How to use coupons more effectively

Coupons are one of the most popular marketing tools used by ecommerce businesses. They drive conversions and customer retention. And they are easy to use.

But are you making the most of coupons? Are you using them in the best possible way?

The problem with coupons is this: giving them out without measure doesn’t help. Coupons are often synonymous with discounts. SALE30OFF, CLEAR50, NEW10 – they are all too familiar. And discounts alone can do more harm than good – reducing your profit margin only to drive sales short-term. You need to measure the impact and give away coupons sparingly.

To use coupons effectively, you should:

• Measure the results – what coupons bring traffic, revenue, customer loyalty, VIPs, new customers
• Track what type of coupons work best – percentage vs money value off, wording, campaign
• Reuse the coupons and ideas that work well
• Scrap the ones that don’t

Let’s look at how to do that so coupons work for you.

Measure the ROI of coupons

Tracking the results of using coupons will show you if you really benefit from them or if they’re leaking you money. Here are a few things to look for to evaluate the ROI of coupons.

1. Revenue generated from coupons

In your ecommerce analytics, check what revenue is generated thanks to coupon codes. What share of the orders had a coupon applied overall? In the example below, we can see that one coupon code drove quite a lot of orders during this month – over 6% (click to expand).

It’s worth going deeper to explore the customers who applied it. Are they old customers? Do they shop a lot from you? Knowing the audience for successful coupons better will help you use them efficiently with more people.

Comparing the average order value (AOV) by coupon is also important. Some coupons might naturally stimulate bigger basket size. If that’s something you need to improve, use more of those coupon codes – for example, free shipping for order above a certain amount.

2. Campaign performance

Sometimes you probably use many coupon codes within one campaign – either personalized for each customer or different for every channel. You can merge them into one campaign with a tool like Metrilo for performance tracking as a whole.

Does any campaign stand out in particular? How is it different – the call to action, the offer, the channel?

Also, look at what type of coupons perform well on each channel – Instagram, Facebook, Pinterest, email, referrals (features on other sites, media). Compare conversion rates, AOV, revenue generated.

3. The impact of coupons on customer retention

Last but not least, take a look at the long-term effects of coupons.

How they impact customer retention can decide whether to use them at all. This is because coupons might stimulate repeat purchases or simply attract one-time customers. Since coupons mean discounts, is it worth giving them out if they don’t bring you loyal customers (and more orders) in the long term? It is like an ad investment that needs to yield good returns to make sense.

In the example below, you see that some coupons do very well in earning returning customers, while others not so much.

The worst performing one with only 17% return customers gets the lowest customer lifetime value as well. It either was targeted at the wrong people or the offer was off so people wouldn’t come back to shop.

Compare:

• the target audience
• the messaging
• the offer
• the reach (how many people got it)

To evaluate the overall performance of a coupon. What works with your ideal target audience? What kind of offers do they like?

Types of coupons to use – good practices

If you don’t feel creative in your use of coupon codes, here are a few ideas to mix things up. Your customers will enjoy a change in the shopping experience.

• Discount code for next order in package/ confirmation email (you can make it for limited time only to shorten the time between orders)
• Free shipping code over a certain threshold order value
• For hesitant shoppers (many browsing sessions, but few orders) – coupon for a specific category they’ve been eyeing
• A special coupon for “New” category for those of your customers who shop from it a lot.
• А gift coupon offered at checkout – lets shoppers claim a freebie with orders above a certain value

Tips on using coupons in ecommerce

Don’t use the same code over and over so people learn it and start abusing it.

Don’t always send a discount code to fight cart abandonment because people will learn to abandon first and wait for a price drop. This will devalue your brand.

Repeat the type of offers that attract loyal customers and not the ones that bring in one-timers. Replicate the good messaging (call-to-action) and offers.

Maybe some customer segments don’t respond to coupons – don’t force them. It’s even better for you to save on discounts.

Create different coupons for each influencer you work with to make tracking the results a breeze. Here’s more about that.

To sum up

Coupons are great for ecommerce marketing because they can be really effective if fine-tuned for your goals. You can easily look into your analytics to see what messaging and offers to use, and whom to target with coupon codes. Like with any other marketing tactic, knowing your customers and what works for them is the key to successful campaigns.