How to Use Free Shipping in Your Promotional Strategy in 2023?
In the ever-evolving landscape of e-commerce, businesses need to stay ahead of the game when it comes to attracting customers and driving sales. One powerful strategy that continues to prove its effectiveness is incorporating free shipping promotions into your marketing arsenal. As we delve into 2023, the allure of free shipping remains a potent force that can significantly impact customer behavior and propel your business towards success.
In this blog post, I will discuss some of the behavioral economic underpinnings of when and why free shipping can motivate consumers, provide best practices for planning and implementing free shipping promotions, and show how others do free shipping discounts at their online stores.
The psychology behind free shipping promotions
Retailers like Amazon implicitly sort their customers into two types: High Spenders, who already plan to spend over $35, and Low Spenders, who do not intend to spend that much.
For High Spenders, it is simple: they are already planning to spend $35, so they prefer a store that saves them money on shipping. People hate paying “extra” but love deals, so having a permanent free shipping program like Amazon Prime can build customer loyalty. The real twist, however, is what is happening in the heads of the Low Spenders.
When a Low Spender sees the line “Free shipping on orders over $35” next to the product price, it entices them to spend more. The lure of free shipping starts with the magical word free.
Dan Ariely has studied the powerful allure of free and, in one of his papers, found that people do not treat a zero price like they treat costs in general. When people see something free, two things happen:
- They forego the mental cost-benefit analyses usually associated with purchasing.
- They actually perceive the benefits of a free product as higher than they really are. In other words, people overestimate the positive qualities of a free product, even when the freebie is just shipping.
While High Spenders see free shipping as a valuable convenience, to Low Spenders, that all-caps promise of free provides a compelling incentive to get their cart up to the target price. In other words, Low Spenders do not view free shipping as a perk but rather as a goal to be attained.
Overall, free shipping holds great importance due to its profound psychological impact on customers – among other things, it enhances the perceived value of a purchase. As a result, businesses that offer free shipping can effectively attract and motivate customers, leading to increased conversion rates and fostering long-term customer loyalty.
How does implementing a free shipping discount benefit your business?
Statista reports that 68.2% of global consumers are more likely to buy a product online when offered free delivery. Accordingly, organizing a free shipping promotion certainly makes your customers happy and significantly benefits your business:
1. It acts as a powerful customer attraction tool
A free shipping coupon eliminates the additional cost that often deters potential buyers. By offering free shipping, you can capture the interest of a more extensive customer base and ultimately boost your conversion rates while reducing cart abandonment. This, in turn, positively impacts your bottom line and contributes to increased sales.
2. It enhances customer satisfaction and fosters loyalty
Customers perceive free shipping as a valuable perk that improves their overall shopping experience. By providing this benefit, you not only delight your customers but also encourage them to return for future purchases, becoming loyal advocates for your brand. This positive sentiment and word-of-mouth can lead to sustainable growth and increased market competitiveness.
3. It provides a strategic advantage in a competitive marketplace
Free shipping promotion sets you apart from your competitors and positions your business as more customer-friendly. In addition to attracting new customers, it can also increase the average order value. When customers realize they can obtain free shipping by reaching a minimum order threshold, they often add more items to their carts, driving up the value of each transaction and boosting your profitability.
By leveraging the benefits of free shipping, your business can thrive and create a positive brand image that resonates with your customers.
10 best practices for free shipping promotions
Here are some best practices to consider when planning and implementing a free shipping promotion at your store:
1. Communicate the promotion clearly
Ensure the terms and conditions of the free shipping promotion are clearly stated and easily understandable. Display the details prominently on your website, promotional materials, and checkout process so customers are aware of the offer. Ensure your shoppers know whether your free shipping promotion is auto-applied or code-required. Informing them will certainly make for a better UX experience.
2. Set clear eligibility criteria
Determine validation rules for customers to qualify for free shipping. It could be a minimum order value, specific product categories, or targeted customer segments. Clearly communicate the criteria to avoid confusion or disappointment.
3. Highlight the promotion strategically
Use banners, pop-ups, or CTA buttons to draw attention to the free shipping promotion on your website. Consider placing the information strategically on high-traffic pages or especially at checkout to increase visibility.
You can also add a progress bar at checkout to show your customers how much more they need to spend to qualify for free shipping. This will greatly incentivize them to shop more and get a satisfying, free reward.
4. Create limited-time offers
Create a sense of urgency by running free shipping promotions for a limited period. Setting a countdown timer or specifying the promotion's end date can motivate customers to take action and complete their purchases.
Learn more: What is a flash sale and how to run one?
5. Take care of promoting your free shipping offer adequately
Leverage your email subscriber list to promote the free shipping offer. Send out targeted emails to inform customers about the promotion and encourage them to make a purchase. Personalize the messages based on customer preferences or past purchasing behavior to enhance engagement.
