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Jul 23, 2008
Case Study

Dollars-Off Coupon Gets 170% More Revenue: 2 Simple A/B Test Steps

SUMMARY: Which email coupon works best to grab a shopper’s attention – “Dollars Off” or “Percent Off”? An eretailer analyzed these email coupons with a simple A/B split test and unearthed some interesting results. Two simple steps.

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CHALLENGE

Like a lot of email marketers this year, Nathan Decker, Ecommerce Director, Evo (formerly Evogear), sought to make the best out of the economic slump that has consumers tightening their purse strings. If that wasn’t daunting enough, Decker and his team were heading into their regular summer slowdown.

“It’s a lull time of the year for us, and we really wanted to augment sales,” Decker says. “Most of our email customers are repeats. We were looking for a more effective way to get them to come back and shop.”

The calendar already said April as well; they didn’t have a ton of time before their summer product emails starting getting sent out. “We had a full schedule of promotions in front of us,” Decker says.

They had seen an intriguing but mixed bag of results in past emails that utilized either a “$$ Off” or a “% Off” pitch to customers. But they had never directly tested the two pitches against each other. They wondered which of them would actually work best in this sobering economic climate.

CAMPAIGN

Decker and his team set up a simple A/B split test. Here are the two quick-and-easy steps they took for the test:

Step #1. Test upcoming email

Establishing a venue for the test was fairly easy for Decker and his team. They had an upcoming email coupon scheduled for one of their larger preference segments – people interested in products from the gear brand, Wake. They didn’t have to schedule a separate send.

“We felt like it was a particularly good email for us to target and get an accurate read on what may work best.”

Step #2. Create fair comparison

Decker and his team looked specifically at email sales metrics for their Wake brand segment to determine what offers would best suit the nature of the test.

“We definitely took the time to ensure that it was a fair comparison,” he says.

Based on their average order size, they chose $50 off a purchase as a reasonably good incentive that wouldn’t kill their ROI. Using the same parameters, they picked a 15%-off total purchase offer because it worked out to be the mathematical equivalent when it came to a percentage.

In the end, they pitted the “$50-off Coupon” vs. “15%-Off Coupon” in the subject line and the body copy.

“We had done a lot of percentage-off coupons and not as many from the dollar-off variety. I had a gut theory that one would perform better than the other and wanted to find out.”

Everything else in the emails remained the same. They also involved a coupon code, a 6-day, limited-time window and a follow-up 48-hour reminder email that employed the exact same “$50-Off Coupon” vs. “15%-Off Coupon” copy.


RESULTS


It was well worth the brief time it took to do the test for Decker and his team.

o $50-Off Coupon generated 170% more revenue than the 15%-Off Coupon.
o $50-Off Coupon had 72% higher conversion rate.

Since then, the dollar-amount offer has been helping Evo create sales during the tough summer-sales period.

“It turned out that the dollar-off coupon was a better way to position offers because the perceived value is higher for our customers. The ‘defined amount’ that you get turned out to be a much more effective incentive. Going forward, we are going to use the dollar-off [tactic] to drive more sales.”

Decker adds that eliminating the prospect of the recipient having to do some percentage math to figure out their savings also was a likely factor.

“The dollar-amount was simpler. And it was clear what the offer was from the second the person looked at. They didn’t have to think about it, and I think that has relevance.”

Interestingly, the slight copy difference in the subject line didn’t affect the open rates nearly as much as they did conversions. The $50-Off Coupon” got a 20% open rate; the 15% Off Coupon did almost as well with 19%. Also, the clickthroughs were nearly identical -- the 15%-Off coupon produced a 33% rate, while the $50-Off came in at 32.4%.

The 15%-Off Coupon did generate an average order size that was 44% higher . For that reason, Decker says, marketers who value average-order size due to their customer niche may want to duplicate the test to see if they get the same lift. Based on revenue, however, choosing between the two going forward was a no-brainer for Decker.

“In a down time or an up time, the finding would be applicable. But it has been especially beneficial to find something that works better when things are looking [economically] scary down the road.”

Useful links related to this article

Creative Samples For $50-Off Coupon vs. 15%-Off Coupon Test
http://www.marketingsherpa.com/cs/evo/study.html


Evo:
http://www.evogear.com


Constant Contact, Inc. – email services provider:
http://www.constantcontact.com


MarketingSherpa Special Report: Special Report: Part I: Online Coupons 101 - Redemption Data, Vendors, & How to Fight Fraud
http://www.marketingsherpa.com/article.php?ident=23528


MarketingSherpa Special Report: Special Report: Part II: Three eCouponing Case Histories: Land O' Lakes, Act II, and Krispy Kreme
http://www.marketingsherpa.com/article.php?ident=23536

See Also:

Comments about this Case Study

Jul 23, 2008 - J Crist of Cristco says:
This study, as other percentage to dollars off comparisons I've seen is missing one very crucial piece of information: the average purchase size. If the average purchase size is $200, 15% off is only $30, of course $50 off will beat $30 off. If the average purchase size is $500, a 15% discount is $75, much more than $30 and much more than $50. In order for the results of the test to hold any water, the discount amount applied to the average ticket should equal the dollar offer. That means for the comparison in this test to be valid, the average purchase amount (prior to being offered the discount) for the segment being tested should be $333 as 15% of $333 is $50. What is the average purchase amount for the segment being tested prior to the discount being offered?


Jul 24, 2008 - Chris Heine of MarketingSherpa says:
Thanks for the great question, J Crist. We checked back in with Nathan Decker from Evo, and he said: “The offer was only valid on ‘Wake Packages.’ The average price of available Wake Packages was very close to $333. That is why we selected 15% off as a comparable offer. The minimum price available for redemption was $250 so the biggest discount a $50 off customer could have received was 20%.” So in the end, though the incentive might have varied due to which package the recipient might have been interested in, on average, the two offers were comparable.


Jul 24, 2008 - Liz of Intuit says:
Great article. In the past I found that whichever value proposition seems higher is the one that wins. In this example 50 is a larger number than 15. In addition, most customers don't want to do the calculation, so again, your $50 offer is a more straight-forward value prop.



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