Free Gift with Purchase (GWP) — The "No-Discount" Strategy
Free gift with purchase lets you incentivize without discounting. Learn the psychology, threshold strategies, and how to combine GWP with intent-based targeting to protect margins while boosting AOV.
Muhammed Tüfekyapan
Key Takeaways
- 1 Free gift with purchase raises AOV and conversion while protecting your prices. Discounts do the opposite.
- 2 Start with a threshold at AOV + 25 to 35%, then test. Treat it as a starting point, not a law.
- 3 A $15 gift feels more valuable than a $15 discount. Getting triggers emotion, saving triggers calculation.
- 4 Use tiered thresholds with a different gift at each level (like $50, $100, $200) so every customer can qualify for something.
- 5 Dedicated buyers get the gift and pay full price. Save triggered discounts for hesitant visitors only.
- 6 Track AOV change, gift redemption rate, and margin per order. Then optimise: test the threshold, test the gift, test the tiers.
You want more sales. But you do not want to discount. Every 20% off sale teaches customers to wait. Every BOGO deal eats your margin. There has to be another way. There is. It is called free gift with purchase.
Gift with purchase (GWP) means your customer gets a free item when they buy something or spend a certain amount. No coupon codes. No price cuts. The customer pays full price and gets something extra on top.
This matters more than most merchants think. Discounts tell customers "we will sell for less if you push us." Gifts tell customers "we reward people who shop with us." Same cost for you. Very different message.
What This Guide Covers:
- What GWP means and how it differs from discounts
- The benefits of GWP and the psychology behind why gifts beat discounts
- How to set thresholds (and tiered thresholds) that increase average order value
- A worked example with real campaign math
- Concrete gift ideas and which gifts to avoid
- How to measure and optimise your GWP campaign
This is not another "discount strategy" article. This is a complete free gift promotion strategy about how to give value without giving away your margins.
What Is Free Gift with Purchase?
Gift with purchase (often shortened to GWP in marketing) is a promotion where the customer receives a free item after meeting a condition. The condition is usually one of these:
- Spending a minimum amount, like "spend $100"
- Buying a specific product
- Buying from a specific collection
A simple example: "Spend $100, get a free travel bag." The customer decides to buy and get a free gift. They do not save money. They get something extra. That is the whole idea.
You may also see the term purchase with purchase (PWP). That is the paid cousin of GWP. The customer buys one item and gets the option to buy a second item at a special price. This guide is about the free version.
How It Differs from Discounts
| Aspect | Discount | Free Gift with Purchase |
|---|---|---|
| Customer perception | "I saved money" | "I got a reward" |
| Price integrity | Reduced | Maintained |
| Brand positioning | Sale brand | Premium brand |
| Margin impact | Direct hit | Controlled cost |
| Customer training | Wait for sales | Shop for value |
Types of GWP Offers
There are a few common ways to structure a GWP promotion:
- Threshold based: "Spend $100, get a free gift"
- Product based: "Buy this serum, get a free mini"
- Collection based: "Buy anything from the summer line, get a free tote"
- Tiered gifts: "Spend $50 get Gift A, spend $100 get Gift B, spend $200 get Gift C"
- Customer choice: "Spend $100, pick your free gift"
The threshold based offer is the most common. It is simple, it is clear, and it pushes customers to add one more item to reach the goal.
The Benefits of GWP
Why do so many Shopify brands use GWP? Because it solves several problems at once:
- Higher average order value. Customers add items to reach the gift threshold.
- Higher conversion. A visible gift in the cart gives hesitant visitors a reason to check out now.
- Protected margins. A gift usually costs you far less than an equivalent discount.
- Protected brand. You never train customers to wait for a sale.
- Product discovery. A free sample introduces customers to products they may buy later at full price.
- Inventory clearing without "clearance." Slow movers become gifts instead of discounted leftovers.
The rest of this guide shows you how to get each of these benefits in practice.
The Psychology: Why Gifts Beat Discounts
The difference between a gift and a discount is not mathematical. It is psychological. Understanding this is the difference between a campaign that sort of works and one that changes customer behavior.
