{"id":92428,"date":"2020-04-25T09:54:00","date_gmt":"2020-04-25T16:54:00","guid":{"rendered":"https:\/\/thegood.com\/?post_type=insights&p=92428"},"modified":"2021-06-15T14:19:24","modified_gmt":"2021-06-15T21:19:24","slug":"free-shipping-incentives","status":"publish","type":"insights","link":"https:\/\/thegood.com\/insights\/free-shipping-incentives\/","title":{"rendered":"How Free Shipping Incentives Can Influence Purchase Decisions"},"content":{"rendered":"\n

It\u2019s no secret that consumers are growing more impatient every year. <\/p>\n\n\n\n

They want products arriving at their front door within two business days (or less), and they don\u2019t <\/em><\/strong>want to have to pay for shipping costs. <\/p>\n\n\n\n

Research<\/a> has repeatedly shown that free shipping is one of the top purchase drivers for millennial-aged consumers, closely followed by free returns and same-day shipping. <\/p>\n\n\n\n

If your online business isn\u2019t already offering free-shipping to its customers, you\u2019re missing out on a significant opportunity to reduce cart abandonment and improve conversion rates on your ecommerce site. <\/p>\n\n\n\n

In this Insight we\u2019re focusing on how free shipping can impact your customers\u2019 purchase decisions, and how you can get the most value out of offering free shipping to your audience. <\/p>\n\n\n\n

Why Offer Free Shipping?<\/h2>\n\n\n\n

As a customer, it\u2019s fairly obvious that the benefit to free shipping is it saves you money \u2013 at least it makes you believe<\/em> you\u2019re saving money \u2013 on your order. However, as a business owner you might find it difficult to understand the upfront benefits of offering free shipping.<\/p>\n\n\n\n

For retailers, it\u2019s important to consider both the short-term and<\/em> long-term benefits. In the short-term, offering free shipping will likely lead to an increase in orders and a higher average order value<\/a><\/strong> (AOV), especially if you set a minimum order threshold that your customers need to reach before they \u201cunlock\u201d free shipping.\u00a0<\/p>\n\n\n\n

60 percent<\/a> of ecommerce businesses report that \u201cfree shipping with conditions\u201d is their most successful marketing tool. If adding one more items to the shopping cart results in getting free two-day shipping, most consumers will do it. <\/p>\n\n\n\n

In the long-term, offering free shipping will benefit your business by increasing customer lifetime value, and helping you build a group of loyal repeat purchasers. Additionally, it can be a great way to maintain your competitive edge in the marketplace, especially if you\u2019re operating in an industry that sells commonly available products, or even commodity products that compete heavily on price.<\/p>\n\n\n\n

Here\u2019s the thing:<\/strong> before you start running a free shipping promotion on your site right away, it\u2019s crucial that you understand how<\/em><\/strong> to offer it in a way that delivers the most value to both you and your customers. <\/p>\n\n\n\n

How to Offer Free Shipping the Right Way<\/h2>\n\n\n\n

Based on our<\/em> observations, the most effective free-shipping messaging incorporates a hint of marketing psychology to set the tone for shopping behavior. We\u2019ve identified five key behavioral principles that you can utilize to directly influence purchasing decisions on your site. <\/p>\n\n\n\n

1. Reciprocity<\/strong><\/h3>\n\n\n\n

Reciprocity is the social norm of responding to a positive action with another positive action. If someone does something for you, then naturally you will feel persuaded to do something for them in return. Using the influence of reciprocity to persuade customers to complete a purchase on your site is a particularly effective method for positioning your free shipping offer. <\/p>\n\n\n\n

Brand Example:<\/strong> In this example, Clevr Blends utilizes reciprocity to encourage customers to complete a purchase by promising to share 10 percent of their proceeds to aid in COVID-19 relief (see screenshot below).<\/p>\n\n\n\n

This messaging is impactful because it plants a deep seed of brand resonance in the customer’s mind. Users are taking away a memorable impression. This is a unique purchase that extends beyond the value of the product, but towards a substantial impact in the world. They recommend 2+ bags of coffee to enable free shipping \u2013 implementing this minimum order threshold helps to raise their AOV, while also cushioning the revenue impact. <\/p>\n\n\n\n

\"clevr
Clevr Blends uses reciprocity to encourage customers to increase their average order value. <\/em><\/figcaption><\/figure><\/div>\n\n\n\n

2. Ingroup Bias<\/strong><\/h3>\n\n\n\n

Ingroup bias is the tendency to favor a particular group above others. Businesses will often utilize ingroup bias to connect with their target audience on an issue or topic that pertains to their particular needs. <\/p>\n\n\n\n

Brand Example:<\/strong> In this example, Trade Coffee uses ingroup bias as a purchase motivator by specifically giving back to the independent roasters that sell coffee on their site. The messaging is niche, but attracts all coffee enthusiasts to support their \u201cingroup\u201d community. <\/p>\n\n\n\n

Trade is taking advantage of the fact that their audience values independent coffee roasters and using specific related messaging to motivate transactions (with every transaction, Trade donates $2 to local roasters nationwide).<\/p>\n\n\n\n

\"ingroup
Trade Coffee uses ingroup bias to appeal to their niche audience.<\/em><\/figcaption><\/figure><\/div>\n\n\n\n

3. Framing Effect<\/strong><\/h3>\n\n\n\n

The framing effect is a cognitive bias where people make decisions based on whether their options are presented with positive or negative outcomes. The framing effect is a simple but effective way to encourage consumers to take action on your ecommerce site. <\/p>\n\n\n\n