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Apr 01, 2010
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”?

Check out this case study from our archives, in which an online retailer analyzed these options with a basic A/B split test. Two simple steps revealed compelling results.
CHALLENGE

Like a lot of email marketers, Nathan Decker, Ecommerce Director, Evo (formerly Evogear), sought to make the best of the economic slump that has consumers tightening their purse strings. If this 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 much 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 batch 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 a sobering economic climate.

CAMPAIGN

Decker and his team set up a basic A/B split test. Here are the two simple steps they used in 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 a $50 purchase discount as a reasonably good incentive that wouldn’t hurt their ROI. Using the same parameters, they picked a 15%-off total purchase offer because it was a mathematical equivalent in terms of 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 six-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 percentage math to figure out savings was also 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 it did conversions. The $50-Off Coupon got a 20% open rate; the 15% Off Coupon did almost as well with 19%. Also, 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 an easy decision for Decker.

"In a down time or an up time, the findings 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

Apr 02, 2010 - Mary Kay Lofurno of SyberWorks says:
It is good that they did offer tests. What I am wondering is if they gave away a discount to a customer that was going to buy anyway? The article says very little about how they segmented their database. How do we truly know if it worked? You can give away a discount and rev up sales, but that does not mean you have money.. Just my opinion.


Apr 03, 2010 - Lysander Meath Baker of Digivate says:
Online marketers have much to learn from old school mail order veterans - I remember being told about this conclusion ($ off beats % off) when I joined a mail order company in 1994....



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