The "Getting" vs. "Saving" Effect
When a customer saves $15 with a discount, they do a quick calculation. "I was going to pay $100, now I pay $85. Nice." Logical. Forgettable.
When a customer gets a free gift worth $15, something different happens. They are not calculating. They are feeling. "I got something for free." The emotional response is bigger than the actual value.
Behavioral economist Dan Ariely calls this the Zero Price Effect. When something is free, people do not just prefer it a little more. They overvalue it. In one well known experiment, people chose a free low cost chocolate over a premium truffle at half price. The truffle was the rational choice. But "free" short circuits rational thinking.
For your store, this means a $15 gift can feel more valuable than a $15 discount, even though they cost you about the same. The word "free" does the heavy lifting.
Five Psychological Principles at Work
1. Loss Aversion in Reverse
People hate losing something they feel they almost had.
Here is how it plays out. A customer has $85 in their cart. They see a message: "Add $15 more to get a free silk travel pouch." That pouch is now mentally theirs. Leaving without it feels like a loss. So they browse for one more item. Not because they need it. Because abandoning the gift feels wrong.
Discounts do not trigger this the same way. "Save 15% if you spend $100" is an opportunity. "Get your free gift when you spend $100" is a possession at risk. The emotional weight is completely different.
2. The Reciprocity Effect
When someone gives you something unexpected, you feel an instinct to give back. This is hardwired.
A discount feels transactional. "I gave you money, you gave me a lower price." Nobody feels grateful after a negotiation.
A gift feels personal. "You did not have to do that, but you did." That goodwill extends beyond one order. The customer is more likely to leave a review, recommend you to a friend, and come back. Not because of a loyalty program. Because of genuine appreciation.
3. Perceived Value Disconnect
Here is a truth many merchants miss. Customers do not know your cost of goods. They judge value by retail context, not wholesale pricing.
A branded travel bag that costs you $5 to produce might retail for $25. Offered as a free gift, the customer perceives $25 in value. Your real cost is $5. That is a 5:1 perceived to actual value ratio. No discount can do this. A $5 discount is always perceived as exactly $5.
This is why gift selection matters so much. The best gifts have high perceived value and low cost. Exclusive items, things customers cannot buy separately, push this even further because there is no reference price to compare against.
4. Brand Perception Protection
- Discounts say: "We are willing to sell for less"
- Gifts say: "We reward our customers"
Frequent discounting trains customers to anchor on the sale price. Over time the regular price starts to feel inflated, and the sale price becomes the expected price. Your brand slides from premium to "always on sale."
Gifts do not create this effect. A customer who gets a free pouch with a $100 order still sees $100 as the normal price. The gift is a bonus, not a new price expectation. This is exactly why premium brands prefer GWP strategy over discounting.
5. The Goal Gradient Effect
People speed up as they get closer to a goal. Think of a coffee loyalty card. Customers visit more often when they have 8 of 10 stamps than when they have 2.
In GWP, the goal is the spending threshold. When a customer sees "You are $15 away from a free gift," motivation spikes. They actively hunt for an item to close the gap. A progress bar in the cart makes this even stronger because it makes the goal visible and tangible.
Discounts create no goal. "15% off everything" has no finish line. GWP turns shopping into a small challenge, and the gift feels earned.
Same Cost, Different Feeling
Scenario A: 15% discount
Customer pays $85 instead of $100
Your cost: about $15 in lost revenue
The customer thinks:
"Good deal. I will wait for the next sale."
Scenario B: Free gift
Customer pays $100, full price
Your cost: about $6 in gift cost
The customer thinks:
"This brand takes care of me. I am coming back."
Result: You spend less, you earn more, and you build a stronger connection. The math is not even close.
The Key Insight:
A free gift promotion activates five psychological levers at the same time: zero price excitement, loss aversion, reciprocity, perceived value inflation, and goal pursuit. A discount activates one: price savings. That is why gifts build brands while discounts erode them.
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When to Use Free Gift with Purchase
GWP is not right for every situation. Here is when it works best.
