How to use online vouchers and discount codes successfully this Christmas
For many small businesses, Christmas is one of the most important sales periods of the year and also one of the most competitive. Online businesses are busy competing against each other in the hope of winning customers and hearing the ringing of their virtual sales tills. Used tactically as a short-term sales tool, discount codes, online vouchers and e-coupons can help increase sales conversions during this all-important holiday season.
The use of digital vouchers has risen significantly over the last few years or so and if predictions are correct the growth looks set to continue. The rise of e-commerce, shrewd and technically competent online consumers alongside a long period of economic stagnation have effectively propelled discount codes and e-coupons into everyday online shopping.
110.8 million people will redeem a digital coupon in 2014
There are few online consumers who haven’t redeemed an e-coupon at some point or other. Indeed recent statistics highlight just how significant online vouchers have become in the world of e-commerce:
- 57% of consumers who redeemed a coupon said that if they had not received the discount they would not have bought the item
- 2014 will see more than half of US adult internet users redeem a digital coupon via any device for either online or offline shopping
- coupons can increase customer satisfaction by 4%
- it is predicted that 110.8 million people will redeem a digital coupon in 2014 (a 11% growth from last year)
- statisticians forecast that 31 billion online coupons will be redeemed in 2019.
The benefits of using e-coupons and discount codes
The reality for most small online business owners is that e-commerce is a competitive environment full of cost conscious shoppers, so making that final sales conversion sometimes needs a little extra impetus, especially at times like Christmas when competition is fierce. Voucher codes can be an excellent short-term sales tool. With the right e-commerce solution they can be really quick to set up, promote, measure and redeem online.
- Online vouchers can help push the consumer into making that all important move from shopping basket browsing to final conversion at the checkout – who doesn’t like to feel that they have bagged themselves a bargain?
- The time sensitive nature of a voucher or discount code for example ‘20% off for three days only’ can force consumers into a making a purchasing decision. As humans we don’t like to feel that we may have missed out on something.
- If you’re competing for business in a crowded market with little differentiation between products and services then it will be the better deal that is more likely to win the business and close the sale.
- If a customer takes up say a 30% off discount then he or she is likely to perceive the money saved as potential money to spend on something else. I’ve lost track of the amount of times I’ve been not been planning to buy something but have been enticed online with a money off promotion and checked out with an overflowing basket!
Do proceed with caution…
Of course there are some pitfalls that you will want to avoid to ensure your discount code and e-coupon promotions remain profitable this Christmas , otherwise it completely defeats the purpose of using them in the first place.
Do your sums: Before you in dive in offering discount codes here, there and everywhere – do you sums. Work out what kind of discount you can afford to offer and for how long you can run it in order for the promotion to remain profitable. Don’t forget to factor in shipping costs as well if you are thinking about offering free delivery and returns.
Don’t overuse: Think about what objectives you are hoping to achieve and plan for when you are going to run your promotions. Offering discounts all the time may end up significantly reducing your profit margins, plus their overall impact will begin to suffer. If consumers think they are always going to get a discount with your business then the sense of urgency as an incentive to buy reduces.
Have expiry dates: Make sure you have clear expiry dates on your vouchers and discount codes. You don’t want to be caught out having to honour old promotional discount codes when you hadn’t planned to.
Comply with British code of Sales Promotion and Direct Marketing. Make sure you have familiarised yourself with the guidelines laid out by the British Code of Sales Promotions and Direct Marketing.
Top tips for using e-coupons and discount codes this season
There are lots of different ways you can use online vouchers and e-coupons – some common examples are below. Test and measure the response of different offers to find out which work best for your business objectives.
- Free shipping and returns
- Spend over £50 and save 15%
- Discounts such as 20% off or save £5 off your order
- Money off your next purchase
- Buy one get one half price
- Three for the price of two
- Recommend a friend and receive a money off voucher for your next purchase
Date and time specific Christmas promotions: Rather than offering on-going discounts throughout the Christmas season, tactically plan on your promotions for the maximum impact. For example offer a special ‘Black Friday ‘(Friday 28th November 2014) or ‘Cyber Monday‘ (Monday 1st December 2014) promotion or a ‘VIP one week only 20% off‘ promotion. You can see the Gap example below – it offers a 40% off for 12 hours only – a great way to create a sense of urgency. Limiting your promotions heightens the sense of urgency and the perceived specialness of the offer.
Encourage up-selling and repeat visits: To make sure you are keeping an eye on the bottom line focus on up-selling and encouraging repeat business . Tempt shoppers with further products once they have been enticed in and follow-up with an email at a later date showcasing further Christmas products they may be interested in. You can also try testing an offer to increase you average order value such as ‘Spend over £50 and receive 10% off and free delivery’. Used effectively, coupons can help with goodwill and customer retention. Indeed, 91% of coupon redeemers say that they will visit a retailer again after being offered a coupon.
Christmas shopping cart abandonment: Shopping cart abandonment is always a big issue for online retailers, perhaps no more so that at peak shopping times like Christmas. Although I would advice caution against offering discount codes to abandoned carts all the time, at competitive times like Christmas offering some sort of incentive to carts that have been abandoned for a while can work well since, 65% of online consumers state that they would re-consider an abandoned shopping cart if they were offered a voucher code.
“Coupon codes are essential to an e-commerce startup if it is in a competitive market. Business owners can use coupons wisely in their marketing strategies by re-targeting with banners or shopping cart abandonment emails to lure shoppers back to a website.” Pablo Palatnik, Mashable
Getting rid of old stock during the Christmas sales: Post Christmas sales are the time when businesses need to rid themselves of old and excessive stock. Offering a limited time discount on top of sale prices is a good tactic give you a bit of a competitive edge and pull-in shoppers. Just keep a close watch your profit margin as the last thing you want is to be selling at a loss.
Finally, it is really important to make sure that your checkout is able to deal with the redemption of vouchers, discount codes and e-coupons quickly and efficiently. A poorly set up, fiddly checkout that makes redeeming vouchers time-consuming will cause shoppers to leave in frustration – even if they have a discount code.
The use and redemption of digital vouchers and e-coupons looks set to continue to rise over the next few years. With predictions that redemption via mobile devices will grow the most. So looking forward it makes sense to ensure your e-commerce solution is multi-device compatible and quickly and easily able to set up and redeem discount codes, gift vouchers, e-coupons and online vouchers.
We’d love to hear your thoughts and experiences on this topic, so please do leave a comment.
Christmas sale item image courtesy of digital art/FreeDigitalPhotos.com
Caution image courtesy of mrpuen/FreeDigitalPhotos.com