Utilize your social media channels and online advertising platforms to promote the free shipping offer. Craft engaging and visually appealing posts, videos, or ads highlighting the value customers can gain by taking advantage of the promotion.
6. Make the most of upsell and cross-sell opportunities
Combine free shipping promotions with upselling or cross-selling strategies. For example, offer free shipping on orders that exceed a certain threshold, encouraging customers to add more items to their carts to qualify.
7. Monitor and optimize your campaign
Continuously monitor the performance of your free shipping promotions – track metrics like conversion rates, average order value, and overall sales to gauge their effectiveness. Analyze the data to identify areas for improvement and make necessary adjustments for future campaigns.
8. Provide transparent shipping information
Clearly communicate shipping timelines, delivery options, and any potential restrictions or limitations. Transparency instills trust and ensures customers understand what to expect, reducing the likelihood of abandoned carts or customer dissatisfaction.
There are various ways to implement free shipping in your business. One option is to offer free shipping when customers meet a minimum order amount. Alternatively, you can provide free shipping only for specific delivery options. Another approach is to offer free shipping for slower delivery times while charging a fee for expedited shipping. The flexibility is limitless, allowing you to tailor your shipping options to align with your own requirements and your customers' preferences.
9. Perform a financial analysis of your free shipping campaign
Evaluate the potential impact on your profit margins when offering free shipping. Calculate the average shipping costs per order and consider whether absorbing these costs makes sense long-term. Alternatively, you can incorporate the shipping costs into your product prices. However, be cautious about potential price increases, which may negatively impact customer experience and cause your order numbers to plummet.
10. Evaluate your promotions
After the promotion ends, evaluate its impact on your business. Assess the overall success and customer feedback. This evaluation will help you refine your future strategies and identify opportunities for further optimization.
Free shipping ideas – how to get started?
1. Bath & Body Works
Bath & Body Works, an American retail store chain that sells soaps, lotions, fragrances, and candles, offers their customers a special free shipping promotion from time to time. In May 2023, the shop organized a free shipping promotion for only 24 hours.
Terms and conditions:
- The minimum order amount that qualified for free shipping was $50.
- To redeem the free shipping promotion, code CLEANHANDS needed to be entered at checkout.
- The offer could not be combined with any other scannable coupons or code-based offers except My Bath & Body Works Rewards and Birthday Reward.
- The $50 qualifying purchase amount was based on merchandise subtotal after all discounts were applied.
Sephora, a French multinational personal care and beauty products retailer, offers free shipping on all orders (no minimum purchase required) for its loyalty program – Beauty Insider – members.
On top of that, the brand also runs limited-time free shipping promotions on specific occasions available to all shoppers.
Walmart, an American multinational retail corporation that operates a chain of hypermarkets, combined the free shipping offer with their loyalty program, similarly to Sephora.
Apart from other benefits, members of the Walmart+ program get free next-day & two-day shipping with no order minimum on items from Walmart.com.
The free shipping offer serves here as an excellent incentive for customers to start participating in Walmart's loyalty program. In the end, who does not love having something for free? Psychology works!
4. Umberto Giannini
Umberto Gianni, a vegan and cruelty-free haircare provider, offers free shipping to their UK customers on orders over £25. As soon as the customer’s order amount hits the necessary amount, the discount with the free shipping is automatically applied at checkout.
As in the example below, the memo about the shop’s ongoing free shipping policy was included in the email reminding customers about the ending of the 30% off sale.
Such placement of the free shipping offer incentivizes customers to take advantage of the promotional offer, buy new products, and, in consequence, drive revenue for the brand.
Because of knowing the threshold needed for free shipping, customers are enticed to spend more than they originally planned in order to receive their orders without additional charges.
Crocs, an American footwear company based in Broomfield, Colorado, offers their customers free shipping over $75 and reminds them about the shipping procedure in promotional emails.
The minimum order of $75 serves as a validation rule applicable to the free shipping promotion – the customers first need to meet the necessary condition to apply for a discount.
The establishment of additional criteria applicable to free shipping coupons prevents businesses from losing money which could happen if, for instance, the shipping cost exceeds a given customer’s order.
Use Voucherify to create free shipping promotions seamlessly
If you are convinced that a free shipping discount is something that your business needs, you will definitely need the right platform to carry you through the process of establishing the promotion with special validation rules (such as a minimum order amount) tailored to your and your customers’ needs.
If you care to create your free shipping promotion seamlessly and quickly implement it at your store, choose Voucherify as your promotional campaign provider. Our user-friendly platform allows you to easily set up and manage promotions while customizing specific criteria and automating validation processes.
Seamless integration capabilities with various e-commerce platforms (BigCommerce, WooCommerce, Shopify, commercetools, Emporix) ensure a smooth customer experience, while advanced features like scheduling, usage limits, and customer segmentation provide precise control over your promotions.
By leveraging Voucherify, you can streamline the entire process, enhance the overall customer experience, and optimize the success of your free shipping campaigns.
Create effective free shipping promotions with Voucherify