1. Increasing Average Order Value (AOV)
This is the number one use case. Set the threshold just above your current AOV. If your average order is $75, set the threshold at $95 to $100. Customers add items to reach the gift, and your AOV climbs without any discounting.
2. Increasing Conversion
GWP also converts hesitant visitors. A customer who is 80% sure often just needs a small reason to act now. A free gift with a deadline is that reason. "Free gift with orders this week" gives the undecided visitor a concrete push without touching your prices.
This works best when the gift is visible early. If the customer only discovers the gift at checkout, it can not influence the decision to buy. Show it on product pages, in the cart, and in your announcement bar.
3. Clearing Inventory the Smart Way
Use slow moving products as gifts. This beats discounting them because you are adding value instead of cutting price, customers discover products they might buy later, and there is no "clearance" smell on your brand.
4. Launching New Products
Gift a sample or travel size of the new product. Customers try it with zero risk. That trial creates demand for the full size later.
5. Seasonal Campaigns Without Sales
A holiday GWP feels festive, not desperate. "Free holiday gift with orders over $75" keeps your brand intact during peak season while competitors scream "50% OFF."
6. Premium Brand Positioning
Luxury brands almost never discount. Free gift with purchase adds value without touching price. You stay exclusive and still give customers a reason to buy now.
When GWP Does Not Work
| Situation | Why GWP fails |
|---|---|
| Very low ticket products | Gift cost exceeds margins |
| Single item purchases | Customers will not add items for a gift |
| Price sensitive audience | They want discounts, not gifts |
| Commoditized products | No brand value to protect |
The Strategic Question:
Do your customers want to feel like smart shoppers (discounts) or valued customers (gifts)? The answer picks your strategy.
Setting the Right Threshold
The threshold is the most important decision in your GWP strategy. Set it too low and you give gifts away without increasing order value. Set it too high and nobody qualifies.
The Common Starting Point: AOV + 25 to 35%
A widely used rule of thumb is to set the threshold 25 to 35% above your current average order value.
| Current AOV | Suggested starting threshold | Max gift cost (at 40% margin) |
|---|---|---|
| $50 | $65 to $70 | $6 to $8 |
| $75 | $95 to $100 | $8 to $10 |
| $100 | $125 to $135 | $10 to $14 |
| $150 | $190 to $200 | $16 to $20 |
Why this range is popular: it sits just above the current AOV, so it feels like a reachable stretch, and it is not so high that customers give up. For gift cost, one hard rule matters most: the gift must cost less than the margin on the extra spend. A $25 increase at 40% margin gives you $10 of extra margin, so the gift must cost under $10. A safe starting guideline is 15 to 20% of the threshold increase, which keeps you comfortably below that line. If your margins are higher, say 60%, you can afford roughly 1.5x these gift costs.
One honest note:
Treat this as a starting point, not a law. The right number depends on your margins, your order distribution, and your gift. Start here, then test. Your own order data will tell you more than any general rule. We cover how to test in the measurement section below.
Tiered Thresholds: Multiple Goals, Multiple Gifts
Instead of one threshold, create a ladder. Each level unlocks a different gift:
| Tier | Threshold | Gift | Customer thinking |
|---|---|---|---|
| 1 | $50 | Small accessory | "Easy to reach" |
| 2 | $100 | Premium sample set | "Worth adding items" |
| 3 | $200 | Full size product | "Big reward for a big order" |
Tiered gifts work because every customer can qualify for something. Small baskets still get a reward. Big spenders get pulled toward the top tier. You lift AOV across all segments instead of just one.
This is also where your tooling matters. In Growth Suite, for example, you are not limited to a single goal. A merchant can set multiple goals and attach a different gift product to each one. Spend $50 and the customer gets Product A. Spend $100 and they get Product B. Spend $200 and they get Product C. The cart drawer shows the customer every tier and how close they are to the next one. That visibility is what turns a static offer into a climb.
Common Threshold Mistakes
Four things go wrong here most often. Too low: everyone already qualifies, and you are just giving product away. Too high: nobody qualifies, and the promotion feels fake. No visibility: customers have no idea how close they are. Broken math: the gift costs more than the margin on the extra spend. All four are fixable, but only if you look at your order data first.
