sometimes if we’d be more profitable with slightly lower, more consistent sales at full price.

      How are you calibrating to remove general month-to-month bias, growth on internet spending etc?

      No method is perfect, but I planned on looking more at ratios, percentages, and averages as opposed to absolutes. Our Holiday marketing plan is similar enough to last year’s, and we still had a pretty large customer base last year. I think we’ll be able to learn something from the data, but I could be wrong. I will also try to look at customers who purchased both Holiday season’s to see if that subset of customers spent more or acted differently.

      • Rob says:

        Two points –

        1. Perhaps we should see that the revenue goes up overall and leave it at that, know that that is a positive thing and not get caught up in over-analyzing. (cf. your post ages ago about optimising warehouse layout, how you did it because you knew it was better and didn’t have to produce a report to show corporate bosses)

        2. They say that if you run too many sales, your customers will get used to it and never pay full price again. I certainly know that there’s a pizza place near here where we never pay full price because they’re always running some promo or other. If they’re not, we go somewhere else. Also, do you get all those annoying sofa adverts on TV – “FINAL WEEKEND, SAVE SAVE SAVE”…? It seems they’ve got a MASSIVE SALE every 6-8 weeks – I know one or two of them got caught out with their sales because they were selling at sale price so much more of the time than they were at regular price that when the regulatory commission found out they said that the items weren’t sold at the higher price for long enough for that to be considered the RRP, so they couldn’t call these events “sales” and had to remove the word “sale” (etc.) from their marketing!

        • Adam McFarland says:

          Haha yes, I like looking at the stats because I’m curious to see if there’s a measurable improvement but I’m not going to spend hours looking at it. Between our Admin system and Google Analytics it doesn’t take very long.

          Interesting story about the sales. Yes, we definitely have those types of places around here and on TV here. That’s basically what I want to avoid becoming. We have competitors who always have everything “on sale” – 365 days of the year you can get every item in their store at sale price. It’s unfair/misleading to the consumer, and it doesn’t seem to be profitable business in the long run. Mike does a lot of work studying other online sites in all industries for email frequency, sale frequency, etc. For the most part we’re not over-doing it in comparison to what consumers are seeing elsewhere. Many large retailers send a lot more newsletters than we do.

  3. Jeff Zenko says:

    That’s the type of question you’ll never be able to answer. Instead ask yourself this: Did you possibly gain a new and returning customer? If yes, repeat. If no, but sales went up – holiday season. If no, sales went down – economy.

    You MAY be able to quantify opportunity cost for a situation like that if you have months of analytics data, but I wouldn’t bother to take the time. Just keep doing what you’re doing, Adam!

  4. Adam McFarland says:

    Thanks Jeff!

    “If no, sales went down – economy.” Haha I like your “flow chart”. While the economy may be a factor in our successes/failures, I almost never assign blame to it. It’s so far out of our control, and there are so many things that we can control, that I choose to focus on those.

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