Imagine that – it’s 1888, it’s hot, and you’re thirsty. You have a coupon for a free drink in your pocket. Can you guess the drink? It was Coca-Cola.
That’s considered the first coupon ever – a ticket for a free, refreshing glass. Between 1888 and 1913, the company managed to redeem 8.5 million tickets.
Today, the coupon marketing field is larger.
Coupons provide you with some of the best ways to grab attention and generate leads, but also to drive sales. People don’t want to pay full price when shopping online, especially if they can find a cheaper alternative.
And the oversaturated e-commerce field is chock-full of alternatives.
If you’re wondering whether coupon marketing is suitable for your business or you’re not sure you’re doing it right, we’ve got you! Don’t think you won’t meet your profit goals and underperform if you offer coupons. In today’s article, we’ll prove just the opposite.
Let’s see how an effective coupon codes strategy for your online shop can boost revenues and enhance customer loyalty.
Types of Coupon Codes – How to Choose the Best?
Coupon codes are special vouchers and discounts you give to existing customers and prospects. They aim to entice people into making a conversion.
Said conversion can be micro or macro – let’s say, signing up for your newsletter or completing a purchase.
You decide on that and the type of incentive you’ll translate with the code. But before we see which the most popular coupon codes are, let’s see what shape and form they can come in:
1. Physical Coupons
Physical coupons provide you with a highly personalized approach.
But they’re also the most expensive to use. That’s because you need to design, print, and distribute physical coupons carefully. On the other hand, they’re a surefire way to boost loyalty.
Imagine a customer’s reaction if they find a personalized coupon in their latest package. How would they react if it’s printed on high-quality paper and has a thoughtful design? That allows you to pamper loyal, high-paying customers and to make them feel special.
2. Digital Coupons
Digital coupons are a cheaper, quicker-to-apply alternative that reigns over the e-commerce landscape. You can distribute them through various communication channels. That allows you to reach existing customers and prospects everywhere.
The downside of digital coupon codes is that they might get lost in the noise. When operating online, you compete with hundreds of thousands of other retailers fighting for your audience’s attention. Learn how to make those coupons worthwhile.
3. Mobile-Only Coupons
If your business comes with an app, the way to go is with mobile-only coupon codes.
Although sometimes such codes might be redeemable through desktop devices, if you want to prove your app a viable channel, focus on it. Use mobile-only coupon codes to drive sales from that channel.
But are coupons suitable for your business to begin with? If you’re running an online shop, they might prove invaluable. Consider the 145.3 million Americans who redeemed a coupon in 2021.
According to research, nearly 50% searched for coupons for household goods and items.
More than 40% wanted codes for restaurants or food delivery, and another 40% for grocery shopping. Electronics, apparel, and fashion follow close behind with 37% and 35%. You can’t find a category of goods for which consumers would pass on a coupon code.
Top 10 Coupon Code Discounts to Consider
If your business falls into any of the mentioned categories, it’s time to optimize your coupon codes strategy. Let’s look at some of the most popular discounts you can offer through coupon codes:
- Abandoned Cart Coupon – when nearly 70% of only shoppers abandon their carts, it’s time to figure out a way to get them back on your online shop. Personalized abandoned cart emails with a dedicated coupon code for a discount and a clear CTA can be a game changer for recovering lost sales. Just don’t forget to put a time limit on your offers.
- Free Shipping Code – shipping costs often lead to checkout abandonment. We all know they might be unreasonably high sometimes. You can mitigate them and recover abandoned checkouts with free shipping coupons. You can pair the free shipping coupon with a minimum purchase threshold to boost the AOV (average order value).
- Sample or Gift – offering samples or gifts can boost AOV while providing additional value to your customers. You can clear inventory with that tactic or increase AOV if you set a minimum purchase threshold for someone to receive a gift.
- BOGO Coupon Codes – the popular Buy 1 Get 1 Free coupons and offers can affect sales significantly, especially if used strategically. BOGO coupons are best suited for holidays and specific events, like a seaside holiday or the start of the school year. You can apply the tactic to the same or similar products.
- First-Time Purchase – first-time visitors won’t always complete a purchase. They’re more likely to look around, scout for offers, and leave. You can encourage them to purchase with a first-time customer discount code. That just might be enough of a nudge to convert them.
- First-Time Subscriber & Re-Subscriber – a great way to build your email list is to use coupon codes as incentives for signing up for your newsletter. People who sign up willingly signal they’re interested in your email marketing communication. You can try to make the people who unsubscribe return to your store with an exclusive re-subscription coupon code.
- Exit-Intent Pop-up Coupon – appearing in the nick of time, exit-intent pop-ups can feature coupon codes that encourage people to stay on your online store. Just as people move to close the window, present them with a time-sensitive discount for their next order or go all in and offer them a free shipping code.
- Seasonal/Event Coupons – you can use exclusive and timely coupon codes to boost AOV during massive shopping events like Black Friday, holidays like Halloween and Christmas, and the start of a season. Offer coupons for unique products, and target impulse buyers to make the most out of your strategy during events.
