Abandoned Cart Discounts: How to Choose the Right One

abandoned cart discounts

To offer a discount or not to offer a discount? It’s a question that many ecommerce stores must answer when creating their abandoned cart emails.

There are a lot of factors that need to be ironed out when creating an abandoned cart email. Whether or not you’re going to offer discounts, the type of discounts you want to offer, and how much should the discounts be worth. Note,  I’ll be referring to coupons, offers, and deals as discounts from here on out.

In this post, I’ll look at our data to determine if abandoned cart discounts work, what the most popular and high performing discounts are and, to top it off, the best discounts relevant to the average order value of your store.

But first, do they work?

Do abandoned cart discounts work?

Simple answer. YES!

Discounts work. According to our abandoned cart benchmark report, abandoned cart emails that included a discount code had an above average open rate (44.37%) and click-through rate (10.85%).

But what exactly did I analyze?

1. Types of discounts

I took a look at three different types of abandoned cart discounts: Dollar-based discounts, percentage-based discounts, and free shipping discounts. Here’s what I found:

abandoned cart discounts

Percentage based discounts were by far the most popular discount used by our customers while dollar based discounts yielded the highest revenue. Free shipping surprisingly had the highest click-through and open rates.

I say surprisingly because I personally never bite on the free shipping discounts and always tend to go for the dollar based.

So now we know — percentage based discounts were our most popular while dollar based discounts made the most money. Let’s take a closer look at the two.

2. Percentage based discounts

What percentage based discount works the best?

I looked at over 1000 abandoned cart flows, sent to 6,868,309 email addresses and saw a 36.87% open rate, 10.83% click rate, and $2.83 revenue per recipient.

You would assume that the larger the discount, the better the results. Let’s see if that’s true.

Highest performing discount

Open rate Click rate Revenue per recipient
5% 45.71 11.51 $9.52
10% 36.87% 10.16% $3.20
15% 35.44% 10.15% $2.19
20% 40.02% 13.29% $2.98
25%+ 31.62% 11.19% $1.15

First thing you’ll notice is that the larger discounts do not perform the best.

In fact, it’s the opposite. The stores which included a 5% discount saw a 3X increase in revenue per recipient.

Our most popular discount was 10% and received an above average open rate (4% increase) and revenue per recipient (7% increase) .

Based on this data, it appears that the lower discounts tend to produce more revenue.

3. Dollar based discounts

Let’s move on to our highest performing discount, dollar based discounts. These are discounts where the ecommerce store offers a dollar amount off the total price of their abandoned cart.

Dollar based discounts generated 5X more revenue per recipient than any other discount I analyzed in our abandoned cart report.

Now that we know they work, what dollar amount should you be using?

Highest performing discount

I looked at 140 flows sent to 318,876 email addresses and saw a 42.78% open rate, 8.99% click rate, and $15.91 revenue per recipient. Here’s what I saw:

abandoned cart discounts (2)

You can see that the higher discounts outperformed the lower discounts. Accounts that used a $20 discount saw a 40% increase, while stores that used a $25 discount or above saw a 107% increase when compared to our average.

So based on this data, the higher your dollar based discount, the more revenue you’re going to generate.

Average order value

But what if you’re average order value is on the lower side? I mean, you wouldn’t offer a $20 discount if your average order value was $15, would you?

So let’s take a look at what makes the most sense based on AOV, based on the highest and lowest performing dollar based discounts.

Let’s start with ecommerce stores who have an AOV of less than $50.

Less than $50

Discount Open rate Click rate Revenue per recipient
Highest performing $5 39.19% 8.14% $1.27
Lowest performing $25 17.02%% 2.85% $0.09

Stores don’t typically provide discounts that are 50% or higher than their AOV. You can see why in the data. Stores that used a $5 discount saw a revenue per recipient 1311% higher than those who used a $25 discount.

$50-$100

Discount Open rate Click rate Revenue per recipient
Highest performing $20 51.04% 14.18% $5.02
Lowest performing $25 66.31% 11.48% $0.11

This is a little more interesting. Those who used a $25 discount saw an extremely high open rate but very low revenue per recipient, while those who used a $20 discount saw a 4463% higher RPR than stores who used a $25.

$100-500

Discount Open rate Click rate Revenue per recipient
Highest performing $20 49.88% 13.22% $12.05
Lowest performing $5 38.03% 5.54%% $3.77

As the AOV grows, you begin to see the discounts growing as well. Not only are they growing, but they’re outperforming the lower discounts.

If you have an AOV of $300 and only offer a $5 discount, odds are your customers aren’t going to bite. But if you offer a $20 discount, you’re making your discount a lot more appealing, giving yourself a better chance at retaining your abandoned cart.

Remember, what works for some stores might not work for others. Every audience is unique and might react differently to your discounts. Testing your discount amount will help you learn what resonates best with your customers base to give you the best chance to increase your abandoned cart retention rate.

Final words

Adding a discount to your abandoned cart email works — simple as that. Based on our abandoned cart benchmark report, percentage based discounts were our most popular type of discount while dollar based discounts brought in the most revenue.

After diving into the data, we found that while popular belief is the higher the discount the higher the revenue, the data said otherwise. Our highest performing percentage based discounts were actually 5% and 10%.

And when looking more closely at dollar based discounts, we found that the higher discounts outperformed the lower ones.

To learn more about abandoned carts, check out our Abandoned Cart Benchmark report.

 

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