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Monday, Aug. 6, 2012 at 4:45 pm

Use Incentives To Easily Increase Your Bottom Line: Case Study

By Mariel Bacci
August 6th, 2012

carrot dangling from a stick to represent an incentiveOne of the tried and true methods of persuasion is offering incentives for action.  The incentive approach can help increase sales, leads and overall revenue if executed effectively. If not implemented properly, your incentive program will only assist you in losing time and money.

There are many cases where incentives can help lead to conversion. They are especially effective on spontaneous types of visitors who do not want to miss out on any opportunity.

  • Free shipping can help convince your visitors who are comparison shopping to convert.  Many people are convinced by a great deal they don’t want to miss.
  • Sales and clearances are good for your return visitors who come back often just to see what they can get at a discount because they love your products.
  • You can advertise a free product in the middle of the buying experience.  Incentives like these can get your middle stage visitor to convert as if they came in from late stage; it’s just too attractive of an offer to pass up.
  • If you are the type of business that relies on return customers- you can offer a points program or a percent off for every dollar spent. Customer loyalty incentives do a great job creating repeat customers.

Proof Incentives Are Effective

How many times have you bought something because it was on sale?

Have you ever been convinced to wait for a table in a restaurant for half an hour because of the promise of superb food or cocktails?  Or even because there might be a chance celebrity sighting?

Have you woken up at 5 am the day after Thanksgiving to buy an electronic on sale that is destined to see out in an hour?

Ever been to school and bored to tears in class for the promise of a successful career in the future?

While these might seen like everyday decisions, they are all based on incentives.  The strategy is intrinsic to human nature and you should be using it on your website.  A lot of online business owners shy away from using incentives as a front line strategy because they are afraid to hurt their bottom line.  The truth is, if there is an appropriate place to use an incentive on your site, you are losing money by not using it.

Case Study Proving the Value of Incentives Online:

In this case, our client very effectively used to identify the areas of their  site that caused your guests to suffer, and then offered them a ‘bribe’ to make the pain bearable.  This can be a complex task that involves identifying the needs of different personas or types of traffic on your site.  If you put in the effort to nail down the incentive in a scenario like this, it will be more than worth it!

One of our clients, recently won big by using an incentive at the most relevant point on their site.  They did not promise big savings on their homepage or their product pages.  They found where people where leaving their site and offered them an incentive to stay.  Simple as that.

The first page in their conversion funnel takes a long time to load because in order for it to serve appropriate products to their site guests, a lot of information needs to come together.  The site load time chases away a lot of guests.  With an average internet attention span of 2 seconds, their 30 second page load time was causing a lot of their visitors to abandon the checkout process while trying to deliver them an ideal experience.

The page which visitors landed on before explained the value of the services they offered and looked like this:

Now they offer a page that offers $100 incentive for the patience of their visitors and looks something like this:

The new page with an incentive increased the number of people who waited to see the next page in the conversion funnel from 32% to 51% as reposrted by Google Analytics, a 40% increase in traffic to the to the next page of the conversion funnel.

Let’s look at this is terms of revenue.  We are going to use a couple different sets of numbers that are not related to our client but could easily apply to them or to you!

Scenario One- Low funnel conversion rate and very high incentive per average order value AKA an extremely conservative estimate of the win value

Traffic to first page of Checkout Funnel: 5,000 visitors per month

Conversion Rate after the first step of the conversion funnel: 10% -this is an extremely low checkout funnel conversion rate.  You should be all means have a conversion rate in your checkout funnel of 10% and if you do not you are probably throwing money away and should seek professional help immediately!

Average Order Value: $300

Incentive: $100 -a very very generous incentive

Before: 1600 guests make it to the next page at a 10% conversion rate for a revenue of $48,000 a month or $576,000 a year

After: 2550 guests make it to the next page at a 10% conversion rate for a revenue of $76,500-$25,500 incentives=  $51,000 a month- or $612,000 a year

In the most conservative scenario this client with make $36,000 a year off this simple change in their incentive strategy.

