Conversion

The Battle Of The Holiday Marketing Promotions: Dollars-Off vs Percentage-Off Discounts10 min read

the-battle-of-the-holiday-marketing-promotions:-dollars-off-vs.-percentage-off-discounts
 

The holiday marketing landscape is crowded. I’m sure by now, you’ve started to see an influx of emails hit your inbox. And with good reason. Over the next few weeks, consumers will be shopping in droves, which means ecommerce brands need to work hard to stand out and compete for their dollars.

Competition during the holiday shopping season is fierce. Data shows that as Thanksgiving week approaches, you can expect to see a 4X increase in the number of emails brands send at the beginning of that week. And during Cyber Weekend specifically, you can expect to see a 7X increase in the number of discount-focused emails brands send.

Yet while competition heats up, consumers only have so much attention they can and are willing to give brands during this busy time of year. When their inboxes start overflowing with emails, it’s common to see open rates decline. Too many messages, too little time.

Given that the holiday marketing landscape is noisy and crowded, how can you best compete to make sure your emails don’t become a casualty of the ignored inbox?

Last week, we took a look at why timely discount-focused emails help you compete during the holidays. (Missed it? Catch up here.)

Data based on 135,000 emails sent by 5,000 brands during the holidays last year (November 1-December 31, 2018) representing $425 million dollars in sales clearly showed there are clear points during the holiday marketing season when you should think about sending your emails in order to give your brand a better chance of standing out. Brands are increasingly realizing this and that’s why they’re sending discount-focused campaigns earlier and earlier each year.

But what types of discounts capture your customers’ attention best?

Evan Cover on our business intelligence team dug into that same data from last year and looked at how brands are using dollars-off vs. percentage-off discounts to compete—specifically, how they’re using them in their email subject lines.

Let’s first take a look at what we’ll call the baseline—what the data shows cumulatively across the 135,000 campaigns Evan analyzed. Then, let’s take a look at the same measures across a few specific verticals, which show some key differences to note.

Discount-focused campaigns sent during the holidays

Of the 135,000 campaigns sent during the 2018 holiday season (November 1-December 31, 2018), 46 percent of the total emails sent included a discount-focused message in the subject line (nearly 62,000). Of those discount-focused campaigns, 43 percent (nearly 27,000) featured a percentage-off discount in the subject line while only 11 percent (nearly 7,000) featured a dollars-off promotion. (The remaining 46 percent of discount-focused campaigns didn’t contain something as specific as dollars-off or a percentage-off discount, so we’ve omitted them from this particular analysis.)

Holiday season 2018: discount-focused campaigns sent (in aggregate)

Total campaigns sent 135,105
Total discount-focused campaigns sent 61,965 (46% of total sends)
Total discount-focused campaigns with percentage-off discounts 26,791 (43% of discount-focused sends)
Total discount-focused campaigns with dollars-off discounts 6,849 (11% of discount-focused sends)

Let’s dig in a little further and look at the overall volume and the results of the campaigns that were sent during the 2018 holiday season.

Holiday season 2018: dollars-off vs. percentage-off promotions (in aggregate)

Holiday season:
Percentage-off promotions
Holiday season:
Dollars-off promotions
Campaigns sent 26,791 6,849
Average # of recipients 43,394 48,224
Average open rate 12% 14%
Average revenue per recipient (RPR) $0.21 $0.23

While brands sent significantly fewer emails with dollars-off promotions in the subject line of their emails, they actually sent these emails to more customers. With dollars-off promotions, brands saw a higher average open rate (14 percent) than they did with percentage-off promotions (12 percent).

While it’s important to measure the performance of your email marketing strategy in terms of growth and revenue, you should also be mindful of the trickle-down effect this seemingly small difference in open rates has on overall performance. If more people open your email, you have more potential people who will click through to your website and convert. While trying to get more people to open your emails, it’s important to make sure your messages are relevant to your audience rather than mass-blasting your emails to as many people as possible (that’s where the principles of segmentation and personalization come into play).

Looking at the average revenue per recipient (RPR), there’s a $0.02 difference between the performance of the percentage-off and dollars-off promotions in aggregate. Those pennies can go a long way, especially if you’re sending to a large group of your customers—maybe more than you may typically send to.

