Popularity of Online Discount Codes

Traffic to coupon sites increased an incredible 38% from March 2007 to March 2008. And the popularity increases even further as a result of the economic crisis.

There’s an overwhelming acceptance and use of coupons by the consuming public. Advertising Age reported that 87% of all shoppers use coupons. And Nielsen revealed that 95% of all shoppers like coupons and 60% actively look for coupons.

Advertisers enjoy a tactic which is easy to test and near to free in distribution costs. They are also measurable (you can see what’s working and what’s not), make the promotion source traceable (especially interesting for offline transaction) and they are on the end of the conversion funnel (which means: high conversion rate and high ROI).

Why Do You Need Coupons?

Coupons make it possible to use price as an instrument within the marketing mix. Since coupon codes create price differentiation, they are a scalable way to offer different prices to different people.

Why Are They So Powerful?

Coupons are extremely tempting to consumers because they are exclusive. If you don’t have the coupon code you won’t have the benefit of a discount or free shipping.
It also forces a decision making process, because a coupon can expire or get lost. So not using the code also means losing the value of something a customer got.
Finally, it can reduce buyer’s remorse, because the coupon helps us to reduce the anxiety that we purchased the product for the wrong price.

Where Are Online Coupons Different From Offline Coupons?

As an advertiser you will lose the medium tracking partly, because the coupons get widely distributed or go viral. That may decrease the ability to target specific groups and the possibility to make use of scarcity as a promotional tactic.
Furthermore the tangible aspect of the coupon will be lost which means you don’t have the trading ritual, ‘totem’, anymore.

Where Can You Use Online Coupon Codes For?

You should use coupons to:

(For offline coupons you might also have had the objective to get personal customer data.)

What You Don’t Want To Achieve

If you don’t want to end up with low margins or an eroded brand be careful when applying coupons.

1. Don’t Make It Too Easy To Get a Lower Price

Coupons shouldn’t be easy to find or redeem. By trading effort for a discount, you say: “if you care about price I’ll sell it to you cheaper, but you have to prove it”.
You don’t want to end up with customers who use coupons for the bargain only. And you don’t want to have them used for something what’s regularly being bought anyway.

2. Don’t Use Coupons for Premium Brands and High-End Products

Don’t apply coupons for premium brands or high-end products or you might hurt the brand or destroy where your product stands for.
(In that case you better should create a separate channel where you offer a different service level and/or different products, like from previous collections.)

So, What Should You Do?

But coupons can provide a steady stream of new customers. So if it is so powerful; what is a good couponing strategy?

1. Create Barriers to Increase Exclusivity

People enjoy the feeling of gaining a bargain and being treated as special. Don’t remove this thrill by offering coupons everywhere, because it takes the fun to get a discount away.
For example, you could use of a viral game which makes it possible for customers to win a discount.

2. Increase Personality To Stimulate Social Shopping

Let your customers send a coupon to a friend, for example by adding “send this coupon to a friend” buttons. But you could even think of offering personalized and limited coupons to existing customers which they can share with friends.

Two Final Coupon Marketing Tips

By the way, you should always:

1. Create Urgency

Set an expiration date to entice the visitor to redeem the coupon.  Why not have coupons which decrease in value over time to push the buying decision?

2. Hide the Benefit From Regular Visitors

You don’t want to confront customers with the coupon form if they were prepared to pay the higher price anyway. Always create separate landing pages for the promotion and get the coupon form out of your regular order funnel.

Are you still planning to add coupons to your marketing mix?