Growth Suite Advantage:
Growth Suite's cart drawer shows customers exactly how close they are to the gift threshold, and displays the gift they will receive. This visibility drives "just one more item" behavior.
A Worked Example: What a GWP Campaign Looks Like in Numbers
Let us walk through a realistic scenario so you can see the mechanics end to end. These numbers are illustrative, but the structure is exactly how you should model your own campaign.
The store: A skincare brand. Current AOV is $80. Product margin is 60%.
The offer: "Spend $100, get a free travel size moisturizer." The moisturizer retails at $22 and costs $5 to produce.
The setup: Threshold is $100, which is 25% above the $80 AOV. Gift cost ($5) is 25% of the $20 threshold increase, and well under the $12 of incremental margin on that increase ($20 at 60% margin). Both numbers pass the hard rule from the previous section.
What Happens After One Month
- Out of 500 orders, 150 customers (30%) added items to reach the threshold
- Those 150 orders averaged $112 instead of the old $80 average
- The other 350 orders were unaffected
The math on the 150 qualifying orders:
- Extra revenue per order: $112 minus $80 = $32
- Extra margin per order: $32 at 60% = about $19
- Minus gift cost of $5
- Net gain per qualifying order: about $14
- Across 150 orders: about $2,100 in extra profit for the month
On top of that, the travel size introduced a product that customers can now buy at full size. Trial today, full price purchase next month.
The shape of a healthy campaign:
A minority of orders qualify, those orders stretch upward, and the gift cost stays well below the extra margin. If your numbers look different, for example everyone qualifies or margins go negative, the threshold and gift sections above show you what to fix.
Choosing the Right Gift
Not all gifts work. The wrong gift can hurt the campaign.
What Makes a Good Gift
| Criterion | Good gift | Bad gift |
|---|---|---|
| Perceived value | Higher than real cost | Obviously cheap |
| Relevance | Related to the purchase | Random, unconnected |
| Desirability | Customers actually want it | Leftover stock |
| Brand alignment | Matches your quality | Cheapens perception |
| Cost efficiency | Low cost, high perceived value | Expensive for you |
Gift Categories That Work (With Real Ideas)
Travel and sample sizes
Low cost, high trial value. Ideas: a mini perfume, a trial size moisturizer, a single serving supplement pack, a travel size shampoo.
Branded accessories
Customers use them, and that is free advertising for you. Ideas: a canvas tote bag, a zip pouch, a cosmetic bag, a branded water bottle.
Exclusive items
"Only available as a gift." There is no reference price, so perceived value climbs. Ideas: a limited color variant, a members only accessory, a holiday edition mini.
Complementary products
They complete the experience of what the customer just bought. Ideas: a styling tool with a hair product, an applicator brush with skincare, a cleaning kit with shoes.
Seasonal gifts
Time limited appeal keeps campaigns fresh. Ideas: a holiday ornament, a summer towel, a festive gift wrap upgrade.
Gifts to Avoid
- Obvious clearance items. Customers can tell when you are dumping stock.
- Irrelevant products. A kitchen brand gifting phone accessories confuses everyone.
- Low quality items. One cheap gift cheapens the whole brand.
- Overly expensive items. Great for customers, terrible for your margin.
The "Would They Buy It?" Test: Would a customer pay even a small amount for this item? If not, it is not a gift. It is a burden.
Free Gift vs. Discount: The Math Comparison
Let us do the math. This is where free gift with purchase really shines.
Scenario: $100 average order, 40% margin
Option A: 20% discount
- Customer pays $80
- Your COGS is still $60, so your margin drops to $20, down from $40
- Margin loss: $20 per order
Option B: Free gift ($15 perceived value, $6 cost)
- Customer spends $125 to reach the threshold
- Your margin: $50 minus $6 gift cost = $44
- Margin gain: $4 per order, plus extra items sold
The Key Insight:
The discount costs you $20 per order. The gift gains you $4. That is a $24 per order difference, in favor of the gift. The discount always decreases your per order profit. The gift can actually increase it, because the customer spends more to earn it.