Now let’s take a look at the specific performance of these same campaign types but let’s isolate the time period and only look at those sent during Cyber Weekend last year (November 22-26, 2018).

Cyber Weekend 2018: dollars-off vs. percentage-off promotions (in aggregate)

Cyber Weekend:
Percentage-off promotions
Cyber Weekend:
Dollars-off promotions
Campaigns sent 8,896 1,147
Percentage of campaigns sent 32% 4.14%
Average # of recipients 45,328 43,926
Average open rate 11% 13%
Average revenue per recipient (RPR) $0.21 $0.31

Anytime you look at this type of analysis, some of the most interesting tidbits come from the daily data, especially during this highly competitive time of year.

Over the five-day Cyber Weekend, there were three key days where the results from Percentage-off campaigns were fairly significant compared to the dollars-off campaigns—Thanksgiving, Black Friday, and Cyber Monday.

Let’s look at Thanksgiving and Black Friday.

Thanksgiving and Black Friday 2018: dollars-off vs. percentage-off promotions (in aggregate)

Thanksgiving: Percentage-off promotions Thanksgiving:
Dollars-off promotions
Black Friday: Percentage-off promotions Black Friday: Dollars-off promotions
Campaigns sent 1,058 129 2,664 347
Percent of campaigns sent 26.10% 3.18% 34.91% 4.55%
Average # of recipients 45,331 35,895 39,770 37,334
Average open rate 12% 16% 12% 13%
Average revenue per recipient (RPR) $0.27 $0.46 $0.27 $0.47

Across this two-day period, brands sent 3,722 percentage-off focused campaigns, and saw an average open rate of 12 percent and an average revenue per recipient of $0.27.

For dollars-off focused campaigns, brands sent a total of only 476 campaigns but those emails saw an average open rate of 15 percent and an average revenue per recipient of $0.47—a 74 percent higher RPR than the percentage-off emails sent during the same time frame. It’s important to note that when looking at this data, it reflects averages. In the case of dollars-off promotions, since brands sent fewer of these messages, the campaigns that performed very well can weight the average RPR. In 2018, data shows that these dollars-off campaigns performed well, especially on Black Friday, and they drove up the RPR (for due diligence, we looked at this from a median and averages RPR perspective). Then, as you’ll see, the dollars-off campaigns had similar median RPR to other discount campaigns on Saturday and Sunday.

On Thanksgiving alone, dollars-off campaigns had a 16 percent open rate—four points higher than percentage-off campaigns and as seen above had 69 percent higher RPR.

On Saturday and Sunday of Cyber Weekend, the rates for these two campaign types were very similar, so let’s fast-forward to Cyber Monday where we see similar results to Thanksgiving and Black Friday.

Cyber Monday 2018: dollars-off vs. percentage-off promotions (in aggregate)

Cyber Monday:
Percentage-off promotions
Cyber Monday:
Dollars-off promotions
Campaigns sent 2,604 357
Percent of campaigns sent 35.17% 4.82%
Average # of recipients 41,658 43,695
Average open rate 11% 12%
Average revenue per recipient (RPR) $0.21 $0.33

On Cyber Monday, brands saw open rates of 11 percent on average for their percentage-off campaigns and 12 percent on average for dollars-off campaigns, while average revenue per recipient came in 54 percent higher with dollars-off promotions.

Dollars-off vs. percentage-off promotions during Cyber Weekend 2018 (by industry)

Now let’s take a look at how dollars-off vs. percentage-off promotions fared during Cyber Weekend specifically last year (November 22-26, 2018) across some specific industries—fashion and apparel, jewelry and accessories, health and fitness, beauty and cosmetics, and garden and home goods.

As you may expect, across these industries, fashion and apparel had the greatest amount of campaigns sent during this time frame followed by jewelry and accessories. Brands in the garden and home goods industry sent the fewest amount of campaigns during this timeframe but saw the biggest difference in the performance of the two types of promotional emails.

