Gift with Collection Value + Volume Discount

Learn how to Combine Gift with Collection and Volume Discount to boost AOV this BFCM

Creating promotions that appeal to your customers while encouraging higher sales can be a game changer for your business. By combining Gift with Collection Value and Volume Discount, you can give shoppers extra incentives to buy more from a specific collection of products while also offering a price break for larger purchases.

This powerful pairing can help you move more inventory and boost your average order value.

How the Combination Works

Here’s how each promotion works and why they’re so effective together:

• Gift with Collection Value: This promotion offers a free gift when a customer spends a certain amount within a specific product collection. It motivates customers to focus on buying from that collection to qualify for the reward, making it a great way to promote certain product lines.

• Volume Discount: This strategy gives customers a discount when they purchase more items, either as a percentage off or a fixed amount. It encourages bulk buying by rewarding customers with a price reduction as they increase the number of items in their cart.

When combined, these two promotions drive sales in multiple ways. Customers are encouraged to spend more within a particular collection to receive the free gift, and they also benefit from a volume discount when they buy larger quantities. This combination works particularly well for collections that are designed to be bought together or items customers tend to purchase in bulk.

Why It’s Effective

This combination works because it targets two key customer motivations: maximizing value and getting more for their money.

• Focuses on Specific Collections: By offering the gift tied to spending within a collection, you can promote specific product lines and encourage customers to explore more options within that collection.

• Encourages Bulk Buying: The volume discount provides an immediate price break, motivating customers to purchase more items in one go, which naturally increases the average order value.

• Increases Perceived Value: Customers feel they’re getting both a discount and a bonus when they purchase from the collection. The free gift adds extra value to their cart, while the volume discount helps justify spending more upfront.

How to Calculate Profit When Using These Two Campaigns

To make sure this promotion benefits your bottom line, it’s important to calculate the impact of both the free gift and the discount. Here’s a formula to help you determine your profit:

Profit = (Revenue from discounted items in collection + Additional sales from Gift with Collection Value) − (COGS of discounted items + COGS of free gift)

• Revenue from discounted items: Total revenue from items sold in the collection that qualify for the volume discount.

• Additional sales from Gift with Collection Value: The extra revenue generated from customers spending more to qualify for the free gift.

• COGS of discounted items: The cost of goods sold for the items offered at a volume discount.

• COGS of free gift: The cost of the gift offered when a customer reaches the collection value threshold.

By balancing these factors, you can ensure that your promotion increases sales while keeping your profit margins healthy.

---

Example in Action: Comparing No Promotions vs. Using Promotions

Let’s look at a store selling fitness equipment and how Gift with Collection Value and Volume Discount can work together to drive sales for a specific collection of products. The goal is to promote the "summer workout collection", which includes items like dumbbells, resistance bands, and yoga mats.

• Gift with Collection Value: “Spend $200 on our summer workout collection and get a free gym bag.”

• Volume Discount: “Buy 2 sets of dumbbells and get 15% off.”

Scenario 1: Without Promotion

A customer buys just one set of dumbbells at $75.

• Revenue: 1 dumbbell set = $75

• COGS: Each dumbbell set costs $30 to produce: COGS = $30

• Profit: Profit = Revenue - COGS $75 - $30 = $45

In this scenario, the store makes $45 profit on a $75 sale. However, the customer only purchases one item, resulting in a lower cart value.

---

Scenario 2: With Promotion (Gift with Collection Value + Volume Discount)

With both the Gift with Collection Value and Volume Discount promotions, the customer is incentivized to spend more. They add 2 dumbbell sets to their cart to qualify for the volume discount and additional items to reach the $200 threshold for the free gym bag.

• Revenue before discount: 2 dumbbell sets at $75 each = $150 Plus, a resistance band priced at $60 = $60 Total = $210

• Volume Discount (15% on dumbbells): $150 × 0.15 = $22.50

• Revenue after discount: $210 - $22.50 = $187.50

• COGS of dumbbells: 2 dumbbell sets at $30 each = $60

• COGS of resistance band: $60 × 0.40 (COGS rate) = $24

• COGS of free gift (gym bag): The gym bag costs $10 to produce. COGS of gift = $10

• Total COGS: $60 (dumbbells) + $24 (resistance band) + $10 (free gym bag) = $94

• Profit: Profit = Revenue after Discount - Total COGS $187.50 - $94 = $93.50

---

Understanding the Calculation

In Scenario 2 (with promotions), the Average Order Value (AOV) increases significantly compared to Scenario 1 (without promotion). Here’s why:

• In Scenario 1, the customer buys just 1 set of dumbbells, generating $75 in revenue with a profit of $45.

• In Scenario 2, the customer is motivated by both the Gift with Collection Value and the Volume Discount, leading them to buy 2 dumbbells and additional items from the collection, resulting in a much higher AOV and profit.

