To coupon or not to coupon. That’s the question every eCommerce manager faces, and it always seems like a simple solution to generating conversions: should you offer customers a coupon code or not?
More often than not, store owners and managers will say “yes” and offer customers a discount when they’re trying to push sales. And while it’s almost guaranteed that this will boost conversions, it’s important to understand the ramifications of resorting to a coupon code.
Let’s take a quick look at the pros and cons of offering customers an unsolicited discount and what effects this action can have.
- Coupons are a huge incentive for people to convert when they might otherwise not.
- Coupons can be easily limited and tracked, to help control a sale or measure actions.
- Coupons are the quickest way to retain customers and provide value.
- Coupons can be programmed for parameters and focused to channel-specific sales.
As is plain to see, coupons offer you one huge overhanging benefit: control. In choosing to generate a coupon, you have overriding power to specify what it’s worth, who it’s for, what it applies to, when you can use it and more, all while tracking it from offer to redemption.
The prospect of control is a huge advantage for eCommerce owners and can be a tremendous asset when it comes to creating targeted bumps in sales. Moreover, when paired with special events such as holidays, birthdays, anniversaries and milestones, coupons create a sense of reward that develops good habits in shoppers.
- Coupons may lower your total dollars per sale.
- Coupons can condition shoppers to buy only when offered a discount.
- Shoppers can exploit and take advantage of coupons if loopholes aren’t closed.
- Coupons can lower the perceived value of your products if offered too frequently.
The biggest downfall of coupons is clearly their ability to improperly condition customers. Using coupons too frequently trains customers that they don’t have to pay full price or that they should only shop when offers are available, which impacts your bottom line over the long term.
Also highly problematic is over-generation of coupons and the problems that come with tracking them. While Remarkety has the ability to create and track coupon codes through platforms like Magento, it’s still up to eCommerce owners to make sure they’re creating codes that don’t stack, overlap or negate one another. This leads to exploitation by customers and can invalidate valuable coupon data used for planning future offers.
The bottom line
Using a coupon code comes down to a question of generating sales versus manufacturing sales. Understanding the difference means utilizing coupon codes to their fullest and best purpose:
- Generating sales means prompting customers who might already be willing to buy and encouraging them to buy at a specific time, reach a specific checkout amount or indulge in a specific product.
- Manufacturing sales means converting on customers who are not ready to purchase by offering them a hard and fast deal, without encouraging them to understand the true value of the product.
Another way of looking at this is under a customer versus product light. A good coupon will reward the customer; a bad coupon will push products.
It can be a hard distinction to make, but if you’re careful in asking yourself what the purpose of a coupon code is before you create it, you’ll have a better chance at offering a good promo and preventing yourself from pushing a bad one. And, remember to take a look at Remarkety data after a coupon has run its course—the numbers can absolutely tell you if you did the right thing!