Percentage Discounts vs. Free Shipping: Depends on Who You’re Asking

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Craig Smith  |  Founder & CEO

Everyone likes to feel like they’re getting a good deal, but not all offers are created equal in the minds of consumers. In a July 2014 poll by Retention Science, it was discovered that percentage discounts are overall more enticing to customers than free shipping discounts. Use a discount calculator if you may, but the calculations would still yield you the same surprising results.

30.9% of US online retailers reported that a percentage discount was the most effective, while only 21.8% said free shipping or other shipping related promotions yielded the most results. Other offers, like amount discounts (12.7%), dynamic discounts (7.3%), loyalty programs (5.5%) and multiple purchase discounts (3.6%) didn’t fare nearly as well.

It’s interesting to note though, that these numbers vary greatly when you separate them by age range. In a similar study where consumer’s ages were taken into account, the percentages change. Buyers between the ages 18-45 preferred percentage discounts, while 46-75 year olds liked the free-shipping discounts better.

Consumers who are considered between the ages 25-34, or “Older Millennials”, were shown to be the biggest advocates for discount offers, with 34.1% favoring discounts and only 13.9% saying they would take a free-shipping offer over a discount one. Those numbers are reversed though when you switch up the ages. Older generations-those between 56-65 years old-preferred the free-shipping discount at 35.5%, and they were the least likely to like discounts over free-shipping.

It’s important for ecommerce and other online retailers to take these kinds of polls into consideration when coming up with different promotions, and decide which one is best to effectively reach their target market.

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