Since the release of our GWP (Gift With Purchase) app, Gift Box, we have been constantly learning new ways and creative strategies for using free gifts to optimize store performance. The app is being used by more than 1,500 merchants, and we wanted to share some of the best free gift ideas with you, especially now that Black Friday is around the corner.
Gift with purchase is nothing new and has been used in retail since the 19th century. The first businessman who came up with the concept of rewarding customers (using store credit for future purchases) was Alexander Turney Stewart in his small shop in New York. And like with many things, whatever works well in retail can also be applied online in e-commerce.
Why is GWP one of the key e-commerce tactics
Although the concept of a free gift bears the costs of a given gift, it has a lot of upsides for the business. Nearly 90% of customers who receive any free gift, are "somewhat likely" to purchase again from the same store.
In general, you should use free gifts to:
- Increase conversion rate
- Increase AOV
- Increase loyalty/retention
- Introduce new products via samples
To give you more details on how to do these, we have put together 5 examples.
1. Free gift with every purchase
Offering a free gift with every purchase can easily boost the conversion rate, as customers will be more motivated to finish the purchase.
In this case, the free gift product should be relatively cheap (e.g., around $10) and in large quantities in your stock. Giving away product samples also works great and helps spread new products.
2. Free shipping from $X
A very popular method of increasing average order value (AOV) is offering free shipping from a certain spend.
Customers will be motivated to hit the threshold so they can receive free shipping. This is very popular in regions where free shipping is expected.
3. Buy X get Y (BOGO)
A BOGO type offer works great to push a certain product (i.e., the one with high margin). When customers buy the specific product, they will receive a free gift.
In this case, the free gift product should be universal for all customers or relevant to the main product.
4. Spend $X and get a free gift
This universal method makes sense for a larger stores with lot of SKUs. It's hard to select one product, so you can just set the threshold to certain spend.
The free gift, in this case, should be a selection so customers can choose whatever they like from the list. Just keep in mind that the list should be relatively short, like 3 - 4 products.
5. Free gift tiers
Last but not least, the best free gift strategy is combining some of these into the ultimate "gift ladder." Based on our experience, we recommend the following gift setup:
- Free gift with every purchase to boost conversion
- Free shipping from $20-30 to boost conversion and AOV. The threshold should be your AOV + 20-30%.
- Free gift selection from $50+ to boost AOV. The threshold should be the tier 2 + 20-30%.
We don't recommend using more tiers as that can become confusing or even frustrating for your customers.
Bonus – Say "$0" instead of "free"
When you are giving some away as a reward, it's important to show the original product value. All gifts (except the shipping of course) should be listed as regular products in your store.
In fact, there is a study presented in the Journal of Retailing in 2020 by Jieun Koo and Kwanho Suk on how the effect of free promotions. The results are pretty clear – saying "get it for $0" instead of "get it for free" works much better in terms of customer engagement. Especially for highly price-conscious consumers.
Conclusion – When to launch the GWP campaign
If you are not doing any GWP promotion, you should definitely test it and see the impact on your business. You can have a "default" GWP setup which is running always, and come up with a custom ones for special occasions (i.e., Black Friday, Holidays, Mother's Day, etc.).
The only exception is the ultra-premium/luxury segment (i.e., a segment with low price-conscious customers). For these, we don't recommend using any free gifts, as they can devalue your brand.
And if you are looking for a solution how to actually implement GWP offer into your Shopify store, make sure to test our app Gift Box, or read our article on how to add a free gift with purchase.
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