Free shipping is not enough

27Mar09

A few days ago, I got a catalog in the mail from a website that I haven’t shopped at in months. On the cover was a prominent offer for “Free shipping”. I quickly scanned the rest of the front and back cover for any further discounts, like a $10 off $50 coupon. No luck. Seeing as how this catalog had little to offer me, I discarded it.

Was I being fickle? Perhaps. But I think my behavior is typical of many consumers these days. Sure, free shipping is known to increase conversion rates, but I would argue that’s mainly among customers who are predisposed to make a purchase. For people who haven’t shopped with you in a while, you’ll need to do better. And that typically means a discount targeted towards reviving your dormant accounts.

Most retailers already segment their mailings and email campaigns based on purchase histories. So really all you need to do is switch on those customer reactivation campaigns a little earlier, and give them more punch. Instead of sending a $10 coupon to people who haven’t bought something in a year, try sending a $20 coupon to customers who have been inactive for six months. By using this approach, you’ll capture the attention of existing shoppers who are looking for better values. Plus, you’ll remain front-of-mind for them when the economy improves, giving you the chance to turn those value-oriented shoppers into high-margin repeat buyers.



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