Cart Abandonment Incentives: The Pros, Cons, and How to Make Them Effective
Cart abandonment is a hot topic for online retailers with 7 out of every 10 carts abandoned, it’s easy to see why online merchants are looking to recover these lost sales.
While we can, and do, analyze the reasons why a customer might abandon their cart, there’s one debate that consumes the conversation around cart abandonment—whether or not to incentivize the purchase.
In this piece, I’m going to cover everything you need to know about using incentives in cart abandonment workflows, including what cases they work best for, what incentives you can use, and when you may want to avoid using them to secure the sale.
What Incentives to Use in Cart Abandonment Workflows
While many of us think about incentives as monetary discounts, they don’t have to be limited to only those.. While customers do expect discounts during the abandonment stage, there are multiple forms of incentives to consider testing with your customers.
Monetary discounts are of the more popular incentives offered in cart abandonment workflows. Here’s a few strategies to consider when offering discounts as incentives.
While the two most common discounts are a percentage and dollar figure off, there are instances where one may make more sense than the other.
Working with a percentage may make sense for retailers that either have a predictable margin across their products or have a low average order value (AOV). This way, customers can continue to receive a discount as they increase their basket size, and retailers can maintain margin for those low AOV shoppers.
While this same principle applies to a dollar figure discount, you may want to limit this only to those abandoned carts who reach a minimum spend threshold. This will help protect your margin.
With any option above, consider how changing the discount based on the abandoned cart can strengthen your offer. For example, while setting a minimum spend threshold can protect you from discounting $10 on a $30 order, it won’t be an effective selling prop for a $300 cart. Aligning the discount based on their minimum threshold “tier” allows you to appropriately incentivize them as they increase their cart total.
In a world of Amazon Prime and next-day shipping, competition can be fierce. Sometimes, if customers abandon their carts due to shipping costs (a very common reason), discounted or free shipping can be just the thing to bring them back.
Again, think about how your cart total impacts this proposition. Using free shipping as an incentive might be enticing for those who don’t meet your minimum shipping requirement, but it is worthless for those who have already reached the threshold. For these customers, it might be more beneficial to offer free or discounted upgraded shipping as an option.
Think about how both the cost and speed of shipping impact conversion rates and create a strategy around those.
Loyalty and rewards points
Offering loyalty and rewards points as an incentive can be an innovative way to bring a customer back to purchase. There are two different ways you can approach this.
You can start by telling your customer how many loyalty points they’ll earn by completing the purchase. For example, you could send a message with a subject line saying, “You’re so close to earning 150 points/ $15 off your next order.”
Alternatively, if you have customers that already have banked loyalty points, you could use the points as a discount. Example: you could put “Use your 1200 points to earn $12 off this product” in your subject line, and then follow up with the price of the abandoned product adjusted with the loyalty points factored in.
Free gift with order
Sometimes, a little something sweet is all you need to get the purchase. Whether it’s free samples, a tote bag, free gift wrapping, or an accessory to a popular product, it’s a great way to show customers you appreciate their business.
Sending a message saying, “You’re so close to your free gift!” will be tantalizing for even the most discerning customer.
If you’re running a current contest or giveaway, it might be a good idea to use that as part of your incentives too. For example, you could mention that completing the purchase would give them X amount of entries to win the grand prize.
There are a lot of ways to use incentives in your cart abandonment messaging that don’t necessarily mean discounting your products—although discounts can be a powerful way to get a customer to take the final step.
How to Effectively Use Incentives in Cart Abandonment Workflows
Using an incentive can be a powerful way to give customers yet another reason to purchase the products they were already thinking about buying. There are a few ways to make sure your incentives are as impactful and convincing as possible.
Get to the point: Put your incentive in the subject line
It’s tragic when a cart abandonment email doesn’t get opened. If your first two emails in a 3-part abandoned cart series got ignored, adding the incentive to your subject line will encourage more customers to open the email.
Obviously, a discount is going to be even more attractive to customers, and when you put that in your subject line, it’s much harder to ignore.
