eCommerce Crash Course: Coupons, Offers, Discounts & Promos
I’ve talked before about pricing strategy here and whether you should offer free shipping here. These are both key components of your overall eCommerce strategy that you can - and should - tweak from time to time to make sure you have things juuuust right. But there’s another leg of the stool that needs to also be considered: coupons, offers, discounts, and promotions. All of these things are part pricing strategy and part marketing strategy, and they can have a big impact on online sales.
There are a few schools of thought when it comes to online coupons and such. For me, it’s easiest to think of them this way:
Luxury - Never has sales, ever. Period. Think: Gucci
Mid-Market - Has well-publicized annual and semi-annual sales only. Outside of those times, no sales. No coupons. Think: Nordstrom
Budget - Everything is always on sale. Coupons or other marketing promotions are easy to come by. Somehow never pay full “retail” price. Think: Kohl’s
Questions to Ask Before Getting Started
There are merits to each of these so if you’re still trying to decide which bucket you fall into, ask yourself these questions:
Is it on brand? Shoppers are actually super adept at picking up any discrepancies between what you are saying about your brand and what your pricing strategy is saying about your brand, including whether and how you discount. If your branding says “luxury” but your discount strategy says “budget”, that’s a mismatch.
Are you training people to only buy from you when there’s a discount? This is an important thing to point out in a post all about coupons, offers, discounts & promotions. Before you read any further and decide how to implement any of these, ask yourself if these things need to be part of your strategy. This is a prime example of just because you can do something doesn’t mean you should. One of the biggest eCommerce mistakes I see merchants make is training their customers to only shop when there’s a discount. This devalues what you’re selling and is often only a successful strategy for the highest volume sellers.
Is the timing right? If you’ve decided that offering discounts or promos is on brand and right for your business, there should still be a method to your madness. Discounting willy nilly makes no sense. The best offers are strategized well in advance and are supported by external marketing activities like newsletters, social media posts, etc. Consider the season, popular trends, or other promotions you can leverage off of.
Do you have enough margin to discount? I mean, this should go without saying but if your regular prices don’t leave enough room for you to discount when needed and have you not lose your shirt, you should start by adjusting your retail prices across the board before venturing into the wide world of coupon codes. (More on this below!)
How To Do It Right
Now that you know where you fall on the Gucci-Nordstrom-Kohl’s spectrum™ and you’ve considered all the factors above, let’s explore some of the reasons why you may want to adopt a discount/coupon strategy:
It can quickly drive sales. Everyone loves a bargain so putting something on sale should definitely boost conversions. What this means is that what you lose on tighter margins, you can make up with volume.
It's a good way to move excess or outdated inventory. Think of this in the same way you can buy super cheap Halloween candy on November 1. Most products (and not just the edible kind) have a “shelf life” - even if that means the time period when they’ll be most attractive and potentially sell for the highest price. You may also be at a place where you’re willing to sell products for a near loss just to get them off the books and make room for new goods.
It can attract new customers. We’ve all seen the popups offering X% off our first purchase if we sign up with our email. I would argue that this is getting to be a bit overused and I tend to dislike it because it encourages only buying with a discount but it can be a way to sweeten the deal if you have built that discount into your normal prices. Running a promotion before you officially launch a new product or service can also help build hype!
Strategies To Try
Exit Popup - We’d always prefer people to pay full price so triggering an offer only once someone goes to exit your site can be a way to only offer a discount to people who were going to leave without buying something.
Separate Sales from Non-Sales Items - One of the worst things you can do is put two items that are relatively similar side-by-side and expect people to buy the higher-cost item. For example, if you’re selling this season’s shirt at full price and right next to it I can see that I can score last season’s tee for half off… well, maybe I’m not the most stylish but I’m going to go for the half-off version. To try to prevent this, move all sale items to a separate sales category or page on your site. This means that most shoppers (who are looking for the latest and newest) will shop in your regular section without price distraction and bargain-hunters will head to the sales section first. Everyone wins!
Offer Free Shipping - Shipping discounts are my favorite for a few reasons. First, everyone loves free shipping. Second, shipping discounts don’t devalue what you’re selling. Third, people often assume shipping is going to be super expensive so they may actually think the discount is worth more than it really is. I always say it’s better to mark up your prices across the board and offer free shipping no matter what but I realize that’s not always feasible. If you're in an industry where product-to-product comparisons are easily made, it may be important that you keep your individual prices low. If that’s the case, I would recommend offering free shipping with a minimum cart value (i.e. free shipping on all orders over $X)
Abandoned Cart savings - I mention this briefly above but if I think if you’re going to discount, you might as well only offer that to people who weren’t otherwise going to pay full price. Utilizing your abandoned cart email to deliver a coupon or incentive to return to your site to make a purchase is a way to only show discounts to certain people. Word of warning: there are a lot of people who have become savvy to this tactic and will purposely leave an item in their cart and wait for a coupon to show up in their inbox the next day. I think this kind of is what it is, but just know that these people are out there.
Make Discounts Automatic - Think beyond the coupon code and make things as easy as possible for people by just automatically applying whatever offer you’ve set up to their cart once the criteria are met. I think that this helps make happier customers because it reduces mental load (no need to remember a coupon code!) and makes people feel like they achieved a goal.
Set an Expiration Date - Not only do expiration dates create a sense of urgency, making sure all your discounts and coupons have an expiration date ensures that you can make changes down the road without people feeling like they got the old bait-n-switch.
Limit Usage - This is a good hype-building way to discount. Limiting your offer to only a certain number of people, only a specific group of customers, or by how many times it can be redeemed is a great way to encourage people to buy quickly or even boost brand loyalty by encouraging people to attain a certain “tier” status in order to qualify for a discount.
Other Misc Ideas (That Don’t Really Need Any Commentary)
Discount entire categories or brands versus the whole store
Offer BOGO or B2G1 offers
Offer a tiered discount so people get more off based on buying more of an item
Discount orders over a certain amount
Offer a free gift with a purchase total over a certain amount
Offer a discount on the most or least valued item in their cart with a total purchase over a specific amount
Provide discounts based on customer loyalty to encourage repeat purchases
Hopefully, you now feel like you have a better handle on coupons, offers, discounts, and promos and know how to incorporate one of these strategies successfully. My last piece of advice is to implement and then monitor often. Don’t be afraid to give something a try and adjust as needed once you see how your audience responds. This is another great reason to put an expiration on offers - so that you can tinker with things as needed to find the perfect sweet spot for your brand.
