free delivery as a marketing strategy
Is free delivery part of your marketing strategy? If not, should it be? As with everything related to doing business and specifically an e-commerce business, there are risks and rewards to offering free shipping. An effective business plan should include free delivery as a promotional strategy and to support the ongoing customer experience. But strategic decisions need to be made about the extent of the offer.Nothing is truly free, and the shipping cost will have to be absorbed in some way. How do you keep customers loyal to your brand and make them want to continue purchasing while making a profit? Let’s discuss why free delivery should be part of a company’s marketing strategy.

It Reduces Cart Abandonment

Baymard, an independent web user experience (UX) research institute with clients that include Amazon, Google, and Shopify, conducts large-scale research studies on all aspects of the online experience. Online shopping cart abandonment research done by the institute found that the primary reason for most cart abandonments is how users browse e-commerce sites. User actions include, amongst others, window shopping, price comparison, exploring gift options, and saving items for later. In their opinion, these are unavoidable cart and checkout abandonments.What other reasons were there for abandonments?48% Extra charges such as shipping, tax, and fees were too high 22 % Delivery was too slow 16% Users could not see or calculate the total order cost up-front 12% Returns policy is unsatisfactory.It is clear that high shipping costs influence customer behaviour. When we shop online, delivery costs are not our first consideration. We search for the product we want, and if the price is acceptable, we move forward in the checkout process. If the final price is higher than the one shown on the product page or what we deem reasonable, the shopping cart is abandoned.Based on the research results, businesses should either be up-front about the shipping cost or absorb it in various ways and make the delivery free. When the product price remains the same throughout, and consumers feel they get something for free, cart abandonment will decrease and sales increase.

It Improves Brand Loyalty

Brand loyalty gives companies a competitive edge. Customers with brand loyalty have an emotional connection to the brand. They buy products irrespective of the price because they believe the brand has the best quality products and services. People that own only Apple products are a good example. Customer loyalty, on the other hand, depends solely on pricing, and brands must offer discounts and promotions to retain these customers.One way to improve brand loyalty with the use of free deliveries is by offering a loyalty programme, or membership programme, that includes free shipping. If a membership or loyalty programme is too much to manage, you can offer free shipping on special occasions to brand-loyal customers. Identifying these clients is easy, utilise the list you created for your email marketing campaigns.FedEx has the following suggestions for small businesses when your product or price point does not allow you to offer free shipping:Inform your customers when they view their cart Inform shoppers of the exact amount if your product has a flat-rate shipping fee If shipping fees vary, offer a shipping rates calculator or plugin on your e-commerce platform for customers to input their zip code and see the exact costs.You might lose customers if you only inform them when they view their cart, based on Baymard’s research. Communicate delivery details clearly on website banners, product pages, and the user’s cart. By the time customers choose to finalise their purchase, they are fully informed about additional costs.

Your Business Gains A Competitive Advantage

Free deliveries as a marketing strategy tool can gain your business a competitive advantage by drawing new customers who want to use the service. The challenge is to improve customer experiences to such an extent that they become brand loyal. One of the ways to enhance your campaign is by learning from your competitors who offer free shipping.
  • Where do they ship from, and what are their delivery timelines?
  • Do you have a product that can replace your competition’s, thereby drawing their customers?
  • Compared to the competition, what other options do you have to influence conversion? Loyalty rewards or support for local businesses?
  • Use your website analytics to determine your advantages and weaknesses. Then decide if you want to copy your competition or differentiate yourself.
Profit is the greatest advantage you have over your competition. How do you fulfill customer expectations with free shipping but increase sales with competitive pricing?
  • Incorporate shipping costs into operational costs and pricing. It should be included in all financial models.
  • Deliveries are more cost-effective as items are added, so find creative ways to increase upselling and cross-selling.
  • Market your free shipping offers everywhere on your website and social media platforms.
  • Offer several shipping options, for example, free local delivery over a certain order amount.

It Increases Average Order Value

A final reason why free delivery should be part of a company’s marketing strategy is that it increases the average order value. This is achieved when your free shipping offer has a cart value threshold. Buyers are more likely to add other items to their cart to reach the threshold. The reason they do this can be a need for emotional gratification, trying to avoid fees, or overvaluing the ‘free’ offer.What other free shipping marketing efforts could increase the purchases of your target market? Free returns can boost conversion rates and order values, but there is the risk that consumers buy a lot, regret the action, and return their order, thus impacting profit margins negatively. Offer free shipping at higher price points only, as larger purchases are more cost-effective than numerous small orders.Multiple shipping options offer customers a choice, for example, last-minute shoppers might be willing to pay for a faster delivery rather than waiting for the standard delivery covered by the free shipping offer. Another marketing strategy companies can use is to create a sense of urgency with a limited-time free shipping offer. Use social media or send out emails to make customers aware of the deal and encourage them to make an urgent purchase.Is your business in the Greater Toronto Area or the Halton Region? Do you want to offer free delivery to customers but are unsure about the best approach? Book a marketing strategy consultation with the experts at KEY27 Marketing, Oakville today. It’s free!