Before you dig into the industry-specific data, here are a couple of things to note about the performance of open rates and average revenue per recipient:

  • Open Rates: Interestingly as we looked at open rate performance across five verticals, in three verticals—fashion and apparel, health and fitness, and garden and home goods, we saw higher open rates from dollars-off promotions. While in the remaining two,  jewelry and accessories and beauty and cosmetics the promotions performed exactly the same.
  • Average revenue per recipient: Across these five industries, three showed a higher average revenue per recipient with dollars-off campaigns, which ranged from $0.05 more per recipient (fashion and apparel) to a whopping $0.51 more per recipient (the garden and home goods industry). In both the health and fitness industry and the beauty and cosmetics industry, percentage-off campaigns appeared to perform better.

Cyber Weekend 2018: fashion and apparel industry

Percentage-off promotions Dollars-off promotions
Campaigns sent 2,605 383
Percentage of campaigns sent 52% 8%
Average # of recipients 77,480 48,819
Average open rate 11% 13%
Average revenue per recipient (RPR) $0.20 $0.25

Cyber Weekend 2018: jewelry and accessories industry

Percentage-off promotions Dollars-off promotions
Campaigns sent 1,311 93
Percentage of campaigns sent 54% 4%
Average # of recipients 32,714 35,962
Average open rate 11% 11%
Average revenue per recipient (RPR) $0.17 $0.24

Cyber Weekend 2018: health and fitness industry

Percentage-off promotions Dollars-off promotions
Campaigns sent 974 156
Percentage of campaigns sent 43% 7%
Average # of recipients 21,872 26,444
Average open rate 11% 13%
Average revenue per recipient (RPR) $0.24 $0.18

Cyber Weekend 2018: beauty and cosmetics industry

Percentage-off promotions Dollars-off promotions
Campaigns sent 1,017 97
Percentage of campaigns sent 52% 5%
Average # of recipients 46,396 63,333
Average open rate 11% 11%
Average revenue per recipient (RPR) $0.30 $0.10

Cyber Weekend 2018: garden and home goods industry

Percentage-off promotions Dollars-off promotions
Campaigns sent 916 141
Percentage of campaigns sent 43% 7%
Average # of recipients 26,393 26,548
Average open rate 11% 16%
Average revenue per recipient (RPR) $0.17 $0.68

Let’s (gift) wrap this up 

So after looking at this data, where did you fall? Are you team dollars-off or team percentage-off?

Though the data shows brands tend to send fewer dollars-off campaigns during the holidays overall, they do tend to send them to a wider audience. Interestingly, at this time of the year, that approach seems to be yielding higher open rates and a greater average revenue recipient.

When you look at specific industries, you can clearly see dollars-off campaigns tend to outperform percentage-off campaigns in some industries more so than others. And while the data shows which types of discount-focused promotions worked best for brands in different industries last year, it’s still a good idea to test them with your specific audience.

What may have worked for well for one brand in your industry may not work as well for yours, so use this data as a baseline and set up some A/B tests to figure out which types of promotions resonate best with your particular audience at this time of year.

Before I came to Klaviyo, I remember spending lots of time collaborating with fellow marketers on whether we should use a percentage-based discount or one focused on dollars-off. We didn’t have access to the data like this, so we couldn’t use it to inform the tests we built. We only had our own campaign history to use alongside our best judgment.

A good old-fashioned historical campaign analysis can always help you learn what’s performed well for your specific brand this year and you can use it to influence your holiday marketing strategy. And hopefully, this data can help you test something new or give you the confidence to reaffirm a decision you’ve already made about the specific holiday marketing promotions you plan to run this year. While the holidays are fast-approaching, you still have time to use this data and make some tweaks to your promotion plan in order to have a strong holiday season this year.

In the next installment of this four-part series, you’ll also get a glimpse into the competition that takes place post-Cyber Weekend, with a special look at which days of the week seem to be the most competitive and tips on how you can navigate them.

Looking for more insights, ideas, and resources to help you have a successful Cyber Weekend? Check out the ecommerce holiday marketing hub

This article was originally published by our friends at Klaviyo.

About the author

Steve Hutt

I'm obsessed with entrepreneurship, commerce, and Shopify. If you have the desire to implement what's working today for direct-to-consumer brands on Shopify, I'm excited you're here! Get the Shopify help you need. This industry blog and podcast is my digital brain where my guests and I share cutting-edge marketing strategy, must-have Shopify apps, and marketing platforms that will help you build and scale lifetime customer loyalty. To do this, I'm part of the Merchant Success Team at Shopify Plus and host of the eCommerce Fastlane Podcast.