How Ecommerce Lead Magnets Actually Work (And How to Make Them Convert Even Better)

Coupons. Discounts. Contests…

You know that they make the best lead magnets for an ecommerce store.
But at the same time…
Whenever you use them on a popup or signup form, they freaking fail to come close even to deliver the results you had hoped for, right?
What th-?!

Aren’t people supposed to fall for discounts or coupons like crazy?
Don’t they all want cheaper stuff?

Well, they do.
But making customers respond to those lead magnets isn’t as easy as just offering a discount or coupon code.
And in this post, I’ll show you how those lead magnets work and explain how you can get the most of them in your store.

Ready? Then let’s begin.

#1. Discounts

It’s a common ecommerce practice.
Whenever you want customers to buy a particular product, you discount it a little.
When you want to stop a leaving visitor in their tracks, you offer them a first-purchase rebate.
And it works, doesn’t it?

Discounts are a powerful marketing strategy that can even make us switch brands, in spite of the fact that we have always been loyal to a particular one.
According to a study published in the Global Journal of Management and Business Studies, although we develop strong brand loyalty, we break it at the sight of an irresistible offer.

But do all discounts work the same? Do they have the same effect on your visitors?
Turns out… no.
The success of your discount lead magnet will depend on a way you structure and word the offer.

For example, customers don’t think of percentage or price discounts in rational terms.

In other words, what might seem like a great deal for you, your audience could see as average at best.
Researchers from the University of Minnesota’s Carlson School of Management tested how consumers analyze and respond to various discounts and discovered a numerical blind spot.

To put it in the simplest terms, we suck at calculating discounts.
For example, researchers discovered that customers struggle to realize that getting a 50% increase in quantity or a 33% discount in price is actually the same.

Heck, it turns out that many of us would consider getting 33% extra or a 33% price reduction as two completely different propositions.

The words you use when offering the discount affect the customers’ willingness to buy (and that refers not only to the discounted product)

A couple of years ago, researchers from the University of Chicago published a study called “The Effect of Sales Promotions on the Size and Composition of the Shopping Basket.”

They discovered that customers exhibit either a promotion or prevention focus, corresponding to the desire for pleasure and avoiding pain.
As Alain Samson explains on Psychology Today:
“Promotion focus is characterized by eagerness, while prevention is characterized by vigilance.”

But how does that relate to ecommerce discounts and offers?

You see, you can phrase the discount to refer to the promotion focus (Get $$$ Off – achieving gain, pleasure).
Or you could phrase it to emphasize avoiding a loss, i.e. “Save $$$$”, targeting the prevention focus.

Discounts wording works better on people who don’t usually buy the discounted products

In a separate study, Alain Samson discovered that promotion and prevention focus work especially well for people without any established buying routines and expertise in advertised products.

How to Apply This Knowledge to Your Popup’s Strategy?

  • If, until now, you’ve been using only one approach (Get or Save), split test the other one to discover whether your audience displays a greater promotion or prevention focus.
  • Also, make sure that you use discounts visitors will see as valuable.

An exit popup featuring a coupon

An exit popup featuring a ‘classic’ save approach on GlobeIn

#2. Coupons

Coupons, discounts’ little brother, often include a monetary rebate. However, you can also issue coupons for free shipping and other incentives.
Customers can redeem them at a later date, often by typing in a coupon code on a site.
And they can cause online retailers a ton of grief, don’t they?
For one, shoppers abandon their carts because of them. Seeing a coupon code box on a checkout page makes many customers rush off to scour the web in search for a coupon.
Others, accustomed to receiving coupons, refuse to purchase any products at a full price. And unless you offer them a discount, they’ll just keep looking for another store that will.
And many try to reuse the same coupon over and over again. I’m sure you’ve experienced that on your store.
And yet…
Coupons make fantastic lead magnets.

They’re easy to distribute digitally.
You can display them directly in the popup.

Or send a coupon in an email.

