Leverage Data to Optimize Shipping Strategies During the Holiday Season

Holiday shipping strategies

Customers have come to expect free shipping when shopping online, especially during the important holiday buying season. According to Shippo’s State of Shipping Report, 62% of online shoppers say that they would not make a purchase without a free shipping option. But with rising shipping rates, many e-commerce brands are finding it difficult to absorb the cost of free shipping, leading to abandoned carts. 

Marketers are tasked with finding creative ways to stay competitive and drive sales, while minimizing shipping costs incurred by the retailer. By leveraging their most important marketing asset – their first-party customer data – brands are empowered to craft calculated strategies on  when to unlock the benefit of free shipping, and to which customers.

Determining the threshold of when to offer free shipping is key. We’ve all seen the offers of “spend $x for free shipping.” Strategically selecting the minimum spend required to receive the offer can help you maximize basket size and offset the cost of shipping. At what basket size will a customer begin to change their behavior? Perhaps the free shipping offer can encourage customers to increase the size of their cart – but only to a certain limit. For example, a customer may stop increasing their basket size once they hit $100 in order to get free shipping. Or maybe they are willing to spend $150+ for the free shipping offer.

It is also important to unpack the makeup of your highest lifetime value (LTV) customers – not just those with highest lifetime revenue. Lifetime revenue analyzes the dollar amount spent with your brand, but it doesn’t capture the full picture. This can include the cost to acquire the customer, or costs to retain the customer – like free shipping or discount codes. Two customers can have identical lifetime revenue, but different lifetime values based on these factors. For your loyal, high-value customers, offering free shipping may make sense, as the cost is offset by the overall value of their purchases. For low LTV customers who are costly to acquire, have a small basket size, and will likely only make a single purchase, you may choose to approach them differently. If a customer is costing your brand more than you are making from their purchases, offering discounts and free shipping may be counterproductive. 

Similar to distinguishing high vs. low LTV customers, you may identify additional customer groups or personas to personalize messaging for. Discount purchasers are a great example of this. A site-wide discount leaves money on the table, as many shoppers don’t need an additional incentive to make a purchase. By identifying customers who will only purchase with a discount or free shipping code, you can provide personalized codes exclusive to these groups only via more focused advertising initiatives.

By understanding customer behavior by persona and cohort, you can accurately predict how similar customers will behave. Whether you’re looking to optimize free shipping offers, increase LTV, or personalize campaigns, it all starts with your first-party data. Decile uses this data to inform strategy and personalize your customer journey. With a few small adjustments, you can make a huge impact on your bottom line and continue scaling profitably.

Contact Decile to learn more, or to schedule a demo.