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The online shopping experience is the commitment-phobe’s paradise: they scour their favorite eCommerce stores for products that they love, place them in their shopping carts only to come to one realization: there’s no way they can possibly buy this stuff! Either the shipping’s too high, the checkout too long, or the product price astronomical. For the cart abandoner, the reasons are endless.

And while the consumer struggles to commit to their cart, online retailers across the globe suffer from an ailment far worse: they’ve got (cart) abandonment issues.

For years eCommerce retailers have searched for a cure: how do you stop shoppers from abandoning items in their cart? Some methods are universally accepted, while others – like shelling out incentives – give rise to debate. At first glance, incentives seem like a pretty logical way to bring customers back to the checkout – but they don’t always work in an E-tailer’s favor. We’ve made the case for and against the use of cart abandonment incentives to help you decide what’s best for your business:

The Case For Incentives

  • Incentives in the subject line = higher open rates. According to Blue Hornet, a shopper is 45.4% more likely to open a cart recovery email if there’s a discount in the subject line.
  • Incentives work when you segment your shoppers. Cart recovery tools are not all the same. The most effective systems are morphed with real-time marketing platforms, giving you the tools to segment your customers based on their behavioral and transactional history. Analyzing this data will enable you to determine which customers need incentivizing to complete a purchase and which customers would have made the purchase anyway.
  • Incentives work for big-ticket items. According to Fresh Relevance, products that hit the $100, $250, $400, and $500 mark trigger higher abandonment rates, likely because shoppers need more time to consider the purchase. With any expensive purchase there is a longer nurturing process required to close the deal. Giving your shoppers a discount in cases like these is a powerful way to shorten the buyer’s journey.
  • Incentives work for new and high-value customers. Show potential new customers how much you value their business by offering an incentive for their first purchase, which in turn helps you increase customer acquisition. Similarly, offering incentives to high-value customers helps to maintain brand loyalty and boost their lifetime value.

The Case Against Incentives

  • Serial abandonners don’t need incentives. According toMarketingCharts, serial cart abandonners are 48% more likely to buy when remarketed to, meaning that a friendly reminder – rather than a discount – should suffice.
  • Batch and blast incentives don’t increase your total purchase value. This is huge. Fresh Relevance conducted an analysis of one retailer to determine whether a 15% incentive would have any impact on their customers’ purchase value. While offering a 15% discount led to a 27.2% sales uplift, the purchase rate decreased by 10.3%, meaning that the company actually lost money as a result. Take a look at the chart:

Why the decrease in purchase value? Based on the drop in the immediate purchase rate with the 15% incentive, our guess is that shoppers caught on to the incentive scheme, purposefully playing the system in order to receive a discount. The retailer in this study expended $3 000 simply to achieve very little difference in the total purchase value.

  • Incentives can break your brand image. Being too liberal with incentives is great for the consumer, but bad for your brand; it suggests that your products aren’t really “worth it,” making it that much harder for your shoppers to pay full price.
  • A simplified checkout could trump incentives. According to Forresterresearch, 50% of consumers attribute cart abandonment to a complicated checkout process. By streamlining your checkout – simplifying forms, removing navigation bars, and collecting payment details right away – you’re going to close more sales without having to spend money on an incentive scheme.

The key takeaway?  It’s not that you shouldn’t use incentives in your cart recovery campaign; it’s that you should use them wisely—and sparingly. Don’t be fooled by dramatic surges in sales uplift, recovery rate and value of recovered items; the real value of a cart recovery incentive scheme lies in your total overall sales. Smart use of data to understand your customer segments in addition to streamlining the checkout process will enable you to hone in on when incentives will deliver the best results.

Want to learn more about recovering more abandoned carts without hurting your bottom line? Get in touch or follow us on Twitter  and LinkedIn for tips, tricks, best practices and more.