- Loyalty Coupon Codes – if you don’t have a loyalty program, evaluate your online shop and consider the potential of establishing one. Loyalty programs create the incentive of a potential future discount and nurture repeat-purchase behavior. Reward loyal customers with points they can redeem as discount coupons, for example.
- Referral Coupons – you can feature discount coupons through a referral program. That’s another way of rewarding loyal customers willing to share their exclusive referral codes and links with their social circles. That way, you create more opportunities for your customer base to grow.
Are these all your options? How to choose the most efficient approach? It all depends on what goals you set for the coupon marketing strategy.
Below, we’ll explore the development of such a strategy and how to enhance it, so keep reading!
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Designing a Coupon Code Strategy
Coupon codes are essential in building strong customer relationships, growing your customer base, and boosting average order values. But you must carefully craft a dedicated coupon marketing strategy before you start seeing meaningful results.
Check out our step-by-step guide on creating such a strategy and learn how to harness the power of coupons today! Let’s start with the basics:
A. Set Goals for the Coupons
A coupon code strategy can help you achieve several key goals. These include customer acquisition, upselling and cross-selling, acquiring consent, acquiring feedback, driving sales, and enhancing AOV.
Additionally, coupons provide a way to apologize whenever customers have complaints. Coupon codes can help with improving and enhancing customer relationships. Once you’re clear on your coupon marketing goals, you can select the best options confidently.
B. Identify the Best Coupon Codes Offers
What are the most suitable offers to feature on coupons? Remember to align them with your audience’s needs and preferences. For example, use free shipping coupons for the next order if you want customers to return. Provide 10% off to anyone who subscribes to your email, and so on.
Finding the best approach depends on experiments and trial-and-error offers. But what can enhance your coupon marketing strategy, regardless of the type of coupons you send, is adding a pinch of personalization.
Use the data gathered from daily operations to personalize coupons for existing customers. Incentivize visitors to offer consent and share personal information and preferences with you by promising personalized and more relevant offers.
C. Track Coupon Code Performance
Once you select your coupons, it’s time to determine their scope. That way, you can track and evaluate coupon code performance more easily. Set a time limit to redeem the coupon. Predetermine the number of times the same customer can use a code. Decide on meaningful segments to target with coupon codes, and pay attention to performance.
Track indicators like AOV and redemption rate to determine the strategy’s effectiveness. Remember that coupon marketing relies on trial and error, and don’t be afraid to experiment a little. That’s where testing comes into play.
D. Test Different Offers
Testing different offers is the only way to understand what resonates with your customers the most. You can launch various coupon code campaigns. Or if you have the right tools – you can even A/B test your campaigns.
A/B testing coupon code campaigns is a quick source of clear information about what’s working best with your audience. That’s a more reliable approach to testing your coupon marketing strategy than launching smaller experiments at regular intervals.
Even if it sounds like a hassle, don’t skip this step. Testing your approach generates actionable insights you can use to optimize coupon code campaigns and make the most out of the strategy.
E. Promote Coupon Codes
You should promote and distribute your coupon codes where your customers are. Some of the most popular channels and methods include:
- Coupon Platforms – on them, people browse for specific promotions from their favorite brands. You get to make offers side by side with the big players. Remember that online shoppers might prefer a more recognizable alternative if your brand isn’t familiar.
- Email Marketing – the best way to reach your target audience and engage existing customers and subscribers. Through email marketing, you can send highly personalized coupons and relevant offers that resonate with people. That’s the channel to leverage if you’re running a loyalty program.
- Direct Messaging – through SMS and push notifications. When you send coupons to such an audience, it’s most likely interested and will act according to your expectations. That’s because they’ve willingly provided you with their phone number or subscribed to push notifications and are interested in what you want to offer them.
- Website & App – where your customers are. Pop-ups, banners, dedicated landing pages, and vaults with loyalty points can be used on your online shop and app to help visitors move to the next stage of their customer journey.
- Influencers – are you partnering with micro-influencers? The past several years demonstrated that their audiences are more engaged, and you stand to gain a lot if such influencers and content creators share your coupon codes. You can pair that up with a referral coupon promotion to incentivize influencers.
Each of those communication channels gives you an opportunity to promote your coupons. Just make sure your audience is there. You might even distribute physical coupons and add printed vouchers to shipped orders if that will please your audience.
F. Retain Customers
Coupons aren’t just a tool for driving sales. They’re a powerful marketing tactic that helps build a positive brand image and strengthen customer relationships.
With more than 95% of Americans using coupon codes (Shopper, Coupon Culture Report), you can’t afford to underestimate their worth.
Additionally, using coupons provides another source of customer data and valuable information.
You can leverage it to optimize marketing communication and all campaigns across different channels. That helps with customer retention by staying relevant with offers and promotions.
