(Almost) Everything You Need to Know About Using Discount Coupons in Ecommerce

Discounts.

We all fall for them.

15% off a book seems like a good enough deal to get that novel you planned to read one day.

Free shipping coupon for a set of printer peripherals? Sure, you are going to run out of the inks at some point anyway.

Discounts affect the buying behavior; it’s a fact. And they do so in a number of ways:

For starters, coupons stop consumers from searching for other offers. Customers shop around. It’s part and parcel to buying behavior. Finding a discount or coupon, however, encourages consumers to stop searching for any other deals and settle for yours.

The reason for that is the sense of urgency associated with discounts –it’s typically strong enough to prevent them from looking for other offers so as not to lose the current one.

Another fact of life about coupons and buying behavior is simply that consumers expect them. This is a downside of discounts in general-customers are accustomed to them and in many cases, refuse to purchase products at their regular price.

Consider gym memberships. Would you buy one without a deal or discount? Probably not, since you know that sooner or later, your local gym will run a promotion discounting the price.

Coupons: the Pros and Cons

Most of us have used a coupon online at least once. It’s that short code you can input in a specific field in a checkout or cart page to receive a discount from the merchant. There are several pros to coupons for online retailers, the top three being:

• Simple to implement. Most ecommerce platforms support coupons right out of the box. If not, there are typically low cost plugins that can add that functionality.
• Easy to track. It is your code after all, and you can clearly see who purchased items with a specific coupon. In situations where tracking your results is difficult (i.e. leaflet marketing), coupons can provide you with a means to test the success of your campaigns.
• Increased conversions. For the reasons I have already mentioned above, coupon codes tend to increase conversion rates while the discount is running.

But for all these benefits, coupons can also have some cons that you should be aware of.

• You often don’t know who gets your coupon. You might have sent the coupon code to your list, but unless it was a personalized coupon, your subscribers might pass it on to anyone they know.
• Reduced order value. This is the intrinsic and obvious downside to discounts.
• Driving non-loyal business. Naturally, coupons tend to attract people who prefer to buy with coupons. This means that these customers are less likely to purchase from you at your regular prices.

What Coupons Types Work In Ecommerce

There are three main coupon types you can successfully implement in ecommerce:

A Money or Percentage Discount.
These are perhaps the most common coupons you see offered in ecommerce stores, coupons like “15% off the item price” or “$20 off your first order,” etc.These coupons discount the purchase by a specific amount, calculated either by percentage of the regular price or an actual, flat value.

Fixed amount coupons tend to perform better for low priced items of total or less of $100. A percentage discount is generally better for items or cart totals higher than the value of 100.

Free Shipping Coupon

Shipping cost is undoubtedly the biggest pain point for customers (after all, 44% of shopping carts are abandoned because of the shipping charges). It’s no surprise then that free shipping coupons allowing customers to skip paying the shipping charge are so popular.

But, these coupons can cause significant problems if you sell items that cost a lot to ship. You can address this by restricting the coupon only for certain items (or order value, where the total size of the order might make up enough margin to warrant you paying for shipping).

Discounts for Number of Products Purchased (or Total Cart Value)

This coupon type is in fact a variation of the other two. It does, however, restrict the usage of a coupon. Instead of allowing customers to apply a discount or free shipping to any order, you can restrict it to a specific order value or number of products purchased. For instance, “Get 20% off of any orders above $150” or “Buy 3 or more items and get $10 off,” etc.

6 Ways to Make The Most Of Your Coupons

Just like with anything else in online retail, offering a specific option or a discount is often not enough to make it a success. For that to happen you need to ensure that:

1. Make the offer valuable

Discounting a $300 purchase by $10 is probably not going to cut it for your customers. You have to offer a discount that offers a real value otherwise they will simply ignore it.

2. Send your offer at the right time

Some shops launch offers all the time, without considering the timing of their promotions. Yet, by sending well-timed coupons you can significantly increase your chances for increasing conversions. For instance, if someone purchased a printer off you, send them a coupon for replacement cartridges few weeks after the purchase (or at whatever average time they might be needing a replacement).

3. Promote your coupons

Unless you send personalized coupons that are sent to a limited number of recipients, you need to promote your discounts to attract a new audience. You can obviously publish the coupon on your site, but in doing so you rely on someone to visit your site to notice it.

Promote your coupon through all your communication channels to ensure it reaches everyone interested in redeeming it. Email it to your subscribers, post it to your social media followers, and even consider reaching out to bloggers in your niche asking them to promote it to you. Remember, the coupon is a way to attract new customers to your store so you need to ensure that it reaches beyond your usual circles.

4. Create a sense of urgency

Setting up a coupon and just leaving it active indefinitely probably won’t increase your sales much, to be honest. For one, customers constantly shop for discounts and need a push to make a decision. A sense of urgency gives them that push. Secondly, if your customers realize that the coupon is always there on your site, they will prolong making a decision for as long as they think they can find a better deal elsewhere, or until they run of options.

5. Generate a simple coupon code

This might seem obvious, but I constantly see randomly generated codes in use. For your coupon to be successful it should also be simple to read and, most importantly, to type. If you make your customer type a complex string of characters from a press ad, they might give up.

A good practice is to keep your coupon short, 6 characters maximum, and avoid lookalike characters or ones that might be a number (o and 0 for instance). Also, if possible, don’t make them case sensitive.

6. Use a landing page

If your code is restricted to a specific category of items or a set of items, create a dedicated landing page to use when you advertise a coupon. This will create a much better user experience for your customers, who will see all products available for the coupon at a glance while allowing you to better target your message and measure the campaign performance.

The point is, coupons are a powerful marketing tool for any online retailer. If used well, they can help increase your conversions while providing much needed data and insight into your customer’s behavior.