This article was last published in September 2010 and has been updated for relevancy.
Also called coupon codes, voucher codes, offer codes or discount codes, promo codes are popular sales incentives offered by online retailers. They are also one of online marketing's biggest profit eaters. Discounts applied against merchandise or shipping charges reduce margin, and if associated with affiliates, reduce margin further as commissions are paid out. Furthermore, you are creating conditions where customers never pay full price.
The numbers tell the story though of how ingrained discounts and deals are in today’s shopper behavior. The digital coupon redemption value is projected to reach $91 billion by 2022.
Discounting is key to adding value, loyalty, and trust to your customers’ experience. Here are 6 best use and alternative cases for the promo code:
- Use geo targeting to limit promotions by region. By specifying a particular offer unique to a zip code or city you easily track and contain its performance.
- Only offer private promo codes directly linked to specific customers accessible via email or text for specific timeframes, avoiding any posting to social media or coupon sites that encourage sharing.
- Avoid the promo code altogether by replacing it with rule-based offers programmed into the cart such as BOGO.
- Don’t rely on a promo code as the only way to incentivize your customers to purchase. Every promotional offer or campaign should be part of a strategy. Consider other tactics used in tandem with promo codes such as loyalty or rewards programs, designed to bolster repeat purchases while capturing customer shopping behavior.
- Put conditions on promo codes at checkout by asking for an email address to gain access.
- As mentioned inThe SEO Tip Online Retailers Still Are Not Taking Advantage Of, creating your own coupon code landing page is a great idea.
With so many instances of fraud and misuse, the promo code can be used to you and your customers’ benefit as part of an overarching digital commerce strategy, along with similar tactics designed to retain customers and reduce cart abandonment.
There's no cut-and-dried approach to handling promo codes, but effort should be made to reduce the damage.
Learn more about promotions focused on the customer experience from Elastic Path.