They’re mathematically identical, but this case study reveals buyer perception trumps numbers

Here’s a little math question. Imagine I have two different brands of whisky on sale. Identical liquid, amount, etc. Let’s pretend they taste the same, too.

One brand is $15, marked down from its original price of $30 per bottle.

The other brand is $30, but it’s ‘buy one bottle, get one free’.

Which one is better value?

Of course, it’s a trick question, and in terms of volume of liquid per dollar spent, the outcome is the same.

However, that’s not how a buyer perceives it, and when working as a marketing consultant, your choice could be the difference between thousands of dollars of potential revenue for your client.

Don’t make the mistake I did.

How Did I Come to Learn From This Mistake?

One of my previous clients had the need to clear stock. Their product was seasonal, consumable, and had a sell-by date. It couldn’t be sat on shelves any longer.

To boost revenue and run-through stock, the simplest way was to run a flash sale. In my mind ‘buy one, get one free’ was the best option.

Grocery stores do it all of the time as a way to lower inventory or simply boost average order value.

I decided to split-test in Mailchimp to see what the difference would be.

The way the split test works is that the list is split into sections.

• 25% of your list will get an email with subject line 1. offering ‘buy one, get one free’.
• 25% of your list will get an email with subject line 2. offering 50% off.
• The best performing email is chosen.
• The remaining 50% of your email list receives the winning email.

Below are the number of opens for the email offering ‘buy one, get one free’.

As you can see above, the first 25% of the email list this was sent to gave me almost 21,000 opens and over 2,000 clicks. All for offer 1.

The conversion rate was 3.7%

The split test meant that the next subject line offered 50% off the product, instead of ‘buy one, get one free’. This was offer 2.

As you can see above, it received a 16.5% increase in email-open rate, but a staggering 27% increase in click-through rate.

More opens, more clicks, and far more sales.

The conversion rate of this offer was 8.6% — huge.

The Results: What You Should Offer

Without going into too much detail for my client, the 50% off offer produced a sales uplift of 266% compared to its ‘buy one, get one free’ counterpart.

Let that sink in: 266% more sales than the almost mathematically identical offer.

Needless to say, we rolled with that for the rest of the email list sends and continued to position it as a 50% off sale.

In the years since, I’ve tested this offer again. In the exact same fashion with scientifically replicable results.

My own bias and preference towards ‘buy one, get one free’ was exposed to be false. Fifty percent off is far better.

But Why Do People Prefer It? Framing

The reason for this could be buyer perception. In ‘buy one, get one free’, you’re forcing the prospect to take action before they get a deal and the initial purchase is marked at full price.

However, with half off, the initial item is seen to be 50% less than it normally is. People perceive it as a better deal. According to Grewal and Marmorstein, “consumers show a tendency to assess the utility of price savings as a proportion of the item’s price.”

Moving forward, in your own marketing efforts, it’s clear that the power of ‘buy one, get one’ has faded and in a price-conscious, competitive space, the deep discount rules all.