This is the 2nd post in our 5-part blog series exploring the huge returns you can see with successful ecommerce promotions. Follow them all to get valuable tips on strategically planning promotions and how to execute them in Shopify.
We’ll walk you through how to strategically plan each type of promotions, and show you how to execute them in Shopify. Follow them all to get valuable tips for growing your business!
Image source: Michael Lehet
Bananas. Or bar soap. That’s what many people think of when they hear “Buy One Get One”. The promotion may be most commonly associated with grocery stores, but it can also be a valuable tool for ecommerce shops of all kinds.
Buy One Get One (BOGO) is one of the most well-used promotional methods. And for good reason. It’s a great way to incentivize customers to add additional items to their cart and increase average order/cart values.
People love getting anything for free. With a BOGO, customers feel like they’re getting something extra, so they’re more likely to purchase more. Actually, studies show that customers purchase two times more than they would if simply offered a 50 percent discount off one item.
In fact, 93 percent of shoppers say they’ve taken advantage of a BOGO promotion at least once, and 66 percent of shoppers say they prefer BOGOs the most of all discount promotions according to a report from AMG.
The Power of Free
“Free” is a powerful word. Behavioral economics researcher Dan Ariely found that shoppers overvalue the benefits of free even when compared to higher-quality items at a discounted price.
Ariely’s famous Hershey’s Kiss experiment revealed just how powerful the concept of free can be. One trial of the study offered students a Lindt Truffle for 26 cents and a Hershey’s Kiss for 1 cent. The results were that 40 percent went with the truffle and 40 percent with the Kiss. However, when Ariely’s team dropped the price of both chocolates by just 1 cent (to 25 cents for the truffle or a free Hershey’s Kiss), suddenly 90 percent of participants opted for the free Kiss -- even though the relative price between the two was the same.
The psychology behind BOGO promotions relates to the higher perceived value for a lower cost that leaves customers feeling that they got more than they paid for. They encourage customers to buy in greater quantity than they otherwise would, and when they’re done well, they can be highly profitable for the retailer.
Strategy for a BOGO Promotion
Buy one get one promotions are highly effective for clearing inventory, brand building, and driving increased revenues.
The first thing to consider when planning a BOGO promotion is what product to feature.
Choose a Product or Collection to Promote
You can find buy one get one used for every product category under the sun: from mobile phones to burritos to new cars (I can’t believe I missed that one!).
For example, Chipotle recently announced a rare Buy One Get One Free event on its website following a string of poor PR and the recent closure of a Virginia location due to norovirus illnesses. Offering people free food can help rebuild lost goodwill and encourage customers to give the restaurant another try.
Choosing the featured product should tie into your overall promotion strategy: Are you trying to move specific inventory? Want to promote a new product? Hoping to drive sales with a high-margin collection? Answering these questions will help you decide what products to promote.
Understand Your Target Audience
Who needs your selected product? Knowing your target audience will help you know where to advertise to reach them, what language will appeal to them, and what day/time will be best for their shopping habits.
>> EXAMPLE: If you’re promoting bean bags to college students, you’ll know that social media is the best advertising platform, that you need to relate to college-themed interests and motivations, and that evenings and weekends are the best times for a promotion.
Say you have a product that costs you $2.50. You sell it for $10. Which means that your standard profit on the sale of one item is $7.50. You run a Buy One Get One Free event, and customers can buy one for $10 and get one free. Your profits are $10 revenue - $2 cost - $2 cost = $6. A bit lower profits than your full price sale, but you’re moving twice as much product and you’re still in the positive.
Better yet, temporarily raise the unit cost for your BOGO event to $12 so that customers buy one item for $12 and get one free. Your profits will be $12 revenue - $2 cost - $2 cost = $8. You’re making more money, and selling more quantity too. At the same time, your customers are still getting a great deal: two items for $6 each (a savings of $4 each, or $8 in total).
Define the Specific Promotion
Buy one get one FREE is the most common way to structure this promotion, but it’s certainly not the only BOGO option. You could also offer:
- Buy One Get One Half Price
- Buy X of Something Get a Free Gift
- Buy X Get Y Free
“This deal is only available for the next 2 hours!”
Chances are, that kind of pressure might make you pull the trigger on that pair of running sneakers you’ve been eyeing. Setting a deadline for your promotion can incentivize shoppers to act sooner due to a fear of missing out. When executed well, this approach can create bigger sales, more orders, and better conversion rates from your BOGO promotion.
Now that you have a BOGO strategy in place, it’s time for action.
Running a BOGO in Shopify
You’re going to need two separate apps - both from developer Bold Commerce. Working in tandem, these apps will help you run a Buy One Get One promotion on your site.
No worries -- we’re going to walk you through it.
Step 2: Complete the Duplicate & Hide Install Instructions on your published theme. This will ensure that customers must qualify for the BOGO offer before purchasing discounted products.
Step 3: From your Shopify admin page, click on “Apps” and then click on “Product Discount”. Create a discount offer.
Step 4: Go back to your main admin page, and click “Products” in the left side menu. In the same menu, click “Collections”. Select “Create Collection”.
Step 5: Enter a title and description. Under "Conditions", in the first drop-down box select Product tag.
In the second drop-down box leave “is equal to”. In the third box enter the discount tag that you created in Step 3 (when you created a discount offer).
Next to “sales channels” select “Manage”. Deselect the box “Online Store”. Click “Done”. Click “Save Collection”.
Step 6: Create an Upsell Offer.
How’d you do? If you followed all that (phew!) and you’re ready with your first BOGO promotion… congratulations! I hope it’s a huge success. On the other hand, if you’re sitting there staring at your computer screen, wide-eyed and brow furrowed, keep reading.
Outsource Your BOGO
Sometimes, it just needs to be simple. A long list of steps is more than you have time or focus for. It’s all going to be just fine. We keep a bright red super-cape in the back closet for moments like these. (Not really. But it’s a fun idea, right?)
Here at Growth Spark, we love Shopify Scripts for functionality like BOGO promotions. While scripts are kind of techie and a little complex, they’re right up our alley. We can write a script for your store that turns that six-step process above into a much simpler, one- or two-step process. Just note that you’ll need to be using Shopify Plus in order to gain access to Shopify Scripts.
Once developed, you just run the script. Enter the BOGO details. Done and done. You’re off and running.