Coupon codes & e-commerce: what strategy to adopt to be profitable?
The coupon codes, also known as coupons or simply the couponing is clearly preferred by consumers online during their buying process. Indeed, the fact of benefiting from a reduction sometimes "unexpected" or "found at the last minute" has a powerful effect on your potential buyer, and may even be the element that will finalize his purchase.
If we had to make the analogy with the traditional trade, it is as if a customer who had just filled his shopping cart, in supermarkets, was going to the crates, and during the queue discovered a coupon lost on the floor or forgotten on the edge of the box. You will agree that it is very rare. And yet this is common in e-commerce, and unfortunately, a significant erosion factor of the margin of e-merchants, if it is not used sparingly.
On the other side, there is also the classic use of promo code, as a pretext to buy. For example, you receive a coupon and it encourages you to visit the site in question to see if there is a good deal to seize.
The levers of communication of coupon codes in e-commerce
Two main channels exist to communicate on these promotional codes: the communication coming directly from the e-merchant (e-mailing, posting on the website directly, via social networks ...) and if you have for example a program of Affiliation, communication via partners (coupon codes sites). The first has the merit of being the least expensive in terms of margin: it is summarized on the paper has a pure reduction of your margin. The second takes the same as the first, but also adds marketing costs since through the affiliation you pay a commission on each sale to the affiliate.
So if your promo code is 5%, and your affiliate commission is 7%, then you will:
- reduce your turnover including tax of 5% (on 100 € TTC of the purchase, the customer will pay in the end only 95 € TTC),
- return to the affiliate platform 7% commission on your turnover (95 € incl. tax -> 79,17 € excl. VAT, 7% representing 5,54 €)
If we do not dissociate the marketing expenses of the sales, a raw view of this sale amounts to saying that you only earn 89,45 € (95 € - 5,54 €). All that remains is to calculate your actual margin, impact the processing/order preparation costs, storage costs, etc. If you accumulate the discounts made in promo code over a year, you will see that it starts to represent a lot of shortfalls, still, need to be sure that this shortfall would still be earned without a discount code.
The behavior and use of the promo code by the consumer
We will not hide it: the main factor that generates the consumer need for the promo code ... It is you, e-merchants who are at the origin! How? Simply by displaying a "Promotion Code" or "Coupon" field in your cart.
Remember, when you buy for yourself or your business, the presence of an empty field "Promo Code" has never tickled you, to the point of doing a Google search "promo code + website"? Or do you ever want to look in your emails if this e-merchant has not already sent you a coupon in its newsletters ... It is true that to say that you are the cause to 100% is false since for the psychology of the consumer, he knows that e-commerce offers coupons, just as supermarkets offer loyalty cards that cuddle vouchers. However, one of the decisive elements is his view of the empty field during his buying process. He sees it as an option to make a deal.
It is obvious that, if we make the link with the use of the codes sites promos by your own customers, the share of sale emanating directly from your site is the majority. This customer, which you have also brought on your site via your keywords Google Adwords, via your retargeting or through your presence on the price comparison ... so it is a customer for which you paid for the summon! You would even deserve a commission on their commission. Nevertheless, the merit of these sites codes is to be extremely well referenced on Google and answer a question that surfers ask at a time T.
What solutions to optimize the ROI of coupon codes?
Leading the war to coupon code sites is not a solution in itself, nor stop making discount codes, since the need exists in one way or another. On the other hand, here are some very simple tips to optimize this lever of couponing:
# 1 Show yourself your own promotional codes on a dedicated page of your site!
Who has the most legitimacy to refer to its own brand with its own special codes? You! Many e-merchants have adopted this approach, and have created a page called "Coupon Codes", in which they list valid discount codes. Some e-merchants post this page in the footer of their site (so easily accessible by buyers connected to your site), but the little trick of other e-merchants is not to make it appear officially on their site, however, the page is visible on the search engines when we search for it!
# 2 Show the coupon codes valid directly in your shopping cart
We spoke earlier about the effect of the empty promo code fields, some e-merchants have decided to add below the basket, just after the fields "Coupon Code", the discount code or codes valid for this order. This principle is interesting because you facilitate the process of your user, and it avoids going out of the process to look elsewhere. In addition, you send a strong message, simply stating that you make use of your discounts to everyone, without distinction. However, it should be noted that the long-term marketing effect can be dangerous since you will make your customers (especially loyal buyers) use a promotional code to validate their order. He could push his purchase a few days/weeks to wait for the famous coupon code.
# 3 Choose incentive discount codes to increase the value of your average basket
For the coupons to be really the winner, for the e-merchant and the consumer, a very simple idea is to make only discount codes with minimum purchase. However, it is important to take into account your average basket, not to frustrate your users.
Example: your average basket is 75 euros. You want to offer a discount of 5%, in this case, encourage your customers to increase the number of products of their order to reach a certain threshold (85 euros for example), which will give a minimum order, discount deducted, of 80, 75 euros.
# 4 Simply stop discount codes
If you regularly buy from Vente-Privée or Amazon ... how many times have you managed to find/use a promotion code on these sites? The majority of e-commerce leaders have realized that this use of the discount code can hurt in the long run, and have preferred to make an effort on upstream prices. They also have the advantage, by their history, to have created a bond of lasting trust with their consumers, which also allows them to avoid this race promo code.
This decision can easily be taken if your e-commerce site has: a niche positioning, a strong reputation in its sector, very competitive prices, a quality customer service ... All factors that are worth the luxury of doing without a good discount. However, it must be qualified according to your type of clientele, for example, in the clothing sector (La Redoute, 3 Swiss etc), the culture of the discount code dates from the era of paper catalogs, it is so anchored in habits of consumption that will be difficult to do without.
And if online consumers prefer to buy without coupon code but enjoy a perfect shopping experience (competitive price, flawless customer service, quality delivery ...)? It would be interesting to conduct this study on a representative panel of online consumers, or why not on your customers directly, before deciding which strategy to adopt.