In plain words
The break-even conversion lift is the increase in conversion rate an offer needs to earn as much per visitor as another. It turns a cost into a target. A free gift doesn't raise the price, so it has to earn its cost back in buyers, and the lift says how many more buyers that takes.
A negative lift reads the other way round. It is how much conversion an offer can lose and still earn as much, which is usually the case for a bundle that earns much more per order.
Formula
- Lift = baseline margin per order ÷ candidate margin per order − 1
- Candidate conversion needed = baseline conversion × (1 + lift)
Worked example
Adding a mug to the $40.00 bag drops its margin from $15.36 to $10.91. The engine's lift is 40.8%: the gift has to bring that many more buyers, relative to today's conversion, to break even.
A small order can't carry a gift easily, because the gift's cost is a large share of its margin.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| cogs | per unit | −$12.00 |
| pick_pack | per order | −$1.18 |
| packaging | per parcel | −$0.50 |
| shipping | per parcel | −$7.50 |
| processing_fixed | per order | −$0.30 |
| refunds | percent | −$2.00 |
| processing | percent | −$1.16 |
| Gross margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
A break-even lift is not a forecast
It says what an offer would have to achieve, not what it will achieve. Whether conversion actually rises by that much is what a split test measures. A large break-even lift is still useful before any test: an offer that needs 40% more buyers rarely gets them, and a test sized to detect 5% won't settle it either way.
Using it
Compute it before you build a test. If the lift an offer needs is larger than any lift you have seen from a change of that kind, the offer is unlikely to win, and it is cheaper to redesign it than to test it. If the lift is small, or negative, the offer can win without converting better, and the test only has to show it doesn't convert much worse.
In Offer Suite
Offer Suite's simulator reports this lift for a draft against the live version of an offer, at the conversion each option has today.