Reward Framing and Offer Perception

I used to do a lot of offer testing for a company with 35 e-commerce sites. Offer tests work like this: the traffic is split 50/50, one group sees one particular offer to buy, say a “buy 2 get 1 free” offer, the other group is given a different offer of “33% off your order when you buy 3 items.” Now, if the customer buys exactly 3 items and they are all priced the same then the discount to the customer is the same. However, the perception of the offer is not the same. We tested this very offer combo on two different sites during two different times of the year. Each time we tested it “buy 2 get 1 free” out performed “33% off your order when you buy 3 items.”

In a test done in the physical realm, car wash loyalty cards were tested. Customers to a car wash were given two different kinds of loyalty card. We’ve all seen these cards, they have little icons on them and the business owner punches them out or puts a sticker on the icons to indicate a purchase has been made. One type of card had a “buy 8 get the 9th free” message on it. The other had a “buy 10 get one free” message but two of the icons that indicate you had made a purchase were punched out. So, both types of cards have exactly the same value, they both require 8 purchases to get one for free. However, for the buy 8 get 1 free card only 19% of customers redeemed it for a free car wash while for the buy 10 get one free with two purchases already made card 34% redeemed it for the free car wash.

That’s a pretty big difference. So, if you’re going to offer the customer a reward of some type, consider re-framing that offer in another way and see which one converts at a higher rate.