G. Measure Results & Analyze the Coupon Codes’ Effectiveness
It goes without saying that the last step of an effective strategy is measuring results and optimizing campaigns. Apply UTM tracking to coupon codes to identify the channels and specific campaigns that led to conversions.
Some of the most helpful metrics and formulas you can use to measure the success of coupon code campaigns include:
- Finding the Break-Even Point – the point at which your revenue will be equal to your costs. You won’t generate profits at that point, but you’ll have enough data to enhance future campaigns. Calculate it by dividing the Total Costs for a campaign by the Product Margin you get as revenue.
- Calculating Redemption Rate – determine whether a coupon code resonates with your audience by calculating the Redemption Rate. It will show you how often the coupon has been used or how many customers have been intrigued by your offer and acted on it. That equals the Number of Redeemed Coupons divided by the Number of Issued Coupons, multiplied by 100, and it’s a clear indication of success or failure to engage and activate customers and prospects.
- Measuring Coupon ROI – calculate the difference between the Total Earnings attributed to the coupon campaign and the Costs for that campaign, and divide that difference by the Costs. That’s the most used approach to calculating ROI from coupon code campaigns. It gives you a clear picture of whether your current coupons are worth the associated costs of promoting and distributing them.
Tracking helps you determine overall performance. The available data will give you insights into what’s working and what isn’t. Use those insights to adjust future campaigns and optimize for better results.
If you spend enough time crafting a detailed, dedicated coupon marketing strategy, you can start reaping the benefits as soon as your first campaign launches. Let’s check those out!
Benefits of Having a Coupon Code Strategy
The versatile nature of coupon marketing can greatly affect online shops. From targeted promotions to cleared-out inventories, here are the main benefits of having such a strategy:
- Enhance Customer Acquisition – drastically increase your chance to reach new customers through targeted campaigns, collaborations with content creators and influencers, etc.
- Strengthen Customer Loyalty – whether through dedicated promotions or a loyalty program, start nurturing repeat-purchase behavior, and encourage people to keep coming back.
- Clear Out Unwanted Inventory – offer 2 for 1, promise a gift when purchasing a specific product or reaching a predetermined threshold, and so on, to free yourself from slow-moving items.
- Improve Upselling & Cross-Selling – not every customer is willing to spend more on a more expensive or a complimentary product. Encourage them with coupons.
- Improve Targeting & Segmentation – you can make the most out of your customer base and marketing efforts by creating more relevant offers that resonate with your audience.
- Boost Brand Awareness & Mouth-to-Mouth – regularly offering coupons forms customer habits and creates associations. You can boost brand awareness through such means, and encourage customers to share about your online shop. Just don’t forget to do it in moderation so that you don’t bleed customers in periods without coupon codes.
- Make the Most Out of Seasonal Events – events and seasonal promotions are usually organized weeks if not months in advance. With coupons, you can hype your audience and encourage them to purchase even more when the time for hot promotions arrives.
- Increase Overall AOV & CLV – online shop owners and managers with limited marketing experience believe coupons undercut your revenue and profits. By nurturing repeat-purchase behavior, you can boost CLV (customer lifetime value). Additionally, when you offer coupons with specific spend thresholds, you can increase the AOV of each customer.
A coupon codes strategy, if suitable, can change how people view and interact with your brand. To create a solid foundation for your strategy and to start reaping the benefits, check out the expert tips we gathered in the next section!
7 Tips for a Successful Coupon Code Strategy
We already saw some of the most popular coupon codes you can use, and we covered the steps of creating a coupon codes strategy for your online shop. Here are some expert tips to keep in mind when applying that strategy:
- Align the coupons with your brand image, assets, and mission. Make them distinct and memorable so that customers remember them and remember to use them.
- Encourage people to share your coupon codes – whether you’re working with influencers, boost your chances of increasing your customer base by encouraging social sharing.
- Take advantage of time sensitivity and FOMO to prompt customers and visitors to act immediately. The biggest mistake you can make is to send an email with a coupon code that is not limited by time. The moment the customer closes the email, they’ll forget about the coupon.
- Add coupon codes to lead magnets, dedicated landing pages, and subscription forms. Tie their distribution to signing up, completing a purchase within a timeframe, and so on.
- Monitor coupon code use and prevent people from misusing them. Imagine someone subscribing to your newsletter, again and again, only to get the coupons. Monitor the activity of customers with the same IP or delivery address.
- Utilize at least two distribution channels for your coupons. For example, combine email marketing with social media to reach a max number of customers and prospects. Don’t be afraid to add coupons to your push notifications to prompt immediate action.
- Get creative – with visuals, countdowns, and messages to make the customer act now.
Once you have clear goals and you know how and what you’ll track, don’t be afraid to experiment and add some spice. Why not make a whole competition out of it?
Craft your strategy and apply these powerful tactics to drive sales and help your business grow. Reach out to VibeTrace for a free demo of the robust all-in-one marketing platform that can help you start launching and tracking powerful coupon marketing campaigns that convert!