When to Use Which
| Factor | Choose free gift | Choose discount |
|---|---|---|
| Brand positioning | Premium, luxury | Value, mass market |
| Customer base | Loyal, engaged | Price sensitive |
| Goal | Increase AOV | Clear inventory fast |
| Margin situation | Healthy margins | Need quick cash |
| Long term strategy | Build loyalty | Short term boost |
The Dedicated Buyer Advantage
This is where GWP separates itself from discounting even further.
A dedicated buyer is a customer who will purchase without any incentive. They are already convinced. They do not need a push.
The Problem with Broadcast Discounts
When you run a site wide sale, everyone sees it, including dedicated buyers. They get a discount they never asked for. You pay for conversions you would have gotten anyway.
Why Free Gift Is Better for Dedicated Buyers
| Scenario | Discount approach | Free gift approach |
|---|---|---|
| Dedicated buyer | Gets 20% off they did not need | Gets a gift as a thank you |
| Your margin | Lost 20% | Gift cost only, often 5 to 10% |
| Customer feeling | "Got a deal" | "Got rewarded" |
| Brand perception | Sale brand | Generous brand |
For dedicated buyers, the gift is a pleasant surprise, not the reason they bought. They were buying anyway. The gift makes them feel valued, and that feeling brings them back.
Combining Free Gift with Intent Based Targeting
What if you could combine a free gift for everyone with targeted discounts only for the visitors who need them?
| Visitor type | What they see | Result |
|---|---|---|
| Dedicated buyer, high intent | Gift threshold in the cart | Buys at full price plus gift |
| Walk away visitor, exit intent | Gift plus a personalized discount | Gets the nudge to convert |
| Window shopper, low engagement | Gift plus a higher discount | Maximum incentive |
Why this is powerful:
Dedicated buyers never see a discount. Hesitant visitors get the push they need. Most customers experience full price plus gift. And no discount pattern forms, because discounts are never broadcast.
Common GWP Mistakes
These mistakes kill GWP promotion campaigns. Avoid them.
Mistake #1: Gift Worth More Than the Incremental Margin
If customers must spend $25 more to get the gift, your gift cost must stay under the margin on that $25. At 40% margin, that is $10. A $15 gift loses you money.
Mistake #2: Threshold Too Easy to Reach
If most orders already qualify, you are just giving product away. Check your order distribution. The threshold should be a stretch for most customers.
Mistake #3: Invisible Gift Offer
Customers can not chase what they can not see. Show the gift in the cart, show progress toward the threshold, and make the gift look appealing.
Mistake #4: Wrong Gift for Your Brand
A luxury skincare brand giving a cheap keychain damages perception. A smaller quality gift beats a bigger cheap one.
Mistake #5: No Urgency
GWP without a time limit lets customers delay. "Free gift with orders this week" or "while supplies last" creates action.
Mistake #6: Complicated Rules
"Buy 2 items from collection A, spend $75, get gift B or C depending on..." No. Keep it to one clear rule: spend X, get Y.
Mistake #7: Not Tracking Results
Running GWP without measurement is guessing. Track AOV change, redemption rate, and margin per order. The next two sections show you how.
Setting Up Free Gift in Shopify
Native Shopify Options
Shopify automatic discounts support basic GWP:
- Go to Discounts, then Create Discount
- Select "Buy X Get Y"
- Set the condition: customer spends a minimum amount
- Choose the gift product and set it to 100% off
Native setup has limits: one gift per order, limited display options, no cart drawer integration, and no conditional triggering.
Growth Suite Free Gift Features
Growth Suite extends GWP well beyond the native limits.
Cart drawer integration
- The gift appears in the cart drawer automatically
- A progress bar shows how close the customer is
- "Add $X more to get your free gift" messaging pushes completion
Multiple goals with different gifts
- You are not locked to one threshold. Set several goals, each with its own gift product
- Spend $50, get Product A. Spend $100, get Product B. Spend $200, get Product C
- Customers see every tier and their progress toward the next one, which turns the offer into a ladder they want to climb
Customer choice
- Offer multiple gift options at a tier and let the customer pick
- Choice increases engagement and satisfaction
Combined with trigger campaigns
- The gift is visible to everyone
- Personalized discounts fire only for walk away visitors
- You convert more without giving margin to people who were going to buy anyway
Measuring and Optimising Your GWP Campaign
A GWP campaign is not "set and forget." The stores that win treat it as an ongoing optimisation loop. Without data, your free gift marketing is guesswork.
