The name of the game for e-commerce businesses is to encourage prospects to turn into customers. But that’s not always as easy as it seems.
Unless there is an immediate need for a product, people like to window shop. According to the Bymard Institute, the average online shopping cart abandonment rate is 69.57%. This means that almost three quarters of the people that visit your site may never buy a thing when left to their own devices. They may like your product, but it may be bad timing for them to make a purchase or they could become distracted and forget all about your product.
So how do you overcome this obstacle?
To answer the question, we need to look towards the world of psychology and the scarcity principle. You need some sort of enticement to encourage the prospect to make a purchase right away, rather than letting them go home to think about it. And the best way to do this is with a limited time or limited quantity offer. In today’s post, we will focus on the elements of a limited time offer..
The Psychology of a Sale
Psychology plays a huge role in our economy. There are a number of principals and theories in play that explain how a customer will react in certain circumstances. Marketers can use these to help boost sales of e-commerce businesses. Here are two of the biggest concepts that impact a sale:
The Scarcity Principle
The first concept in play is the scarcity principle. According to Explore Psychology, the scarcity principle is when people tend to place a higher value on items that are scarce, while placing a lower value on items that are plentiful. This principle explains why people are more motivated to make a purchase when they see words like “only 3 left in stock” or “limited quantity”.
Theory of Loss Aversion
The other concept at play is the theory of loss aversion. According to Behaviouraleconomics.com, the pain of losing is psychologically twice as powerful as the pleasure of gaining. This means that people are more willing to take risks to avoid a loss than to make a gain. This theory ties into the concept of a limited time offer and why time limits on sales can be so effective.
What is a Limited Time Offer?
Now that we know the psychology behind this type of marketing, it’s time to look at the concept of the limited time offer itself.
So, what is a limited time offer?
Crazy Egg defines it well by saying that it is any kind of discount, special gift, reward, or deal a buyer can receive by making a purchase from you during a certain time period.
Pretty simple, right?
Crafting a Limited Time Offer
The what and the why of a limited time offer is fairly easy to understand but putting one together can be a bit more complicated. There is some finesse required when crafting a limited time offer because if any of the important elements are missing, your offer won’t convert like it should.
The what and the why of a limited time offer is fairly easy to understand but putting one together can be a bit more complicated. Click To Tweet
Here are the components needed for a well-crafted limited time offer.
1. Clearly State the Offer
Shoppers are not looking to do complicated math or logic puzzles when shopping, so don’t structure your offer like one. Anyone viewing your site should be able to understand the offer within a few seconds.
Something like “40% off site wide” or “Free shipping on purchases over $50” are examples of a clear message. Offers like “25% off orders over $100, 20% off orders over $50, or free shipping with the purchase of any clearance item” are convoluted and are not easily understood at first glance. This would be an example of what not to use for a limited time offer idea.
You want to present an offer that catches the prospect’s eye and causes them to click the Call-to-Action button right away. If they have to decipher what the promotion is, chances are greater that an interruption will occur, and they won’t complete their browsing of your site. Meaning you probably just lost a sale.
2. Set a Time Limit
Keeping in mind the theory of loss aversion, it’s important to set a time limit on your limited time offer.
A time limit works two-fold. First, it establishes the ground rules for the offer. You are only obligated to honor the offer during the defined time. You need to stick to this deadline because if you extend it, your customers will learn that they don’t have to act immediately because they can get the offer even after the expiry date. The loss aversion is less in this case.
Secondly, a time limit encourages people to make a split-second decision rather than mulling it over for a few days. There is more incentive to make the purchase now and take advantage of the great deal, rather than waiting a few days and paying more for the same item.
One way to increase the sense of urgency is to add a countdown timer to your site. Having a countdown right in front of you is a very powerful motivator.
3. Use a Strong Call-to-Action Button
Limited time offers are meant to catch someone’s eye and get them to review your list of products. Once you have that attention, it’s time to bring it home by encouraging them to take the next step in the process.
This is where a strong call-to-action button is needed. You can have a button that says “Shop” or “Buy Now”. These will work fine, but text such as “Get 50% Off Now” or “Claim Your Free Shipping” reinforces the offer being made. These are stronger phrases and will help to boost your prospect-to-customer conversion rates.
A limited time offer is a great tool to help boost sales. Incorporating these three elements into your limited time offer will help to increase conversion rates and add to your bottom line.
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