Dollars Off or Percent Off – Which Works Best?

Recently Evo (formerly Evogear), a supplier of everything outdoor, looked to counter-act the economic

evo logo

evo logo

slump that has consumers tightening their purse strings. They also wanted to turn around their regular summer slowdown.

This article is an excerpt from Marketing Sherpa which publishes “Practical Case Studies & Know-How”

“It’s a lull time of the year for us, and we really wanted to augment sales,” Decker says. “Most of our email customers are repeats. We were looking for a more effective way to get them to come back and shop.”

They had seen an intriguing but mixed bag of results in past emails that utilized either a “$$ Off” or a “% Off” pitch to customers. But they had never directly tested the two pitches against each other. They wondered which of them would actually work best in this sobering economic climate.

CAMPAIGN

Decker and his team set up a simple A/B split test. Here are the two quick-and-easy steps they took for the test:

Step #1. Test upcoming email

Establishing a venue for the test was fairly easy for Decker and his team. They had an upcoming email coupon scheduled for one of their larger preference segments – people interested in products from the gear brand, Wake. They didn’t have to schedule a separate send.

“We felt like it was a particularly good email for us to target and get an accurate read on what may work

15% Off Coupon (click for larger image)

15% Off Coupon (click for larger image)

best.”

Step #2. Create fair comparison

Decker and his team looked specifically at email sales metrics for their Wake brand segment to determine what offers would best suit the nature of the test.

“We definitely took the time to ensure that it was a fair comparison,” he says.

Based on their average order size, they chose $50 off a purchase as a reasonably good incentive that wouldn’t kill their ROI. Using the same parameters, they picked a 15%-off total purchase offer because it worked out to be the mathematical equivalent when it came to a percentage.

In the end, they pitted the “$50-off Coupon” vs. “15%-Off Coupon” in the subject line and the body copy.

“We had done a lot of percentage-off coupons and not as many from the dollar-off variety. I had a gut theory that one would perform better than the other and wanted to find out.”

Everything else in the emails remained the same. They also involved a coupon code, a 6-day, limited-time

$ 50.00 Off Coupon (Click for larger image)

$ 50.00 Off Coupon (Click for larger image)

window and a follow-up 48-hour reminder email that employed the exact same “$50-Off Coupon” vs. “15%-Off Coupon” copy.

RESULTS

It was well worth the brief time it took to do the test for Decker and his team.

o $50-Off Coupon generated 170% more revenue than the 15%-Off Coupon.
o $50-Off Coupon had 72% higher conversion rate.

Since then, the dollar-amount offer has been helping Evo create sales during the tough summer-sales period.

“It turned out that the dollar-off coupon was a better way to position offers because the perceived value is higher for our customers. The ‘defined amount’ that you get turned out to be a much more effective incentive. Going forward, we are going to use the dollar-off [tactic] to drive more sales.”

Decker adds that eliminating the prospect of the recipient having to do some percentage math to figure out their savings also was a likely factor.

“The dollar-amount was simpler. And it was clear what the offer was from the second the person looked at. They didn’t have to think about it, and I think that has relevance.”

Interestingly, the slight copy difference in the subject line didn’t affect the open rates nearly as much as they did conversions. The $50-Off Coupon” got a 20% open rate; the 15% Off Coupon did almost as well with 19%. Also, the clickthroughs were nearly identical — the 15%-Off coupon produced a 33% rate, while the $50-Off came in at 32.4%.

The 15%-Off Coupon did generate an average order size that was 44% higher . For that reason, Decker says, marketers who value average-order size due to their customer niche may want to duplicate the test to see if they get the same lift. Based on revenue, however, choosing between the two going forward was a no-brainer for Decker.

“In a down time or an up time, the finding would be applicable. But it has been especially beneficial to find something that works better when things are looking [economically] scary down the road.”

I prefer the “dollar-off” strategy myself as I know I am going to save $ 50.00 no matter what I buy, but if I bought a $ 200.00 item I would only save $ 30.00, but I had to do the math first.

Which do you prefer?

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One Response to Dollars Off or Percent Off – Which Works Best?

  1. Tim Robinson says:

    I think t he $50 worked better in this case simply because $50 looks like a lot more than 15% (at first glance). However what happens whtn that $50 equates to 75% off? I think some testing needs to be done to see which would perform better as to me 75% off looks a lot better than $50 off.

    In my own ad’s I always go for what looks bigger, while some of the bigger products $100 will work better than 10%, however on some of the smaller items saying 75% off works a lot better than saying $25 off.

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