The online coupon seems like a simple, straightforward way to increase conversions, but that’s not necessarily the case. Rock-bottom discounts (see: Groupon) can actually have a negative effect on a booming web business.
Instead of using coupon codes to spur sales at checkout, savvy business owners are finding ways to leverage discounts to track customers, build affiliate relationships and more.
A panel of successful young entrepreneurs shares the strategies that are actually working. Here’s what they had to say.
1. Retargeting and Cart Abandonment Strategies
Coupon codes are essential to an ecommerce startup if it is in a competitive market. Business owners can use coupons wisely in their marketing strategies by retargeting with banners or shopping cart abandonment emails to lure shoppers back to a website. Nevertheless, if you want to build a sustainable business, never make discounted product your only value proposition
2. Distribute Through Partners
Here’s how we’ve used coupons and special discounts with great results in our business: We provide partners with special discount offers they can distribute to their audiences. We set a time-based deadline or quantity-based limit. And we provide partners with commissions on sales, so they have an extra incentive to promote the offers
3. Track and Measure ROI
Coupon codes are an excellent way to track and measure your advertising ROI. Simply use a different code for each ad outlet (i.e. Google vs. Bing vs. Facebook) so you can see exactly how many sales each campaign generated. With a little bit of tech work, you can also use coupon codes to track — down to the keyword level of your search ad campaigns — which is critical for optimization.
4. Reward Loyal Facebook Fans
On your Facebook fan page, you can offer coupons and discounts to your fans right through Facebook, or you can choose to use third-party apps. Instead of just offering a coupon to everyone, I think it’s neat to reward your most loyal fans, as one company called Earthegy does. The gemstone jewelry company offers discounts and promotions, but only to their top fans, which it determines through an app.
5. Track Revenue Sources at Events
Discount codes are great for tracking which sales channels are performing the best for you. For our Entrepreneurs Unpluggd events, we give our marketing partners unique discount codes to distribute, so we can see which channels refer the most sales and concentrate on optimizing those channels.
6. Encourage Action
Use online discount or coupon codes to offer discounts to the first buyers. This creates scarcity, so more people take action quickly and move forward with their purchase decisions. A scarcity component drives the people who may be on the fence to take the leap.
7. Customize and Learn
Many businesses make the mistake of simply using coupons to increase conversions. The bigger opportunity is to utilize them to also learn more about your customers’ behavior along the way. Create unique codes to be used through a variety of channels, create custom codes for partners and then test different discount formats to maximize conversions based on real data.