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Use Incentives To Easily Increase Your Bottom Line: Case Study
Posted By Mariel Bacci On August 6, 2012 @ 4:45 pm In Business Strategy,Buying Process,Checkout Process,Improving Conversion,Optimization Tactics,Persuasive Scenarios,ROI,Relevance,Selling Process,case studies | 18 Comments
One 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.
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.
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, AttOffer.com 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
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. 
Article printed from Conversion Rate Optimization & Marketing Blog | FutureNow: http://www.grokdotcom.com
URL to article: http://www.grokdotcom.com/2012/08/06/use-incentives-to-easily-increase-your-bottom-line-case-study/
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 If not implemented properly, your incentive program will only assist you in losing time and money: http://www.conversionmarketingforum.com/en/blog/how-not-use-incentives-games-sweepstakes-and-competitions-grow-your-e-mail-lists
 identifying the needs of different personas or types of traffic on your site: http://www.grokdotcom.com/2008/06/23/free-shipping-online/
 Image: http://www.grokdotcom.com/wp-content/uploads/2012/07/DM-_buyflow_index.key_.jpg
 Image: http://www.grokdotcom.com/wp-content/uploads/2012/07/DM-_buyflow_index.key-1.jpg
 let us know, we can help you find the weak points in your site and overcome them.: http://www.futurenowinc.com/aboutus.htm
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