Don’t fall into the Coupon Trap, do it right or don’t do it all

This is a real hot potato in our office and so it seems across the globe.  Coupons we have written a great many articles about how to use Coupons in order to drive higher margin customers and we have published the findings here

And also first began this discussion way back in 2010

Using one of Australia’s largest online electronic retailers and measuring against a data set that ran into the several millions of dollars of revenue generated we found the following:

  1. 30% growth against PPC sales
  2. A comprehensive 21% growth against shopping comparison sites
  3. In addition coupon sites converted users 3.5 times more than PPC search

But there is a new discussion frothing over the edge of the coffee cup which is

Why show the coupon box on the final page of the checkout at all?

This article is certainly worth the read as it stimulates the need for debate on which side of the fence you are on.!

What I want to bring your attention to a really cool study performed by Red Letter Days Case Study whereby they tested the following

“The use of voucher codes has always been an issue at the forefront of the affiliate industry. Red Letter Days tackled this by developing a solution that displayed or hid the basket promo code box based on the type of referring affiliate. This ensured that customers driven from non-voucher code sites would not see the box (and therefore not be prompted to search for a voucher code), whereas visitors from a voucher code site would see the box.”

The logic is simple if the referring website was not a coupon site remove the coupon box from check out.  If it was keep it there.

This is not rocket science and can be happily A/B tested to see how conversion is affected.

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Read more:

Most of all we re iterate our recommendation on the seven rules of an excellent coupon strategy, if you stick to these you can not fail to play in the sweetspot of high margin sales from coupon sites, as opposed to the fast race to the bottom of site wide discounts coupons.

Making Coupons Work For You

We have been devising coupon strategies for more than two years, across a wide variety of categories, which has helped us to formulate a set of guidelines that, if adhered to, can make you money from your coupons:

  1. Use coupons on high margin products – don’t discount your volume drivers, use coupons to offer customers your higher ticket products or product bundles. This will ensure you never devalue your core products.
  2. Structure your offers such as this: “X% off when you spend $Y” where X% off gives you an increased nett margin compared to your average order margin, represented in the following formula: $Y Nett Margin – (X% of $Y) ≥ Average order nett margin
  3. Use coupons for upselling – always take the customer up the product range and thus improve their experience.
  4. Plan for your coupons to go viral – the very nature of coupons means that coupon sites are community driven and offer powerful word of mouth referrals. Good offers resonate, creating a ripple effect that can generate excellent user-generated content.
  5. Ensure your online checkout can reject inactive coupons. Most coupon sites do not remove out of date coupons – it’s your responsibility to make sure your checkout functionality has the ability to reject out of date coupons.
  6. Set expiry dates and unique identification to measure redemption. To create a call to action a coupon must have an expiry date and ideally a unique identification number so you can track back exactly where the coupon has come from.
  7. Always include stringent ‘Terms and Conditions’ for coupon use, enabling you to to protect yourself (e.g. ‘can only redeem one per household’, ‘only available to the first 50 participants’, etc).

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