Gift with Purchase: The Gift that Keeps on Giving

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.

Let's unwrap...

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.