Thoughts from the frontline

Do incentives help you profitably fill the shopping cart?

At Triggered Messaging, we’re often asked “should we use incentives in abandoned cart emails”?

It’s a great question. Incentives such as free shipping, money off, etc. can definitely help conversions when people abandon their cart.

A recent study, which matches our experience to-date, showed a conversion rate from abandoned cart messages of:

• 18% without incentive
• 21% with incentive

So, there’s a measurable but unexciting increase by using an incentive. The standard conversion rate from cart abandonment emails is fairly high, so the extra few percentage points gives only a small additional uplift. Our advice to most clients is not to use incentives. Why?

Consider this scenario:

• An online retailer is making a gross margin of 20%
• They are using a series of 3 recovery emails – the first after 30 minutes, second after 24 hours, third after 7 days
• The final email has an incentive – voucher, discount, free shipping
• 33% of recovered carts come from the incentivised offer, 67% from the first 2 emails
• The incentive costs the retailer £5
• Average Basket Value of £20-£50

Then the maths works out that clients will make more gross profit by not offering an incentive than if they do.

Here’s how the maths works out:

Of course, some retailers will have a higher margin or a higher ABV, or a lower incentive cost – in which case, offering an incentive can make sense.

If so, we provide anti-gaming features against serial abandoners too.

As always in marketing, the best advice is to test for your situation. Your mileage may vary.

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