Couponing and Performance-based Marketing: An Overview

Couponing – in particular online coupling – started in the US, but the largest voucher site in the world (retailmenot.com), currently listed on the NASDAQ under ‘SALE,’ was originally bought from an Australian company (which has reported here before). Due to the rapid growth of the US and UK couponing market, global players started using the model, which really boosted the rise of couponing in all countries.

This is exactly the same model that is currently on the rise in Australia. For retailers, couponing can be a a good opportunity – the following article will tell you more about the opportunities and pitfalls.

Online Couponing Strategies and Pitfalls

With couponing you can focus on various strategies:

REACTIVATING YOUR USERS
One of the biggest reasons to use coupon codes is to reactive your users – to lure those old buyers back to your website to make repeat purchases. Providing a coupon is a persuasive way of getting those visitors to make their move. People like discount and treats and therefore an purchase can be triggered. For example, provide a customer with a valuable coupon on his or her birthday. You might be able to transform an inactive customer into an active one – and promote your brand when you offer a sharable coupon as well. Customers will start remembering the store because of positive experience they’ve encountered

Zalando email
European fashion pureplay, Zalando is known for its aggressive email campaigns.

TURNING THOSE VISITORS INTO SUBSCRIBERS AND BUYERS
‘Get a $5 AUD voucher when you sign up for our newsletter’ – This kind of promotion is most useful for retailers who use an active and optimized e-mail strategy. If you want to know how transfom a subscriber into a buyer this is the way to go. If you want to learn how to do this as a retailer, a particular good move would be to check out your competition by subscribing to the newsletter for an aggressive player in your market. In this case, you might want to try subscribing to Zalando in Europe to see a good (aggressive) example of email campaigning.

LEVERAGING AND TRACKING YOUR ONLINE AND OFFLINE CAMPAIGNS
A better tracking tool than a coupon code doesn’t exist; you can use it in commercials and/or newspapers and easily see how many people take advantage of the offer. Whether you offer combined or individual coupons, if you ever want to know how much those Television campaigns that you are airing really bring to the table then it’s time to get some offers going.

Specific Strategies for Couponing in Combination with Affiliate Marketing

Using Coupons with affiliate marketing demands a slightly different strategy. This can be a bit more expensive since you have to pay a small commission as well. On the other hand, you can reach a serious amount of new customers and set existing customers in a mindset for buying. Here are some tips to get the maximum benefits out of affiliate campaigns in combination with coupon code:

AT LEAST DO SOMETHING FOR YOUR CUSTOMERS
Offering coupons has a very positive effect when managed well. A common problem for an unmanaged channel is that people reach the shopping basket and end up unsatisfied because they do not have a coupon to help them save while there is a coupon field. How to avoid this? Explain why there is no coupon or that they can get a coupon when subscribed to the newsletter. For the biggest impact, you could promote coupons on your own site or spread them through the big external portals where people are already in buying mode.

RAISING YOUR CUSTOMERS’ BASKET VALUE
Ever tried creating a coupon for a minimum purchase that is double your average purchase order, plus a percentage off? If not you should really give it a try. The assumption that coupon users are ‘cheap customers’ is totally wrong. Rather, they are smart customers looking for a nice deal. Research in several countries has shown that the search for a coupon is not income dependable.

Furthermore keep in mind that people who are planning to spend more, are more likely to invest in the time it takes to search for a good deal. Considering this you can attract the big spenders to your store with specific offers.

  • Tip: If your average order value is $47, offer a 5% coupon off $50 and 10% off a $100 order value. With these steps, you raise the chance that people will end up with buying two or more items instead of one.

 

Coupon use
This info graphic breaks down coupon use across different channels.

BRAND VISIBILITY IN A CROWDED MARKET
Don´t underestimate the branding function of coupon sites. Thousands of people that regularly shop online access coupon portals every day. You want to be there and outsmart your competitors by having people choose you above others. Besides this, every time people see your logo, a little weight is put on the scale in your favor. And we can all imagine that enough weight will change the balance of the scale in the right direction.

  • Tip: Keep an eye on your competitors and ask coupon sites if you can be on the top position in the most relevant category. A lot of added value can be reached here.

MAKE CUSTOMERS HAPPY
People are always happy with a (little) discount. If you make them happy they might be willing to spend more. We’ve seen this happen with so many merchants. Try it! If the test fails.. retry it, or like a few retailers have done, give it up and try it again in half a year in a different way. The ones who really got this strategy working and optimized every part of this article won’t share their cases… They are taking advantage of their opportunities and their gathered knowledge.

GET RID OF OLD STOCK OR FOCUS ON HIGH MARGIN STUFF
When you need to get rid of certain products, coupons (as well as daily deal) could be very beneficial due to their large reach. Plus, the target group of bargain hunters are already looking for these opportunities. Try something like: “Use Coupon X3X2 if you want to save 20 percent on this old products category”. Same goes with products with high margins. Amazon, for example, has most coupons for their ‘mp3 music’. This is one of the highest margin products that Amazon has so it’s naturally what they focus on.

GET BOTH TYPES OF VISITORS WORKING FOR YOU
There are two types of visitors on couponing websites: The ones looking for a good discount on a purchase they’ve already decided to make, and the ones who are drawn to you because you happen to have the best coupons around. Either way, both types of visitors are valuable for you as a retailer. Now, you can do two things: Worry about customers being so close to the sale and avoid the exposure, or choose the other way around by maximizing your exposure on these sites. Try to pull in as many of these customers as possible in a smart way. What you really need to achieve for this is the following:

  1. Get into those newsletters of couponing websites
  2. Get into the Top Lists of these voucher websites or focus more on the front pages (most added value can be found on these pages)
  3. If you have an affiliate partnership: Ask them what they are willing to do for you in terms of exposure if you provide them with an exclusive coupon
  4. Ask the publishers for all possibilities on social media. See on a website what’s possible for you as a merchant and ask them what kind of codes work best on their websites.
  • TIP: If you are running exclusive offers with your partners and you think you are paying too much, you can negotiate for less commission with some couponing partners. This possibility could result in good long term relations.

All in All

Make partners out of your couponing publishers and make sure you stay in touch with those quality partners to get the most out these kind of partnerships.

If you know your affiliates and you are in good contact with them you can easily have them help with the couponing strategy all together. Keep in mind that the combined power of these websites is huge, – though don’t forget keep your own brand and standards of quality. If you see a couponing website that’s not working in a way you want to be associated with, kick the website out of your program. This should be standard for every affiliate-based partner. If you keep your quality scanning high and you make use of all the possible segments within performance-based marketing (such as comparison sites, voucher sites, cashback, e-mailers, content-based sites, bannering, etc), you will be able to rein in great benefits from offering coupons for your products.

4 thoughts on “Couponing and Performance-based Marketing: An Overview

  1. Very nice article about online promotion methods and their real value

    Reply
  2. Couponing is in great expansion in many countries, definitely a trend to work on right now

    Reply
  3. Very nice article about couponing. We have the same trend with promo codes in belgium.

    Reply
  4. Yes it is definitely important to have quality affiliate partners when doing coupon marketing. Great Article, everything is very well explained.

    Reply

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