How to Effectively Leverage the Power of Voucher Codes in eCommerce

Online coupons and offers may seem like a simple and predictable way to increase conversions. Trouble is, sometimes they have the opposite effect. Indiscriminately offering rock-bottom discounts can have a negative effect on your business, and using vouchers comes under fire for uncontrollable distribution, for a tendency to drive one-off, discount customers and for reducing average order values.

Yet vouchers have some great advantages too. They’re easy to track, and they typically offer a consistent increase in conversions. So how should they be utilized?

Let’s look at the case of J. C. Penney. Sensitive to the downsides of voucher code use, last year Penney decided to abandon the practice entirely. The company eliminated seasonal sales, month-long sales, promotions, coupons and every other form of temporarily reduced pricing. Instead, Penney offered permanently lowered prices and bought ad space in search and offline to let its customers know. Now you didn’t have to wait for a sale, collect vouchers, remember a code. Our prices are always low: just show up. Who could say no?

So many of JC Penney’s customers said no that the company still hasn’t recovered and Panos Mourdoukoutas called the pricing change ‘a strategic mistake that haunts J.C. Penney.’

This case matters even if you don’t have Penney shares because it shows how consumer behaviour isn’t rational. Penney’s customers didn’t complain about the new pricing as pricing: they hated it as an experience. ‘He [Penney chief Ron Johnson] took away their feeling of small achievement when he got rid of coupons,’ one Forbes reader observed.

And there’s the important idea. Customers actually like vouchers (coupons), if they’re structured well, because they like the hunt.

It can also be argued that voucher schemes convert customers who are ‘on the fence,’ and appeal to deal-seeking customers who might otherwise never have bought from you. As such, they expose customers to your customer experience and your products. That’s a chance to make a repeat customer!

What makes a great voucher?

Great voucher offers should consistently lead to increased conversions, more cart value, or both. The bottom line is they’re about the bottom line.

To achieve that, you want a voucher/coupon that’s worded eloquently and attractively, and has a short and simple voucher code. Don’t give customers an opportunity to forget the code: keep it simple!

You also want to make sure the voucher really does offer a deal. Customers will pick up on phony deals and their irritation about them will stick to your brand. Don’t run voucher code campaigns that don’t offer real value.

If you can, try to offer vouchers that aren’t available through your website or your own marketing materials. If your vouchers / coupons are truly exclusive to affiliates your customers will appreciate this more, and remember it’s about the hunt! It’s fine to offer the same set of coupons through your site and your affiliates’, but aim to give affiliates something unique too.

Within your own site, it’s often effective to make a voucher code landing page; instead of reaching your landing page, customers heading to your website will land on the voucher code page.

Where possible, make a precoded affiliate link that would automatically apply the code to the shopping cart when clicked: make it as easy as possible to enter your voucher code scheme. In the same spirit, make the voucher code banner available in all sizes, displaying the code on each banner. Let your affiliates choose between a set of banners and a voucher code.

Just like with other marketing endeavours, treat every holiday and every special event as an opportunity to run a voucher code scheme!

The time will come when your and your affiliates’ experience of running voucher campaigns in your niche and your business will generate your own ideas of what voucher code schemes run best for you. Expect advice from affiliates too, and be ready to take it and build on it. Figure on spending about 10% of your time marketing through voucher code websites as a key part of your affiliate strategy.

So what vouchers should you offer?

A solid basic voucher code strategy for an ecommerce store should include at least 6 types.

These are:

1. One or two year-round vouchers

The aim for these is to get customers to spend more than they would have ordinarily: to increase average cart value. You could try vouchers like ‘free shipping on orders over £99.00,’ or ‘£10 off every order over £120.’ The cashback schemes offered by banks and supermarkets are essentially this kind of voucher code scheme. If you’re running more than one of these, make them mutually exclusive or be prepared to have them used simultaneously: they’ll be published side-by-side at voucher code and non-voucher code websites alike.

2. Two or three new vouchers monthly

The aim for these is to target different price points from your year round voucher scheme. Try running something like ‘£5 off orders over £45,’ or ‘£20 off orders over £99,’ during the first month of the year. Next month along, try ‘£20 off a £120 order,’ ‘£5 off a £60 order,’ and so on. You’re hitting slightly different price points through the year, and you’re hitting different price points from your year-round vouchers, encouraging a different level of purchase. Creating and supporting dynamic links as text or banners to display the current month’s coupon scheme will serve you well in two ways: one, customers will know what offers you have, and two, your affiliates will know that you care and are willing to provide that level of support and commitment.

3. Short-term Vouchers

The aim for these is pull in purchasers in the short term. To work they’ll need to be more attractive than your regular monthly and yearly voucher code schemes. Try something like offering a £25% discount on all orders during a particular week, especially in the wake of a big-spend holiday like Christmas, when people are bargain hunting on their own account after spending on others the previous month. Another way to focus this type of scheme is to build it around a particular product rather than a time frame. Manufacturers – ‘All Nike products 50% off’ – or product types – ‘ball caps 25% off’ – are common ways to focus this kind of scheme, but some ecommerce merchants are experimenting with deep price cuts on specific items on a day by day basis, or on product ranges on a weekly or monthly basis. Voucher code sites are always pleased to get coupons like this, and they’ll appeal to both repeat customers and to opportunistic, bargain-hunting buyers.

4. Holiday-specific vouchers/coupons

These have several aims. They may be intended to reward ‘early bird’ purchases to help revenue management, or to offer better pricing than your competitors. Obvious occasions include Christmas and Easter in the UK, while US merchants will want to look to Thanksgiving. In many niches, there’s a holiday specific to you – World Cheese day, International Hat Week – or one that’s applicable to your niche, and holiday specific coupons can form part of a wider marketing strategy that both seeks to drive sales and aims to increase brand awareness.

5. Deal of the day promotions

The aim for these is to offer bargains that customers will find all but irresistible. These might be limited to a week, or even shorter – some merchants literally offer daily coupon schemes. Others will use the same basic idea but run it for a month or longer. Ideally, these will be automatically dynamically updated on your affiliate sites and can have an enormously positive impact on sales.

6. Voucher Codes / Coupons that are exclusive to select affiliates

This is a way to incentivise the best affiliates, and to reward the best of your affiliate sites. Make sure the affiliates you most value know you’re able to do this for them. Exclusive coupons encourage activation in sceptical affiliates too.

So what types of deals convert best?

The type of deals that convert best fall into three categories:

1. Dollar or percentage off coupons / vouchers
2. Free shipping deals
3. Discounts tied to number of items purchased, or money amount spent (‘Buy 2, get 1 free’ deals, incredibly successful, or ‘25% off orders over £100’)

Coupons / Vouchers can offer great advantages for ecommerce if they’re implemented right. They increase conversions, get potential customers down off the fence and they’re great marketing.