How Using Promotions Can Increase Purchase Value & Drive Demand
For any ecommerce business, promotions are a key part of marketing strategy. They can give you the competitive edge on a product or market and drive demand. Some promotions directly increase the value of individual purchases while not increasing the number of transactions. Other promotions increase the number of transactions while purchase value may be low. Understanding the types of promotions and their potential impact on your numbers will help you choose which will work best and measure their success.
Increased Value Promotions
Promotions that increase average order value, AOV, are those which deal with the size of a basket or transaction. A buy one get one free, BOGO, sale is a great example of this.
Other examples include:
- Free Gift with Min. Purchase of $50
- Free Shipping on Orders of $75 or more
- 15% off with Min. Purchase of $30
These promotions require customers to meet a certain dollar mark before they qualify for any benefit. This promotional strategy increases unique transaction value and purchase volume. Expect higher AOV and a lift in overall revenue.
Demand Driving Promotions
Promotions that drive demand create interest and focus on increasing transaction volume. While the value of unique purchases may be the same or lower than normal, the number of transactions sore.
Examples of promotions that drive demand include:
- 25% off All Purchases
- Free Shipping with Purchase
It’s important to use these types of promotions wisely. A 25% off sale with no minimum purchase may increase transactions but may also cause a dip in revenue. It may be a good strategy to save these types of promotions for historically low seasons in the year when offering free shipping or a discount may bring customers who normally don’t buy at that time of year your way. This would provide an increase in sales and revenue. If your goal is simply to promote awareness of a certain product or brand, offering this promotion might be the perfect way to spread awareness and get people talking about and buying the product.
However you decide to use promotions, be aware of how they may effect your goals and metrics so you can manage them accordingly.
What promotions have worked well for your business? How have they effected the performance of your PPC account?
Rachel Anderson is a Pay Per Click Advertising Strategist at Netmark.com. She loves helping companies be successful online by defining target markets and creating the most relevant, appealing ads. Off the job she enjoys photography, good food, the outdoors and family time.