Key Metrics to Track
| Metric | What it tells you | Healthy target |
|---|---|---|
| AOV change | Is the threshold working? | +15 to 25% vs baseline |
| Gift redemption rate | Are customers reaching it? | 20 to 40% of orders |
| Conversion rate | Is the gift helping convert? | +5 to 10% vs baseline |
| Margin per order | Are you actually profiting? | Positive after gift cost |
| Repeat purchase rate | Is it building loyalty? | Rising over time |
Calculating GWP ROI
GWP ROI Formula:
ROI = (Incremental Margin - Total Gift Costs) / Total Gift Costs
Example:
- Baseline AOV: $80
- GWP AOV: $105
- Incremental revenue per qualifying order: $25
- Margin: 40% = $10 of extra margin
- Gift cost: $6
- Net gain per qualifying order: $4
- Across 500 qualifying orders: $2,000 of additional profit
How to Optimise Over Time
- Test the threshold. Try AOV + 25% for a month, then AOV + 35%. Compare redemption rate and margin per order. Keep the winner.
- Test the gift. Swap the gift and watch redemption rate. A more desirable gift raises redemption without touching the threshold.
- Test the tiers. If you run multiple goals, watch which tier customers stop at. If almost nobody reaches tier 3, either the jump is too big or the tier 3 gift is weak.
- Refresh seasonally. Rotate gifts for holidays and seasons so the offer never feels stale.
Warning Signs
- AOV is not moving: the threshold is too low or the gift is not compelling
- Redemption is too high: everyone qualifies, so the threshold is too easy
- Margin is declining: the gift costs too much, or the threshold jump is too small
Final Thought
Discounts are expensive. They train customers to wait. They cheapen your brand. But you still need to give customers a reason to buy now.
Free gift with purchase is that reason. Customers feel rewarded instead of bargain hunting. Your prices stay intact. Your margins survive.
Start simple: one threshold just above your AOV, one gift with high perceived value and low cost, visible progress in the cart. Measure for a month. Then optimise: test the threshold, test the gift, add tiers when you are ready.
The Core Philosophy:
Give value without giving away your margins. That is the whole game.
What if every discount went to the right person?
Growth Suite predicts purchase intent and shows time-limited offers only to visitors who need them.
In This Article
References & Sources
Research and data backing this article
Muhammed Tüfekyapan
Founder of Growth Suite
Muhammed Tüfekyapan is a growth marketing expert and the founder of Growth Suite, an AI-powered Shopify app trusted by over 300 stores across 40+ countries. With a career in data-driven e-commerce optimization that began in 2012, he has established himself as a leading authority in the field.
Version History
Track updates and improvements to this article
Major content update for accuracy and practical usefulness. Reframed the 'AOV + 25-35%' threshold as a widely used starting point rather than a fixed rule, with clear guidance to validate it against your own order data. Added a fully worked campaign example with transparent, step-by-step math so readers can model their own numbers. Added a new section on how GWP increases conversion, not just AOV. Expanded gift selection with concrete, real product ideas for each category. Documented Growth Suite's multi-goal free gift feature, where merchants set multiple spending thresholds with a different gift product at each level. Added an optimisation framework covering threshold testing, gift testing, and tier analysis. Updated measurement section with clearer ROI calculation and warning signs.
Expanded psychology section with Dan Ariely's Zero Price Effect research and added Goal Gradient Effect as a new behavioral principle. Included side-by-side cost comparison scenarios for discount vs. gift approaches. Added Growth Suite cart drawer screenshot showing free gift claim flow. Improved overall content depth with real-world e-commerce and Shopify examples throughout.
Initial publication
Stop giving discounts to everyone.
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