Your followers are finally taking notice, you’ve become a self-taught digital sales funnel pro, your landing page is a sales copywriting masterpiece and all is going well – your website hits are on the up and up…but for some reason, the visitors are not turning into customers.
Sound familiar? We might know why.
You could be losing your sales at the last hurdle because the truth is, charging for shipping is sure-fire conversion-killer. If you need proof, you only have to look at the facts:
- According to Metapack 47% of respondents to ranked free delivery as their #1 consideration for the majority of their online purchases
- Research by Forrester found that the addition of shipping costs is the most common reason (44%) for abandoning a shopping cart
- 85 – 90% of online shoppers claim it has the biggest influence on whether they buy from a website site. This is up 80% on two years ago
So free shipping is a big deal to your customers, but let’s cut to the chase; what’s in it for you?
The advantages are threefold; firstly, it’s one of the best ways to convert e-window shoppers into customers. Secondly, it makes customers more likely to place larger orders. And thirdly, they’ll keep coming back and tell their friends, which makes it your #1 PR and marketing tool (we’ll get to more on that later).
Right, that’s cemented the case as to why, and now to the how.
Make A/B testing your new best friend
First things first, you need to make sure that offering free shipping is what your target customer really wants.
Luckily, working this out isn’t rocket science. As Kissmetrics explains, one way is to create alternative website header banners; one which states the free shipping offer and one without, and see which one leads to more sales. Then you’ll have the stats on how likely free shipping is to boost your conversation rate and therefore, profit.
Work out your minimum order thresholds (number crunching part 1)
We understand your plight; free shipping and returns can be a big undertaking for a small to medium business and the ROI is a slow burner. But there are lots of ways round this.
The simplest way is to calculate your minimum order threshold and only provide free shipping on orders over this. This magic number should involve some careful number crunching because getting it right could mean the difference between profit and loss.
Work out your margins and expenditures (number crunching part 2)
Practical commerce and ShiverWeb suggest only offering free shipping on the high margin items (and they’ve got the maths to back it up), or during limited periods, or even just on items which cost less to ship anyway (that’ll require more number crunching).
Do whichever works best for your business, but the bottom line (pun intended) is that when it comes to offering free shipping, it’s not all or nothing; you can make a profit and still reap the rewards.
Remember, there’s no such thing as a free lunch
We know what you’re thinking; offering free shipping doesn’t mean you absorb the cost, you’ll have to wear it somewhere.
Studies have shown that a customer is more likely to purchase a higher priced product with free shipping than if the price point was lower, with shipping was added separately. In this podcast, Bill D’Alessandro explains what happened when he tested this theory out.
In fact, offering free shipping could actually save you money. Think about it; free shipping could increase traffic to your site, lower your cost per acquisition and increase the quality of your customer; creating higher customer lifetime value.
We’d hazard a guess that these reflect the goals your marketing strategy sets out to achieve, right? Which means you can put some of the budget set aside for attracting new clients, into other areas of your business (or straight into your savings).
To summarise, in the form of a mathematical equation: free shipping + an optimally functioning shipping and returns service = more loyal customers (and we all know what that means)
Or to put it another way, you will see 15-30% improvement in net profit.
And you just can’t argue with the numbers.