Coupons generate new customers.
Often, seeing a coupon code motivates customers to take action, add a product to the basket and complete the purchase.
But to make the most of the coupon codes lead magnets, you need to understand a couple of things about how and why they work.

Like, for example, that coupons create happiness

A joint-study by and Dr. Paul J. Zak, the Professor of Neuroeconomics at Claremont Graduate University discovered that receiving coupons results in an increase in oxytocin levels in our bodies.
In fact, study participants who received a coupon were 11% happier than those who didn’t.

How is that possible?
You see, oxytocin is often referred to as the hug hormone, cuddle chemical, moral molecule, and the bliss hormone due to its effects on behavior.
What’s interesting, Dr. Zak’s study found that receiving coupons generates a greater increase in the hormone than kissing or hugging.
So, as it turns out, we love coupons more.

Coupons also reduce stress.

According to the same study, receiving coupons results in a sudden drop in stress levels.
The study concludes:
“Getting a coupon, as hard as it is to believe, is physically shown to be more enjoyable than getting a gift.”

Finally, customers are more likely to buy when they have the coupon, even though they might never redeem it

Analyzing various reward programs Associate Professor Matilda Dorotic at BI Norwegian Business School concluded that even the decision to act on a reward (a coupon, loyalty card) significantly increases the person’s willingness to purchase, before and after redeeming the coupon.
The research suggests that making the decision to grab a coupon makes customers prone to purchase, and that’s even before they redeem the coupon.

What does this mean for you?
Offering coupons with longer expiration period might result in more people buying at your store, many of whom will do so without actually redeeming the coupon.
As Dorotic states in her research:
“The mere decision to redeem a reward may boost motivation in the loyalty program, which enhances purchase behavior.”

How to Apply This Knowledge to Your Popup’s Strategy?

  • Use copy that further increases the happiness factor customers experience when receiving the coupon.
  • Test offering coupons with a longer expiration date to enhance the person’s buying behavior.

#3. Contests

Contests have long been considered the best way for online stores to raise brand awareness, promote their products, and attract customers.
And yet, many ecommerce owners struggle to achieve any meaningful results from the contests they run. Any competitions they launch failed to go viral, excite people about them or attract new subscribers.
If that’s ever happened to you too, let me show you a couple of reasons why your contests flopped.

High prize deters people from entering

Makes sense, doesn’t it?
The bigger the prize, the more people should want to enter the contest to win it, right?
Well, as it turns out, no.
You see:
Customers base their decision to enter contests on the probability of winning.
And since huge prizes seem almost impossible to win, they deter.
Let’s face, what are their chances of winning a car, for example? Probably slim. After all, how many people you know have won a car?
If you want to increase the likelihood of someone entering your contest, offer a prize they’d consider possible to win.

The odds of winning affect the decision to enter

We have an obsession with winning.
But at the same time, we rarely want to go against the odds.

One reason many contests fail is reducing the perceived odds of winning right from the start.
Just think about it:
You notice a contest promising just one prize.

You know that potentially hundreds of people will enter. And automatically make a decision to skip entering, knowing that your chances of winning are just one to a couple of hundreds. In fact, it’d take a tremendous luck to win.

Involve luck in the contest and your strategy will most likely flop.
Your audience wants to know that they stand at least some chance of winning.

Plus, if you think about it. More prizes will make your audience more likely to share your contents. After all, why would they invite friends to enter, if that would mean reducing their chances of winning? However, a couple of prizes mean they still have a chance to win.

How to Apply This Knowledge to Your Popup’s Strategy?

  • Offer a prize that seems reachable for your audience.
  • Increase the odds of winning by offering more than one prize. This way, you’ll communicate greater odds for a person to win.

A sweepstake on David's Bridal offering to win a bridal dress

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Benjamin Cahen Experienced entrepreneur, Ex-Amazon, Ex-VC, Ben is founder & CEO at Wisepops.

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