07 Apr 09 The Cost of Free Shipping
Free Shipping is a common incentive used by online retailers to entice their shoppers to buy from them vs a competitor or simply to increase the value of the transaction. But is is worth it?
For example, let’s offer free shipping for orders over $50 to someone who has $40 worth of product in their cart. The shopper then purchases another item worth $20. The perceived value of free shipping is sufficient to push the user over the $50 threshold.
In reality, shipping only costs $5, but we have convinced our shopper to part with an additional $20. How devious we are!
If we had not dangled a carrot in front of our shopper, then we would have ended up with a total sale valued of only $45. Instead we succeeded in securing an order worth over $60. But was it worth it? Let’s assume a gross margin of 25% on all sales and that shipping costs us $3 per package
- $40 sale: $10 GM + $2 shipping = $12
- $60 sale: $15 GM – $3 shipping = $12
In this example we did not make any more money. In fact, the transaction costs us extra in handling costs due to the extra item, so we actually lost money on this one!
If the $20 item is bought the following week and we clip the ticket on shipping again, we make another $7 for a total gross profit on the two sales of $19 versus only $12 if the two items were sold together with free shipping. So from a purely economic standpoint there is no sense in offering free shipping. But here’s why you should do it anyway:
- Free Shipping is an effective customer acquisition tool.
- Customers who remember seeing a free delivery offer are more satisfied with the website, which makes them more committed to the brand, more likely to return, and more likely to purchase.
- Almost one-fifth of all shoppers said that when they choose to buy something from a retailer’s store instead of website, avoiding shipping costs is the main reason they choose to go to the store. (Source)
As an alternative to free shipping, which is so commonplace in the world of e-commerce, you might try offering an incentive courtesy of a 3rd party, non-competing, yet complementary retailer. Read more about this here. I have also come across a similar offering in New Zealand.
Tags: linkedin
10 Mar 09 Your Brand on Twitter III – The Practical
Some great ways to use Twitter include:
Tell everyone where your $2 tacos are available for sale
Write a book, 140 characters at a time
Get direct access to anyone who tweets about your brand
Networking: Start getting to know people who are attending the same event as you before you get there.
Private Tweets: Why is @appleinc posts private? I’d really like to know. Make your posts private and only let invited guests view them.
Twitter is another way to connect. All your customers have different preferences for how they wish to communicate with you. Twitter caters to the tastes of a subset of your customer base. Therefore, it makes sense to include it in your marketing / customer service mix.
Here’s more tips on using Twitter: Twitter with Flitter , How to Use Twitter as a Twool , How to Pick Up on Twitter , Brands That Tweet
Tags: Brand Strategy, linkedin, Social Media Marketing, social networks, Twitter
05 Mar 09 Your Brand on Twitter II
The standouts of the brands listed in Your Brand on Twitter I are Starbucks, Wholefoods and Dell. They have successfully developed Twitter communities rather than run-of-the-mill one way marketing channels that do not involve their customers. This is where all the other brands have fallen over in their Twitter strategies.
The value of Twitter appears to be the ability of your customers to have a seemingly direct line of communication to the brands that they enjoy. People don’t seem overly interested in Twitter feeds that do nothing more than highlight specials and dispense coupons. We already get enough of this via email and RSS feeds. Twitter is best used as a communication medium that elicits the values of the brand involved. Dispensing useful information rather than blatant promotions seems to be more amicable. I think Wholefoods.com have such a large following because of their ability to do this. You can read more coverage on Wholefoods Twitter strategy and also Zapos’ here.
Guy Kawasaki, a well known business leader has also amassed a respectable 75,000 strong following. Guy has a reputation for being a good writer and dispenser of quality and practical strategies that business people can employ to stay ahead of the competition. His tweets are always worth checking because you can be sure there will be a link or two of tremendous value.
So it may be that Twitter is a better fit for some brands than others, or it may be that some brands have figured out how to use Twitter properly. Another question is: How should we measure success on Twitter? The number of followers offers a solid comparison between brands and could be used as an indication of the influence that a brand holds in a market.
The real test is to see if there is any increase in sales. In many cases it is clear that Twitter is a goodwill strategy that should benefit long term sales. In others like Dell, it seems that it is also a useful direct marketing tool that benefits short term sales.
Tags: Brand Strategy, linkedin, Social Media Marketing, social networks, Twitter
04 Mar 09 Your Brand on Twitter 1
Coupons on Twitter are becoming more common. But are they of real value to a business? The answer to that question lies in the motivation of a consumer to follow a company on Twitter. Lets look at a few brands and how they are using Twitter. I found these examples through the social brand index.
Note: This turned out to be a really long post, so I went Kill Bill on it and split it up into a series of posts.
Most Tweeters are following so many people that any coupons that may come their way will probably get overlooked. You could subscribe to CouponTweet or Cheaptweet, but how is that different to subscribing to couponmountain or ecoupons? Joey Mucha points out that using Twitter has added value to the brand due to the word-of-mouth potential of Twitter: “Impressive, no more slickdeals.net for me. Rewarding the twitter community with deals will pay huge dividends from company through the word of mouth it creates….”
Starbucks – 66000 followers, 64000 following
http://twitter.com/Starbucks
In Twitter Land since August 2008, Starbucks have amassed a healthy following of evangelists.
M&Ms – 12000 followers, 1 following
http://twitter.com/msgreen
Considering they’ve been on Twitter since January 2008, It’s fair to say that M&M’s are having a fruitless Twitter experience. The problems as I see them are that they are not tweeting often enough. Several tweets a day should be the norm. rather than one tweet every few days. They need to follow their followers. Showing an interest in your customers never hurt anyone!
Amazon – 5861 follower, 16 following
http://twitter.com/amazondeals
Have just jumped on http://twitter.com/amazon but have a stronger following for their daily gold box specials RSS feed which has been live since June 2007. This is a poor effort for such a major internet property. The problem it would seem, is that they offer no added value in their Twitter feed.
Buy.com – 562 followers, 126 following
http://twitter.com/Buy_com
A very focused series of tweets about specials. Live since August 2008, they have a meager 562 followers. Seem to suffer from the same ailment as Amazon, but they’re doing much worse.
Wholefoods.com – 160,000 followers, 159,000 following
http://twitter.com/wholefoods
Not one coupon or special as far as the eye can see, but they have done an awesome job at building a community.
Dell.com – 116,242 followers, 21 following
http://twitter.com/delloutlet
After its launch in July 2006, Twitter’s first users were tech-savvy early adopters. Though the service is now used by a much more diverse group of people, it still has a strong technically oriented contingent, which makes it a good customer connectivity channel for Dell who use the service as an exclusive offers channel. While they do not follow many Tweeters, they do respond to their questions, maintaining the community feel. In fact, because they only follow 21 profiles, one is more likely to click to find out who they are….and it turns out they are other Dell accounts for different geographic regions and departments. Nice one Dell!
Tags: Branding, linkedin, Social Media Marketing, Twitter
04 Mar 09 Marketing in a Recession III: The Practical Guide
While it’s clear that maintaining your share of voice in the marketplace is important in a recession, the reality is that if your ads are not converting like they used to, then the burn may not be sustainable. One solution to this problem is to develop your Customer Lifecycle Marketing Plan. This means delving into your customer data and sending targeted, well-timed communications to previous visitors and customers to your online store.
Since you only get paid when you make a sale, it makes sense that your marketing should only cost you money when it generates a sale. That’s why you should pay more attention to your affiliate marketing program.
Marketing in a Recession. To do or not to do?
