Jul 14, 2023
Gift with Purchase: The Gift that Keeps on Giving
GWPs can be one of the most valuable discount tools for e-commerce brands when used correctly. Let's dig into why.
What is gift with purchase?
A gift with purchase (GWP) is a promotional strategy where customers receive a free gift when they hit a certain price threshold or make a qualifying purchase. GWP is a common strategy among e-commerce merchants to incentivize customers to buy their goods and spend more money to boost AOV over a threshold. While many people understand the value of GWPs as a way to draw in new customers or increase sales and loyalty, there are a host of other reasons why they are (quite literally) the gift that keeps on giving.
Why GWPs are great
1. They increase your AOV
Because your customers have an incentive to reach a certain price threshold, average order value consequently increases when you include a GWP offer on your site.
2. They cost a lot less than dollars and percentages off
While this may be less obvious to most e-commerce businesses, this actually makes sense if you think about it with an example.
Say you’re a brand with high margins; you sell gardening tools for 50 dollars each, and it costs you 5 dollars to make each one. Let’s say you decide to make your customers an offer that if they buy 5 tools, the 6th one is free. Your customers are going to think this is a steal – because the perceived value of the 6th tool is still 50 dollars. However, on your end, you’re really only taking 5 dollars out of your pocket because your cost of production is much lower. When compared to a more traditional discount strategy of 10 dollars/ 20% off, you're actually saving money.
3. The perceived value remains high (if done well)
Since your customers are receiving a gift "for free," they feel a sense of exclusivity and special treatment. Because the gift is advertised as free, the customer also feels as though they saved money on a valuable product.
GWPs are strategically offered as a gift as opposed to a lower-quality product. Traditional discounts (think strikethrough prices or the same item for 20 dollars less) tend to lead customers to believe that a product is less valuable.
4. You can still maintain your brand image
GWPs also offer an enhanced product experience. Say your customer got 5 different types of shovels, and you offer them a similar product (let's say a rake) as their free gift. Your customers will try this new tool and perhaps even come back to purchase more.
This is essentially to say that GWPs help you maintain your brand image because your buyers will perceive them as an exciting bonus as opposed to a marked-down, overpriced product.
5. You have the ability to move excess inventory
GWPs allow e-commerce brands to capitalize on what people aren't buying / what they aren't selling enough of
This can come in a multitude of forms, such as a mystery gift that has to do with the product being sold. Let's say you sell vintage T-shirts, and some of your patterns aren't selling as well as others, make one of them a GWP!
Now the question remains: How do you successfully create a GWP offer? Should you do one GWP? Two? What should the threshold be? 🤯
With Intelligems Campaigns, perfecting your discount strategy is easier than ever.
PS - There may not be just one optimal strategy here. You may want to have a different approach for new customers versus loyal customers. Your Klaviyo campaigns may be different from a prospecting campaign. It's all about finding what's right for your business.
Now is a better time than ever to be figuring out your discount strategy, especially with Black Friday/ Cyber Monday only 5 short months away.