CBR Briefing #34

Email promotions lift revenue, even when customers don’t use them
Offering discounts can increase sales of products that aren’t being advertised.

A bar chart shows that consumers who received an email promotion increased their purchases by an average of three dollars and three cents while it was active, while the subset of that group who received but did not redeem the promotion spent two dollars and eight one cents more. In the week after the promotion, those who had received it increased their purchases by one dollar and fifty-five cents.

About 90 percent of the spending boost came from people who didn’t redeem the offers but still bought from the site.

Emails offering two-for-one discounts, free shipping, and other promotions prompt customers to buy products and services, according to Stanford’s Navdeep Sahni, Chicago Booth’s Pradeep K. Chintagunta, and Booth PhD student Dan Zou. And consumers tend to spend more, even if they don’t redeem the discounts.
The researchers analyzed 70 targeted email promotions conducted by a large online ticket reseller. They find, on average, people who received email promotions spent 37 percent, or about $3.03, more during the promotion than those who didn’t receive offers (see chart). About 90 percent of the spending increase came from people who didn’t redeem the offers but still bought from the site.
Many email recipients increased spending on tickets that were not being promoted. For example, purchases of Major League Baseball tickets increased significantly when no discount offers were made for MLB events.
The effects extended to the week after the promotions ended. Spending increased, on average, by $1.55 in the week after an offer expired.

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Works Cited

Navdeep Sahni, Dan Zou, and Pradeep K. Chintagunta, “Effects of Targeted Promotions: Evidence from Field Experiments,” Working paper, November 2014.

CBR Briefing #34

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