---

What Really Matters: AOV and Customer Behavior

1. Increased AOV and Cart Value: The customer spends $210 before discounts and $187.50 after the volume discount. This is a significant increase compared to the $75 spent in Scenario 1.

2. More Inventory Moved: The store moves more products by using both promotions, increasing the total number of items purchased.

3. Targeted Product Focus: The promotions direct customer attention to key items in the collection (like dumbbells), aligning with the store’s goal to sell more of these specific products.

4. Customer Perception: The customer feels like they’re getting a great deal by receiving both a discount on their dumbbells and a free gym bag. This enhanced shopping experience increases customer satisfaction and may encourage repeat purchases.

---

Revisiting the Example:

• Scenario 1 (No Promotion): Profit = $45 AOV = $75

• Scenario 2 (With Promotion): Profit = $93.50 AOV = $187.50

By using both the Gift with Collection Value and Volume Discount promotions, the store increases its profit from $45 to $93.50—a difference of $48.50. More importantly, the customer purchases more items, resulting in a higher cart value and aligning with the store's goal of boosting sales from the summer workout collection.

---

Why It’s Still Beneficial:

• Increased AOV: The customer spends significantly more with the promotions, increasing both AOV and the store's overall revenue.

• Higher Sales Volume: More products are sold, clearing out inventory faster.

• Enhanced Customer Experience: The customer walks away with a sense of receiving greater value, increasing the likelihood of repeat purchases.

The perceived drop in profit per item (due to the volume discount) is offset by the higher overall profit and increased sales volume, making this combination a win-win for merchants looking to clear inventory or promote specific collections.

---

Best Products for This Combination

The best products for combining Gift with Collection Value and Volume Discount are typically items that:

1. Belong to a well-defined collection: This encourages customers to buy multiple products from the same line or category.

2. Are frequently bought in bulk or multiples: Volume discounts work best when customers are incentivized to buy more of the same or similar items.

3. Have decent profit margins: This helps absorb the cost of the free gift and discount while still maintaining profitability.

Here are some product categories that work exceptionally well for this combination:

Skincare and Beauty Products

Why It Works: Customers often buy multiple products from a skincare collection, such as moisturizers, cleansers, or serums, to complete a skincare regimen. Offering a free gift, like a travel-sized skincare kit, when they spend a certain amount on a specific collection encourages them to explore more items.

Volume Discount Example: “Buy 3 face masks, get 10% off.”

Fitness Equipment

Why It Works: Fitness collections typically include items like dumbbells, resistance bands, and yoga mats, which are often purchased together. Offering a free gift (e.g., a gym bag) when they spend a certain amount on a collection can push customers to buy multiple items to build their home gym setup.

Volume Discount Example: “Buy 2 pairs of dumbbells and get 15% off.”

Clothing and Apparel

Why It Works: Clothing retailers often sell items that customers buy in multiples, such as t-shirts, socks, or activewear. Offering a free gift (e.g., a branded tote bag or accessory) when they spend over a certain amount on a seasonal collection can encourage them to buy more to meet the threshold.

Volume Discount Example: “Buy 3 t-shirts, get 10% off.”

Home and Kitchen Essentials

Why It Works: Kitchen items like cookware, utensils, or kitchen gadgets are often bought in sets or multiples. Offering a free gift (e.g., a kitchen tool or small appliance) when spending a certain amount on a kitchen collection can encourage customers to add more items to their cart.

Volume Discount Example: “Buy 4 kitchen utensils, get 15% off.”

Health and Wellness Products

Why It Works: Supplements, vitamins, and wellness products are frequently purchased in bulk. A free gift (e.g., a wellness journal or a travel-size supplement pack) for spending over a certain amount on a wellness collection can drive customers to stock up and qualify for the gift.

Volume Discount Example: “Buy 2 packs of vitamins, get 10% off.”

Stationery and Office Supplies

Why It Works: Stationery products like notebooks, pens, or office organizers are often purchased in larger quantities, especially for back-to-school or office restocking. A free gift (e.g., a custom notebook or pen set) can motivate customers to reach the required spend.

Volume Discount Example: “Buy 3 notebooks, get 15% off.”

Baby Products

Why It Works: Baby product collections, like those for diapers, clothes, or feeding accessories, are often bought in larger quantities or sets. A free gift (e.g., a diaper bag or baby toy) for spending on a baby collection will encourage parents to add more to their carts.

Volume Discount Example: “Buy 2 packs of diapers, get 10% off.”

Conclusion

Combining Gift with Collection Value and Volume Discount offers customers the perfect mix of savings and rewards. This strategy encourages customers to buy more from a specific product line, while giving them extra value in the form of a free gift and a price break.

By setting the right collection value and discount, you can use this promotion to increase your average order value and move more inventory, all while keeping your profits healthy.