How small businesses can use e-coupons and discount codes to increase profits this Christmas

using discount codes at ChristmasHow 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:

 

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!

Caution signDo 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.

 

Chritmas shopping trolleyTop 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.

 

Gap discount code

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

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How to use online vouchers, discount codes and e-coupons successfully

online disount vouchersCoupons and vouchers have long been used by businesses as a way of driving sales and encouraging loyalty.  I’m sure those of you old enough to have been around in the 1980’s will remember the famous green shield stamps and parents religiously collecting Esso’s Tiger Tokens to exchange for some questionable glassware.

The last few years have seen the use of online vouchers, discount codes and e-coupons grow significantly, and we’ve witnessed the increasing popularity of online discount voucher sites  – think Groupon, Wowcher, VoucherCodes and Savoo.  According to research by Savoo and Affiliate window, between 2009 and 2012 there has been nearly a 40% increase in the number of people searching for deals online.

A combination of general human instinct  (we all love a bargain), a long period of recession and customers becoming increasingly web savvy  (I can’t remember the last time I bought something from Boden without first checking what discount codes were available on the web) have probably all contributed to the rise of online voucher codes.  And, according to recent Forrester research conducted on behalf of vouchercodes.co.uk, growth looks set to continue:

“…the online voucher code market is still in a period of significant growth and advertisers utilising vouchers as a marketing channel enjoy a number of measurable benefits”

Benefits of online vouchers, coupons and discount codes

E-coupons can be downloaded and printed to be presented in-store or through a unique code that can be redeemed at an online store’s checkout. There are all sorts of ways businesses can incentivise customers with offers using online vouchers and discount codes. For example common offers include:

  • Buy one get one free
  • Money off codes such as 10% discount or  £5 off your order
  • Spend over £100 and save 20%
  • Free delivery and returns
  • Three for the price of two
  • Money off next order
  • Recommend a friend and receive money off your next order

Whatever type of incentive or offer you decide to implement make sure you think carefully the value of the offer and the length of time you intend to run the promotion – for example how would your profit margin fare if you offered 15% and free delivery for two weeks?

Voucher codes and e-coupons are a great, short term tactical sales promotion tool. They can be quick to set up, are easy to measure and split test, they are flexible and can be promoted at low cost via email, social media channels and on your website

The most effective ways to use vouchers, discount codes and coupons

1. Increase sales

Vouchers are a good way to increase sales to your website through incentivising prospective customers. For example you could use them to them to boost sales on a product that isn’t selling quite as well as you hoped or to invigorate sales to help reach a particular monthly sales target.

2. Rewards, loyalty and retention

Retention of customers is essential –  as we  all know our existing customers are our most profitable. Offering special loyalty rewards such as a £5 money off voucher can work really well. It makes a loyal customer feel valued and can lead to a spontaneous purchase.  Also, offering a new customer a discount on their next order is a good way of encouraging new customers to return.

3. Drive traffic and acquire new customers

A timely email containing an e-coupon can be an effective way of drawing new customers to your website. New customers may be more willing to take a risk and buy something if they feel they are getting a bit of a bargain to boot.

4. Launching new website, service or product

Online clothes retailers often use offer early bird discounts with next seasons previews. Voucher codes are a good way of generating interest in something new or trialling a new product.

5. Customer service tool

Often nothing appeases a disgruntle customer more than an apology with a nice discount voucher attached to it.

6. Generate leads and promote newsletter registrations

A discount code can be a good way of getting people to sign up to your newsletter – Gap and Banana Republic have successfully used a 15% discount code as  their as their newletter sign-up incentive for a few years.

Now a few words of caution…

  • Don’t overuse discount vouchers to the point that they reduce your overall profit margin.  Put objectives in place first and be clear about what  it is you want to achieve. Think about your incentive and for how long you should offer it for. Remember there is no one size fits all solution –  you must research and  test what works best for your business
  • If offering discounts make sure your discounts are genuine . You don’t want to fall foul of the Office of Fair Trading – I’m sure we’ve all seen the recent news on the investigation into some popular high street carpet and furniture companies.
  • Make sure any sales promotion activity you undertake complies with British Code of Sales Promotion and Direct Marketing. You can find full guidelines at http://www.cap.org.uk/Advertising-Codes.aspx

The internet has have provided us with  more options and an additional delivery channel but the key benefits remain the same. Used intelligently, with specific business objectives in mind then online vouchers, e-coupons and discount codes can be an invaluable sales promotion tool and I suspect, somewhat more appealing to this generation of savvy consumers than a set of crystal tumblers from their local petrol station.