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How to Drive Sales with Ecommerce Promotions on Shopify

This is a guest post by Grant Thomas, Marketing Manager of Justuno.com – a world-class website marketing platform that is affordable, powerful, and easy to use.

As an ecommerce retailer, you have to run promotions. It’s part of the game. But knowing what type of promotion to choose and how to set it up so it actually will make money for your business can be tricky. In this post, we’ll review why you should be using promotions, the different types of promotions you can run, and how to implement promotions on your Shopify store.

Why Use Promotions?

Promotions increase sales

Ecommerce promotions, when implemented correctly, capitalize on online consumer behavior which makes it easier for you to sell to shoppers despite the large amount of competition out there.

A common misconception with sales promotions is that you have to offer crazy discounts or incentives to drive sales conversions. While bigger incentives may be more appealing, a small incentive can still make a positive impact on sales and you won’t have to diminish your margins drastically.

Promotions create a better sales strategy

We are all aware that November and December drive nearly ¼ of all ecommerce revenue but there are other opportunities out there that you can capitalize on. Think Valentine’s Day, Halloween, Mother’s Day. By running promotions around key dates and holidays, you can convert more sales and add value to keep shoppers coming back. It’s also important to consider that you will face less competition promotion wise on these key dates that aren’t during the big holiday season. Here’s a list of key dates for ecommerce promotions.

Convert higher percentage of traffic

Did you know that, on average, 98% of new visitors don’t convert into a lead or sale? Almost all of the traffic that you end up driving to your website results in nothing. Yes, some of these new visitors who don’t convert may come back at another time, but you have no way of knowing how much of this traffic will return.

This puts heavy emphasis on converting the current website visitors. Promotions provide an effective way to engage and convert traffic. Serving up an offer that says “Welcome! Take 15% off of your first order. Enter your email to get the code” will allow you to drive sales but also capture email leads so you can retarget these visitors for free with email campaigns.

Promotions are an effective way to engage people

For just a moment, think of your ecommerce store as a brick and mortar store. You’d never let someone walk through the front door without engaging them in some manner. Whether it be welcoming them, notifying them of current promotions, or providing them with some information, you have to engage that shopper.

The same goes for your ecommerce store and promotions. This is your opportunity to directly engage each shopper with something that could be of value to them. While there are some critics of pop up promotions, the fact of the matter is that if you provide something of value to your visitors (discount, free shipping, free gift wrapping) this will only enhance their shopping experience.

Types of promotions

Percentage Based Discount

The most common way to offer a discount is with a percentage based discount. Online retailers use small discounts (5-10% off), larger discounts (15-25% off) as incentives to purchase. It’s also common to see brands discount 50% or more to clear out old and excess inventory.

Who should use this offer?

Discounting can and should be used by all retailers, but in different ways. If your business has high profit margins then you can afford offer higher discounts of 15-25% off and discount more frequently. With low profit margins and higher end brand appeal, look to offer smaller discounts or less frequent sales promotions. If excess inventory is bogging you down then get rid of it with clearance discounts!

Dollar Amount Discount

Instead of offering a percentage discount, you can discount by a specific dollar amount. This provides you with a static discount amount giving you more control of your product margins. These offers can also be positioned as a credit (take a $15 credit!) which can result in better promotion redemption rates.

Who should use this offer?

If you’re looking to avoid the numbers game of percent discounts and have a static discount amount, then a dollar amount discount may be your best option.

Free Shipping

Free shipping is by far the biggest sales driver during throughout the year. 73% of online shoppers stated that free shipping is the #1 criterion for making a purchase. Free shipping is an offer that appeals to the majority of shoppers and can significantly increase sales conversions.

Who should use this offer?

Shipping cost is largely based on size and weight which means that every business will have fluctuations in shipping cost. If free shipping works with your margins and cost structure then look to use it in your 2016 ecommerce marketing strategy. If the cost is just too high, there are a couple of ways to make it work for your business. We will touch on these later on in the post.

Gift with Purchase

Offering a gift with purchase is a great way to add value to the shopping experience while also driving sales. A small item is a quality incentive and shoppers must fully checkout in order to receive their gift.

Who should use this offer?

Have some old promotional items or some items that just won’t sell? Use these items to close sales conversions. A gift with purchase can be that needed additional value to push shoppers to buy from you!

Note: Currently, Shopify doesn’t offer a promo code option that will automatically add a free item to the shopping cart. If you do run a gift with purchase promotion, be sure to let shoppers know that the free item will be included in the order. To track things on your end, create a unique promo code for this offer.

Threshold Promotions

A threshold offer is a promotion that is only accessible if the shopper has a cart size higher than a certain threshold. This can help increase order sizes and convert more sales. A study by Harris Interactive and UPS found that 39% of customers would purchase enough to get free shipping.

For example, if my average order size is $50, then I’d want to offer free shipping on orders of $75 or more. This way, I’m able to encourage shoppers to increase their order size with the incentive of free shipping.

Who should use this offer?

It can be difficult for some businesses to offer sales promotions without it digging into profit margins. However, by using thresholds, most brands can offer a discount or free shipping promotion in a way that benefits their business. For businesses who want to run promotions but have low profit margins, threshold promotions are the way to go.

Contests

While contests aren’t necessarily sales promotions, they are an incredibly effective way to drive engagement and email sign ups. Running a contest is simple! Offer your visitors a chance to win a big ticket item by entering their email address.

This can be one of your products or something else, but it must be something that your ideal customer will be interested in. One thing to keep in mind is if you do decide to choose one of your products, this may prevent people from purchasing that visit because they’ll wait to see if they win. If this is the case, send a follow up email to all entries who did not win with a promo code to use on your site.

Who should use this offer?

Contests are perfect for businesses who want to convert more of the new traffic that they are driving. Since a high ticket item is attractive, many new visitors who are interested in your products will enter their email for a chance to win. This is a perfect way to boost lead conversion from Facebook ads and other PPC advertising.

Creating Promo Codes with Shopify

For the most part, you’ll be running sales promotions on your Shopify store through promo codes. Shopify provides a great framework that allows you to create promo codes that can only be used in certain situations.

Types of promotions you can run:

  • Dollar Amount Discount
  • Percentage Discount
  • Free Shipping

Under certain conditions:

  • All orders - Promo code applies to all orders
  • Orders over - The discount applies to orders over a set nominal value
  • Collection - The discount applies to a chosen collection of products
  • Product - The discount applies to a chosen product
  • Product variant - The discount applies to a chosen product variant
  • Customer in group - the discount applies to a chosen group of customers from your customer lists

Usage Limits:

Shopify lets you choose how many times a specific promo code can be used. Select from unlimited, a specific number, or limit one use per customer.

Date Range:

Create promo codes that will only be valid during certain date ranges. This enables you to set up holiday and sale promotions with ease.

Here’s the full Shopify support documentation on promo codes.

Run Ecommerce Promotions Today!

Your top priority in ecommerce is to convert traffic into sales and promotions are an incredibly effective tactic drive sales growth. Engage shoppers, provide them with value in a promotion, and start converting more sales! It’s competitive out there so be sure that when a shopper comes to your site, they leave after completing a purchase. To implement more effective promotions, check out ecommerce conversion rate optimization apps on Shopify.

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