Question

a)How is a buy one get one free deal different from a 50% off sale? b) which deal would a consumer prefer and c) which deal will a retailer prefer. Explain

Answer 1

A. Here’s a little math question. Imagine I have two different brands of whisky on sale. Identical liquid, amount, etc. Let’s pretend they taste the same, too.

One brand is $15, marked down from its original price of $30 per bottle.

The other brand is $30, but it’s ‘buy one bottle, get one free’.

Which one is better value?

Of course, it’s a trick question, and in terms of volume of liquid per dollar spent, the outcome is the same.

However, that’s not how a buyer perceives it, and when working as a marketing consultant, your choice could be the difference between thousands of dollars of potential revenue for your client.

B. In ‘buy one, get one free’, you’re forcing the prospect to take action before they get a deal and the initial purchase is marked at full price.

However, with half off, the initial item is seen to be 50% less than it normally is. People perceive it as a better deal.

C. One of my previous clients had the need to clear stock. Their product was seasonal, consumable, and had a sell-by date. It couldn’t be sat on shelves any longer.

To boost revenue and run-through stock, the simplest way was to run a flash sale. In my mind ‘buy one, get one free’ was the best option.

Grocery stores do it all of the time as a way to lower inventory or simply boost average order value.

I decided to split-test in Mailchimp to see what the difference would be.

The way the split test works is that the list is split into sections.

• 25% of your list will get an email with subject line 1. offering ‘buy one, get one free’.

The conversion rate was 3.7%

• 25% of your list will get an email with subject line 2. offering 50% off.

The conversion rate was 8.2% - huge!

So retailers normally prefer 50% discount.