Coupons can be an effective way to attract customers (back) to your store, or convert those that might otherwise have left your website. However, they can also pose significant risks.
What are coupons?
In the offline world, coupons or vouchers are usually pieces of paper. They are usually inserted in magazines or have to be cut out from them. When bringing a specific coupon to a brick-and-mortar store, you can get the discount that is placed on it. Coupons are a very common phenomenon in the offline world, and can be used to attract people to a store or (when the coupons have unique codes) track the effectiveness of a campaign in a city or neighborhood.
Web shops were quick to copy the concept of coupons to the online world. Not only was it easier to hand out the coupons now, effectiveness could now also be measured on a much more granular scale. Digital coupons for e-commerce web shops usually come in the form of a string of characters (a ‘coupon code’) or a tagged link. Upon entering the coupon code in the designated field or clicking the link, the discount will automatically be applied to the order during the checkout phase.
Coupons and conversions
Because coupons can be able to change peoples’ ability to buy an item and provide a trigger, they can be utilized to increase conversions. However, increasing the number of conversions isn’t the only way in which coupons can be used. For instance, they can also be used in ways that can increase social media attention or customer happiness.
When coupons are used for promotional purposes, their goal is usually to get more attention to a new product or service. Giving people a discount coupon might persuade them to convert, which could get the ball rolling in terms of social media attention, reviews or testimonials. In this sense, coupons can also be used to promote the entire product line, for example by running a Black Friday or Cyber Monday 10% off on all products campaign.
Another use of coupons can be to either thank people or say sorry to them. You might want to thank a visitor that has reported a bug on your website or provided valuable feedback on your newsletter. On the other hand, a visitor that has received a late shipment might be less likely to complain if they are given a nice discount coupon for a future purchase.
Coupons and psychology
The Fogg Behavior Model shows that three elements must converge at the same moment for a behavior to occur: Motivation, Ability, and Trigger. When a behavior (such as buying an item in your web shop) does not occur, at least one of those three elements is missing.
Coupons can serve to both heighten the ability (“I wasn’t able to afford that expensive sweater before, but with this coupon, I’m able to buy it.”) and provide a trigger (“Hey, discount on sweaters, I kinda need one of those for the upcoming winter”) at the same time. This makes them effective tools for influencing the behavior of the visitors of your web shop.
Handing out digital coupons
Coupon codes can be handed out in a variety of ways. Each of these has their own pros and cons.
By inserting a coupon code in your newsletter, you’ll reach an audience that is already highly interested in your organization and/or has already purchased your products or services in the past. These people are very likely to use these coupons if they have (renewed) interest in your offerings. Keep this in mind when setting your discount percentage (because these people might have bought from you again without a discount as well).
These type of pop-ups can be used as a tool to lure people into the website and prevent them from bouncing. They can also serve as a way to capture the email address of a visitor, thus getting a way of staying in touch with them in case they decide not to convert on this visit. Most of these pop-ups offer a fairly nominal discount (5-10% usually) in order not to cut into their margins too deep when many people use the coupon.
If you want to reach a bigger audience with your coupons, putting them on social media such as Twitter or Facebook could really help. With these coupons, you will likely reach an audience that knows about your organization, but not necessarily on an intimate level like the newsletter subscribers might do. By the nature of how social media works, the coupon codes could be spread widely across the internet, thus giving your brand a lot of exposure.
These pop-ups are often used as a last resort to keep a visitor from leaving the web shop. The trigger mechanism for them is when a visitor moves his/her mouse towards the top of the screen (where the tabs and the closing button is). When targeted at pages deeper in the funnel, such as the shopping cart or checkout, they can serve as a safety net for highly interested visitors. Because of this, these exit pop-ups tend to offer slightly higher discounts as well (sometimes over 10%).
Lastly, support channels such as live chat or a ticket system can be used to hand out coupons. Usually, these coupons fall into the thank you or sorry categories outlined earlier. Because these coupons are often one-off (make sure to set them as such in your backend!) they can have hefty discount percentages sometimes going up to even 100%.
In the shopping cart
The most popular way to have visitors redeem their coupon codes is through an input field and button in the shopping cart. However, this can create a situation where visitors go out hunting for coupon codes through Google or websites collecting coupons, which is a scenario you’d likely want to avoid. After all, when visitors have reached the shopping cart, it’s best to provide them with very few distractions on their way to the checkout.
Suggested ways to avoid people from leaving the web shop can be to either make the coupon input less visible in the checkout, only show it when visitor enter the website via email or affiliate links, or to hide the input box behind a link marked something like ‘Do you have a coupon code?’.
“When a web-savvy customer sees a promo code field in the checkout process, it’s a call to action – a call to search Google for a coupon code, and there are plenty of affiliate deal and coupon sites to be found.
This action is a distraction and can becost you big bucks — especially if in this economy you’re already heavily discounting your merchandise.”
Through a link
An alternative way of redeeming coupons that doesn’t require an input box in the shopping cart involves creating tagged links. Rather than having to enter the coupon code themselves, the links that are placed in newsletters, social media, etc. have the coupon code embedded into them like example.org?coupon=SPRING. Upon arrival at the website via such a link, visitors are greeted with a notification that their discount will be applied automatically when they meet the conditions for which the coupon is valid.
Coupon codes can be a valuable tool to increase your conversions or lower your shopping cart abandonment. However, be aware of the risks that they can pose when you start using them (including visitors abandoning the website or waiting for shopping before new coupons come in).
He is the founder of ConversionReview. He has been building and optimizing websites for 15+ years now, and doing so with great success.
On top of his digital skills, Theo is also a trained psychologist and frequent speaker at events around the world.