Use the right channels in your cart abandonment workflow
When we think about cart abandonment, the solution that comes to mind is an email workflow. However, adding more channels into your automated workflow can increase your results, especially with the time-sensitive nature of cart abandonment.
For example, a well-timed SMS calling a customer back to purchase with an incentive can be just what’s needed to get them to convert.
Pro tip: When you use SMS or a push notification, follow that message up with an email that has more detail to it.
Segment and target: Yes, even in cart abandonment
Because cart abandonment workflows are triggered via customer behavior, many people think that it’s not useful to segment those customers. As I’ve discussed before, each cart is different and warrants segmenting on cart variables such as the cart total, cart SKU, and the abandoner itself.
The approach you use with a first-time, still new, or a long-time loyal customer might be vastly different.
For example, you might use an incentive earlier in your workflow for a first-time or recent new customer to secure the sale. For a returning loyal customer, you might opt not to offer an incentive at all.
Alternatively, for a long-time customer, you might choose to reward their loyalty by offering a larger or a rewards-based incentive in order to keep their business and prevent them from churning.
No matter what you decide is best for your online store, adding in segmentation to better target your messages will only help you in the long run.
Should You Offer an Incentive in Your Cart Abandonment Workflows?
There are definite pros and cons to offering incentives in your cart abandonment workflows. For some, an incentive is a great way to recover a sale that might otherwise be lost. But they not only eat into margins but also may not even be necessary. For others, like luxury brands, offering incentives is not a possibility.
The short answer to whether you should or should not use incentives is that there is no clear answer—it depends on your brand, customers, products, workflow, and messages.
However, there are some things to look for that can help you identify when incentivizing is not a good fit for your brand.
When Not to Offer an Incentive
There are three main situations where offering an incentive in your cart abandonment messaging may not be the best strategy.
If it breaks brand image:
Luxury retailers don’t typically discount, and if they do, it’s rare. After all, discounting takes away the luxe perception of the brand. If you’re not a luxury brand, it can still eat away at a perception you are creating through your branding. Ensure that any incentive offered aligns with your brand image.
If your products are high quality:
Much like breaking brand image, you want to avoid offering incentives with quality-based branding because the quality is your incentive.
If you sell a product that has the highest quality on the market, you’re probably not competing on price point. It doesn’t make sense for you to diminish the quality of your products in the eyes of your customers by discounting.
If it’s the first message of your cart abandonment workflow:
It’s a known strategy for bargain hunters to purposefully abandon carts in hopes of getting a discount in their inboxes. Admit it: you do it too. I certainly do.
While incentives can be a powerful way to make the final push for a lot of customers, giving away needless discounts eats into margins. One cosmetics retailer who saves their incentive for the third message in their series receives a 140% lift in revenue per email (RPE) with their first message compared to their promotional emails. These are sales that would have otherwise been discounted.
So don’t pull out the big guns until you have to.
Alternatives to Discounts:
As mentioned, discounts aren’t always the right incentive for your ecommerce store. If you can’t discount, don’t despair. There are still things you can promote inside of your cart abandonment messaging to recapture the sale, such as:
- Utilizing a sense of urgency, especially of you expire your carts or items sell out fast
- Focus on shipping speed
- Your customer-friendly return or satisfaction-guaranteed policy
- Reinforce the quality of your products
- Remind people of your superior customer service
- Use customer testimonials (e.g., social proof)
- Reinforce your brand story, ethos, or charitable cause missions
These alternatives are common best practices in cart abandonment, and even using them in the first few messages of your workflow can help you convert before you send the incentive. When you have “natural incentives” to shopping at your store, it’s easier to highlight those as reasons your customer should complete their purchase. Use them to your advantage.
Whether or not you decide to use an incentive will completely depend on whether it makes sense for your brand and customers. If you do decide that incentives are right for your ecommerce brand, there are a few key strategies that will make them pack the biggest punch possible. By choosing the right incentives, the right channels, and the right timing, you can recover potential lost sales with your cart abandonment workflows.