Coupon codes and other online discounts are great ways to attract price-conscious customers, increase brand loyalty, and generate revenue for your ecommerce business. However, they can also have negative impacts on sales and customer satisfaction.
Limited-time coupons are a great way to motivate shoppers to buy sooner rather than later. For example, this type of promotion is used during the COVID-19 pandemic to sell its new masks quickly.
Boosts Sales
One of the main benefits of using promo codes is that they help to boost sales. Whether you are trying to move overstocked items or encourage new customers to buy your products, discount codes can provide a strong incentive for consumers to make purchases. This can be especially useful for seasonal promotions like January and end-of-summer sales.
These discounts can be public or private and can be applied to specific groups of people like influencers or loyal customers. This allows you to offer a more personalized discount experience and track the effectiveness of your marketing campaigns.
Regardless of the type of code used, it is essential to use them strategically to maximize their effect on sales. For example, offering free shipping dramatically increases the average order value while encouraging conversions. Promo codes that require the customer to enter a code at checkout can also be effective. This can be done by placing a coupon entry field within the checkout flow that is clearly labeled to avoid confusion and incite fear of missing out on your customers.
Creating a sense of urgency with an expiration date for your promo code can be another effective way to increase sales. This can be used to drive a quick purchase decision and create a feeling of exclusivity for your most loyal customers, who can get their hands on these discounted products before everyone else.
Increases Customer Loyalty
Many brands like Converse use promo codes to reward existing customers for building loyalty. They can include these in emails or social media to reward those who spend the most with a brand. For instance, they can offer their loyal members a discount on monthly memberships. This provides a low-cost incentive to customers while building brand loyalty and encouraging repeat business.
Another way to increase customer loyalty is by offering coupons on bundled products. Clothing retailers, for example, often promote this strategy by providing a coupon that is only valid when you purchase pants + sweaters or shoes + belts. This helps to boost average order size and can be promoted in cart recovery emails, where customers are likely to have abandoned their carts.
Coupons can also be used to celebrate customer milestones, such as their birthday or anniversary, or the completion of a certain number of purchases or engagements with your brand. This kind of personalization can be highly effective in increasing customer loyalty and can be delivered through email or SMS, where the latter is more likely to be read immediately.
While the benefits of coupons are clear, it is essential to think carefully about the type of discount you choose and how it fits with your overall marketing strategy. For example, vast discounts and continuous sales may damage your brand image if you are a high-end luxury brand, while a more targeted approach can have a more significant impact.
Incentives Customers to Buy Online
Offering coupons to attract price-conscious customers and build brand loyalty can be an effective marketing strategy for ecommerce businesses. However, using this tool with caution is essential because it can attract the wrong types of customers who may need to be a better fit for your brand. In addition, when companies share coupon codes publicly through various channels like social media or email, they can often be seen by consumers outside of their target audience. This can cannibalize sales and reduce ROI.
To help avoid this, it is a best practice to create exclusive discount codes only offered to loyal customers. This way, it is easier for brands to track the success of their promotional code campaigns. Another great way to encourage repeat purchases is to include them in customer loyalty programs that offer store credit and discounts to the referrer and the referral.
Using promo codes to incentivize customers is also a great way to boost seasonal sales. Creating a sense of urgency, such as a limited time window or phrases like “while supplies last,” can push customers to buy online before the offer expires. This type of scarcity marketing is especially effective for boosting conversions during peak shopping seasons, such as Black Friday and Cyber Monday.
Creates a Positive Shopping Experience
Whether they are a new customer or someone who has supported your business for the past ten purchases, giving them an incentive to shop by offering a coupon is great for building trust and loyalty. In addition, research has shown that oxytocin levels spike when customers receive promotional discount codes, which is an excellent reason to use them!
However, it’s important to remember that discounting items does impact your bottom line. It can be a good idea to save certain discount levels for specific times of the year, such as the traditional January and end-of-summer sales, to avoid encouraging customers always to wait for you to offer them a bargain. It’s also wise to only discount items that aren’t moving fast enough rather than reducing the price of products that fly off your shelves.
Another way to mitigate the negatives of discounting is by using unique single-code campaigns. These allow you to track which adverts and platforms perform best, ensuring your investment is focused on what works. Similarly, hiding your coupon field on forms prevents customers from going on the big voucher hunt. This is something that several brands are doing successfully and which is suitable for both UX and conversion rates.
