This customer boosted AOV and revenue per site visitor by increasing their free shipping threshold
increase in conversion
increase in revenue/site visitor
increase in average order value
When this sports equipment brand came to Intelligems, they were just weeks away from the peak season. Like many, they were experiencing rapidly increasing pressure on margins due to rising shipping costs. The brand was looking for a way to boost average order value (AOV) and combat margin pressures heading into their busy season.
Working with Intelligems, this brand identify one component of their site as a stand out potential opportunity for driving margin improvements and AOV. The brand had an ingoing AOV of $650, but offered free shipping for all order over $100 - this resulted in nearly all (>85% of orders) receiving free shipping. The brand wanted to see how customers behavior and their bottom line would react to a higher shipping threshold.
The brand decided to use Intelligems in order to find a surefire answer to that question: would increasing their free shipping threshold boost margins and AOV, or was free shipping so key to the brand that their conversion rates would be damaged? A split test allowed them to find a scientific, unbiased answer in a way that was non-disruptive to customers.
They set up an A/B test, testing a $100 free shipping threshold (control) vs. a $500 free shipping threshold. Using intelligems they were able to split traffic to their site in real time, directing 50% of site visitors to each group. During the test, Intelligems updated the shipping rates on the back end (showing the correct rate for a given test group at checkout), as well as on the front end (updating the merchandising of the shipping offer by dynamically replacing any text related to the free shipping threshold on site).
Updating the free shipping offer to apply to orders over $500 worked exactly as they hoped, and the test results proved that. The brand saw that the $500 free shipping threshold resulted in a boost to AOV with no impact to conversion.
The higher threshold ($500) increased AOV in two ways:
They saw higher product revenue per order in the test group as people reached to get the threshold and distribution of orders shifted toward more products / higher order values
Shipping revenue increased since the higher free shipping threshold resulted in fewer orders receiving free shipping.
The test showed that increasing their free shipping threshold could bring the brand a ~6% increase in AOV and ~12% increase in revenue per site visitor!
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