When a shopper comes to your store to buy one item, wouldn’t it be nice if they’d buy additional items as well? After a customer lands on your website to buy a product, the ultimate aim is to entice your customers to buy more via good offers. Here’s where the basket based pricing strategy comes into play.
It’s a smart marketing tactic that gives customers a good personalized deal. As we’ll expand on it, you’ll realize that it has both short and long term benefits.
We’ll talk about what basket-based pricing is and examine two examples of e-commerce stores that get the basket based pricing strategy right.
Understanding basket-based pricing
Basket-based pricing strategies work by offering personalized incentives when someone is about to make a purchase. It’s an intelligent way to offer discounts based on real-time data and browsing history.
Suppose a customer saved a headphone to buy it later. Like every other retailer, you want to sell it as soon as possible. There are several reasons why.
First of all, you don’t want her to buy it somewhere else. The longer she waits, it’s more likely that she find similar/better deals for the product she’s looking for.
Or, she might decide that she doesn’t need it/want it anymore. There might be a thousand reasons why, and once she has given up on the product, there’s not much you can do.
Moreover, you naturally want to profit now, not later. No retailer ever said, “I’m glad that she saved the product to buy later”. The only way to continuously grow an e-commerce business is to encourage customers to buy now and come back again for more.
At this point, offer her a personalized discount for that particular product. You’ll see that it will yield incredible results. Why though?
The thing about today’s shoppers is that they care for a personalized shopping experience so much that 63% of US shoppers are willing to share personal data for it. Everything else is equal between two stores, 78% of them would prefer the store that offers a personalized shopping experience.
Interestingly, some confuse basket-based pricing and product bundling. But in reality, they are not alike.
Difference between basket-based pricing and product bundling
Product bundling is an effective one-size-fits-all tactic that is highly different from basket-based pricing.
They are fundamentally different strategies in the sense that one is designed to catch a large audience whereas the other is designed to build customer loyalty via personalized offers.
However, they share one thing in common. If successfully applied, they both increase the basket size.
Benefits of basket-based pricing
A major benefit for your customers is a personalized shopping experience. To succeed in the world of e-commerce, you need to do more than simply place products on product and category pages. Looking at 2019 e-commerce trends, it’s obvious that personal shopping experience is a must-have for customers, as well as e-commerce businesses.
By monitoring what your customers buy or browse, you can create customer-specific recommendations with discounts that encourage them to buy.
What’s more, knowing they’re able to get discounts that aren’t available on the normal marketplace makes them feel special and cared for.
With the impact of personalized shopping experience and great deals, you’ll build a loyalty relationship with your return customers.
Inciting customers to make additional purchases naturally increase the average basket size. We know that customer acquisition can be costly. Instead, you should allocate some of your resources to increase repeat purchases and basket size.
To learn from the experiences of others, let’s examine two use cases.
When it comes to basket-based strategies, Amazon is a go-to-resource. The company has a personalization service allowing businesses (not only the sellers on Amazon but also AWS users) to personalize every stage of the purchasing journey.
Real-time personalized product recommendations, e-mails, content, and offers help businesses thrive in their industry.
Of course, the AWS’s machine learning technology that makes this service possible is the result of years of experience on Amazon.com. The company uses this technology for personalized offers as well as personalized product recommendations.
Another feature Amazon uses is the add-on feature.
They use this strategy on low-priced products to encourage more sales. But in order to be eligible for this, you need to spend £20 on these add-on products.
MyProtein is a health and supplement e-commerce store that sells a range of products.
In the example above, you’ll see that we’ve added two items to our basket. One great strategy they use is to ask whether or not you want to supersize one of your products.
It also tells you the savings you’ll make by doing so. When you click that button, your basket is automatically updated.
This smooth customer experience is brilliant for keeping people within the checkout page and increasing the likelihood of them making a purchase.
Now that we’ve added these products to the basket, we see the following screen.
Here, we’re able to see that if we spend £35.00 more, we qualify for a free gift. If this is your first experience with MyProtein, then a free gift sounds like a great idea.
This encourages people to head back into the category and product pages in order to claim the free gift.
Basket-based pricing is a great strategy to build a personal relationship with your customers and increase your basket size.
When you use this strategy, you encourage customers to buy more than they initially planned.
By taking an intelligence-first approach, you can learn more about your customers but more importantly, learn more about the ways to keep them happy.