6 Ways to Tackle the Promo Code Problem

What’s the problem with promo codes?

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. Not only that, but showing a coupon code box on your shopping cart page or in your checkout may prompt customers to search for codes in search engines (often finding them from your affiliates). Commissions get paid out to affiliates that never referred the sale in the first place. Even worse, you condition these customers to never pay full price again.

Nevertheless, there are ways retailers can minimize the damage of promo code entry box visibility, while still offering promo codes.

1. Use targeted selling rules

Some retailers suppress the coupon entry field for visitors unless they have arrived via an affiliate link or email campaign. These visitors are identified by a URL parameter which is stored in the shopper’s session. At checkout page, the parameter is looked up and the discount is either auto-applied or the entry field appears for the customer to fill in.

2. Issue private promo codes

Private promo codes are sent only to select individuals rather than shared with affiliates, social networks or posted on coupon sites. They are associated with an email address or account profile and may be single-use or ongoing. Since they can’t be shared, there’s no risk in showing the box in checkout – there will be no offers to pinch off coupon sites.

3. Use the promo box to build your email list

Office Max cleverly places a link saying “how do I get these?” below the promotional code entry box.

Hovering over the link explains you can sign up for Office Max emails to receive promotional codes.

Alibris does one better by providing the ability to enter an email address right on the page, as opposed to Office Max which makes you hunt for the email subscribe area.

4. Link to your own offer page

As I mentioned in The SEO Tip Online Retailers Still Are Not Taking Advantage Of, creating your own coupon code landing page is a great idea.

Macy’s links to its custom page from its coupon box with the text “Have a promo code? Find one now”:

5. Bank on synonyms

Alan Rimm-Kaufman had an idea to use less common verbiage like “voucher code” (common in the UK but less common in the US) to throw off shoppers. Voucher sounds like it might be something you can’t find on a coupon sharing site. “Offer code” and “rebate code” are alternatives to try.

6. Don’t make it a box

Someone who really has a code will work harder to find the entry area, so concealing it behind a button might solve the problem of the conspicuous box. Staples takes this approach:

There’s no cut-and-dried solution for the problem, and for most retailers, it’s not an option to ditch the coupon box entirely. These ideas are ways you can minimize the damage. On the flip side, JC Penney’s approach of offering “checkout with promo code” as a call to action maximizes the damage.

Presenting 2 calls to action for checkout creates confusion, and the size and placement of the “checkout with promo code” option makes it look more important:

There’s no cut-and-dried “best practice” approach to handling promo code boxes, but effort should be made to reduce the damage. Why not try one of these 6 ideas?

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11 Responses to “6 Ways to Tackle the Promo Code Problem”

  1. Brad says:

    One other HUGE risk with the coupon box is that the customer, who is on the brink of handing you the money, is now off on Google looking for coupon codes, and a) may get distracted and not return to your site, or b) find a better deal on another site – losing them in the short term, and possibly the long term.

    Having the coupon entry as a text box draws a great deal of attention to it, as users are predisposed to filling in fields when checking out online. Finding a way to hide the form field, yet make it accessible to those who are looking for it is probably the best way to keep customers on the path.

  2. Annif says:

    Love the Office Max strategy, really clever !

    One point though, If I give my email and I’m not receiving coupon immediately, I can be really disapointed…huh?

  3. Crystal says:

    Having your own coupon code page can save a lot of money in affiliate commissions, just link to it from your homepage and it will probably rank #1 in the search engines.

  4. Laurent B says:

    Apple uses the single word “Code” on the Appstore

  5. Chris says:

    This is great and I’m really glad you’re sharing some tactics around the Promo code issue. I blogged about it last year talking about their downside – http://www.smartcompany.com.au/online-sales/20091204-should-i-use-coupon-codes-on-my-ecommerce-website.html. One solution I mentioned was to not show the promo code field at all, and offer folks a special url instead which would apply the discount automatically.

  6. This is a great test for our e-commerce sites, thank you for the post. We are going to try the closed box option vs the open coupon box.

  7. Kirsten says:

    Helpful tips. One question: what are some best practices around customers asking for better coupon code rates or refunds? As a business, I don’t want to either lose revenue or cut even deeper into margins for those scenarios where now we are doing a bunch of manual work to give back money – but I also want my customers to be satisfied and feel they’ve been treated fairly.

    Example:
    -Customer gets a 20% off coupon from an email last week … finally gets around to buying this week, goes straight to cart, uses code, done.
    -Customer then browses site, only to find that there is a 2 day sale at 40% off for the exact product they purchased. They now want that code to be applied to their order (refund/repurchase).

    • Hi Kirsten, there are some approaches that may help this situation:

      1) If this is a high enough percentage of orders, consider adjusting your promotions strategy. If you are offering 40% off as the current promotion, and that customer had seen it and used it in lieu of the old promotion, you would have sacrificed the margin anyway. Setting clear expiry dates on promo codes clears up the “no wait, I want this code” complaint.

      2) Some sites auto-apply current discount codes, whether from referral (email, affiliate site) or to every visitor. Of course, this will loop some unaware customers into the discount and may delight them but cut your margin much more than you need to. It is an option, though.

      3) Time is on your side. For same-day complaints, I would recommend (if possible) having the CSR cancel the order once the second order is placed (to ensure the second order is followed through), or honoring the request. However, some customers are worth “firing” – keep an eye out for abuse. We can be very worried about losing customers but losing unprofitable customers is not so bad. If the CSR is given some discretion whether to honor the request or not, the decision could be made from order history data, or a customer lifetime value scoring metric. Not everyone has this information available to CSRs.

      If your customer service is very quick to turnaround pick-pack-ship, you have an advantage to deny the request, simply because “I’m sorry, the order has already been sent to the warehouse for packing and I’m unable to cancel the order at this time.” Customer should understand that and be more careful next time.

  8. Thura says:

    Hello,
    I am trying to link a promo code that will insert into promo code box on an offer page from a HTML email through tracking code. I am provided the promo code. Please suggest.

    Thanks

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