Scenario Two- Average funnel conversion rate and a realistic incentive per average order value AKA a likely outcome from this win

Traffic to first page of Checkout Funnel: 5,000 visitors per month

Conversion Rate after the first step of the conversion funnel: 20% -an average checkout funnel conversion rate

Average Order Value: $800

Incentive: $100

Before: 1600 guests make it to the next page at a 20% conversion rate for a revenue of $256,000 a month or $3,072,000 a year

After: 2550 guests make it to the next page at a 20% conversion rate for a revenue of $408,000-$51,000 incentives=  $357,000 a month- or $4,284,000 a year

This client will probably make $1,212,000 a year off this simple change in their incentive strategy.
The key to this client’s success was using an incentive to get their guests through a weakness in their site.  To prescribe incentives properly, you must dig into your data and see where you are losing guests and why you are losing them. Then you can test which incentive will entice them to stick with you through your checkout.

Now it’s your turn!  Tell us how you use incentives to make money on your site.  Any tried and true strategies that work for you? Or more importantly, is there a time when you used an incentive and it hurt your bottom line?  If you haven’t been able to implement an effective strategy, let us know, we can help you find the weak points in your site and overcome them.

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Comments (18)

  1. So true ! Depending on your business type, of course, but a returning customer is always better that a one-shot sale…

  2. Very sweet post ! Going to try some of thoses tips (can be quite usefull during low-activity season, like summer…)

  3. Thanks for your information about incentives. The methods you describe can really increase business! I’ve tested them!

  4. Totally agree…
    Incentives do a great job… most of the time…

  5. Giving incentives can be a great idea. But you have to be careful here, every time you put something on sale or offer something extra it means you have to sell that much more to break even.

  6. Interesting case study. I come from a marketing background and I know all about the effectiveness of incentives and how they can help improve sales. However, I didn’t think of applying these principals to address such issues as slow load times on a certain page. I guess the same principals can be applied to improve the user experience of your website and not just improve sales.

  7. I agree with Shaun, you have to be careful ! Thanx for those informations.

  8. I’m a saleman and… thanks for this article Mariel Bacci! It helps me alot.

  9. Yes, You’re right. Giving out incentives is a great strategy in every business. What type of incentives can you actually give aside from giving discounts and freebies?

  10. I agree, it can do wonders if you have a blog you are trying to promote. Giving out free stuff can help in the long run

  11. Good point. The scale of the web is enormous, so while offering a big incentive might seem like a losing proposition, it’s often not the case.

  12. Gifts and incentives really do work. We have many clients who buy incentives every year. Sometimes for the same reasons, but sometimes for differt kinds of reasons. Like promotion campaign articles, incentives to their own colleages, giveaways on a seminar or premiums to stimulate a sale..
    I really like the idea in the post for giving away an incentive to stay on the website.

  13. I agree that giving out free incentives is especially important in converting new prospects to customers in this day and age. Once we began offering free shipping on certain products I noticed our conversion rate has jumped quite a bit. But you do have to be careful with your bottom line as the more incentives you offer the more you have to sell to make any kind of profit. They key is building that relationships to have recurring clientele to keep your business strong.

  14. [...] its daily deals to LondonMobile Payments: A Question of ‘What’ and ‘When’Use Incentives To Easily Increase Your Bottom LineHome24 wird den Schweizer Möbelmarkt revolutionierenAttention Economy – Der Name ist ProgrammHier [...]

  15. Great writeup on incentives! Offering free stuff or discounts for customers is a great way to win returning visitors. But what other types of incentives can we give, particularly for bloggers and sites that don’t actually sell anything?

  16. I think incentives go a long way in making your marketing effective

  17. Nice article. Incentives are always the best way to stimulate consumer demand.

  18. incentives is perfect when you want to expand your client base

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Mariel is a GA certified analyst at FutureNow, Inc.

More articles from Mariel Bacci

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