Do you have a couponing strategy?

Do you have a couponing strategy?

eCommerce seems sometimes to not exist without coupons. Many affiliate marketing sites are fronts to distribute coupons. Store owners know well that coupons represent that necessary evil – not having coupons seems a recipe for low conversions and excessive couponing is a recipe for a less profitable business. In this article we discuss some strategies for couponing

Is the coupon code entry during checkout good or bad for conversion?

    Every checkout flow seems to have a place to enter a coupon. However, I think that is not a very good idea and here is why – it may lead to cart abandonment.

  • “Invalid coupon code”. When a shopper sees an entry for coupon code, there will be a tendency for them to go search what seems some special people have that they don’t. They may end up on affiliate sites that give coupon codes which are quite often not current. They enter a few coupon codes and get a “Invalid coupon code” message. Frustrated they never return to complete the checkout.
  • Many shoppers may get distracted and never come back. This may be particularly true for shoppers who have landed on the site without a urgency to buy.
  • Early research(http://www.emarketer.com/Article/Sad-Tale-of-Abandoned-Shopping-Carts/1007156) showed that in 2009 in the US 27% cart abandonment was due to coupon search.
    What can be done?

  • Macys.com puts up its coupons on the home page or gives a page and a hint at checkout to click and see the coupons. No more guessing and searching.
  • If you have mailed a customer coupons, show the coupons so they can be applied to the cart right away.
  • Make the coupon entry less conspicuous on the screen and away from the checkout button.

Reward cart abandoners with a coupon?

    A number of sites actually send you a coupon code when you abandon a cart or popup a coupon when the mouse moves to top right corner near the close button when in the checkout screen. I would use this with caution.

  • Use it as an experiment rather than a permanent feature, as it could create a habitual offenders to always get coupons.
  • When you decide to stop this couponing such visitors will abandon anyway.
  • Watch the analytics – the abandoned cart email may be working, when your abandonment rate may be increasing. You need to look elsewhere for the drop in conversions.

What is the loss of couponing?

    Another factor consider when couponing is understanding the costs of couponing.

  • Your products are being discounted, the obvious loss of revenue.
  • Customers who would have paid full price are now buying at a discount. This is a side effect of couponing.

What should you give coupons for?

  • Items on clearance – you know for sure this is a clearance sale and will not reappear on your store anytime soon. Make customers know you are serious.
  • High margin products. Products that you know you will always high margins on – such as accessories.
  • Consider running a sale event instead of regular couponing – sale events such as flash sales are a great way to generate more traffic and get new customers.
  • Give coupons in emails – this is a good way to get your newsletters opened. But make sure you also put them on your site on a page so google indexes it. This would prevent coupon sites from hosting old coupons. Oh, are you yet sending the same newsletter to all your subscribers? Register here to get an update of our blog which will soon include an article on how to segment your customers.

If you consider couponing as a customer acquisition strategy, Drew Sanocki, eCommerce Marketing guru says “There are other ways to incentivize a purchase by adding on additional services, additional selection. These are people who want to pay for your product. And in focusing on them, I think the flip side of that is the ones who require that coupon to purchase are just bad customers. They’re less loyal and very low lifetime value.”

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