If I've learned one thing during my career in retailing and the internet, it is that people love the opportunity to save money, and they hate it when somebody else is getting a bargain when they aren't.
This is actually how I got started in the online couponing business. I noticed that when I was checking out of a transaction online there were these boxes for discount codes and I never had any.
Online shopping is still in its infancy, but it continues to experience tremendous growth as retailers amplify security measures and people simply become more comfortable with the process and convenience. But right off the bat, the idea of couponing was part of the internet shopping experience, and in the three years that I've been operating CouponCabin.com, I've been able to take notice of what works well for retailers offering online discounts and what doesn't.
Here are my top 10 tips for internet retailers:
1. When creating coupons for the first time, merchants tend to forget that they must create coupons that appeal to a wide audience and are simple to apply. One of the most common mistakes is creating a coupon that is valid only for a specific product or product category. Alternatively, merchants will create coupons that appear general but actually include as many as 30 or more brand and product exclusions. In limiting the product range, merchants are also limiting potential customers.
2. A complicated coupon code is another common problem among merchants using coupons for the first time. As many users tend to write down coupon codes on paper before entering them, long and complex codes leave room for error. Coupon codes should be short and simple. Avoid using characters that can be misinterpreted.
3. It is a safe assumption that a greater discount will result in a higher conversion rate, but here are some additional best practices for creating effective coupons:
- Offer a solid discount of at least 5 percent
- Keep the coupon generic to all orders or a category
- Establish a coupon expiration date to create a sense of urgency
- Use simple characters to avoid confusion when entering a coupon code (confusing characters may include i, l and 1, or 0 and o)
- Create a clear landing page recognizing the discount
4. Coupons offering a flat rate discount in dollars, such as a $10 off $50 coupon, are very popular. These coupons tend to attract more clicks and have better conversion rates for sites that average order totals of less than $100. Alternatively, sites with an average transaction size of more than $100 find that coupons offering a percentage discount, such as 10 percent off $100, often perform better. Finally, coupons that provide a discount with a low minimum purchase threshold, such as $5 off a $15 purchase, or even no minimum at all, result in high conversion and click-though rates.
5. Merchants commonly try to create coupons with a minimum spending requirement that is higher than their average order. By imposing such a minimum spending requirement, the merchant is subtly suggesting that the consumer add an extra item or two to their product order. An example might be a book merchant whose average order is two items totaling $40. Recognizing this average, the merchant would typically offer a 10 percent off coupon for orders of $60 or more, thus enticing the consumer to add another item to their order to meet the minimum.
6. Free shipping coupons are also quite popular with merchants as they consistently perform well. With shipping costs constantly on the rise, consumers often take advantage of free shipping coupons, particularly for sites that would normally charge in excess of $6 for shipping fees.
7. Since new customers typically have larger orders than repeat customers, many online merchants now attempt to attract first-time buyers by offering them greater discounts. Whereas repeat customers may expect coupons offering 10 percent off their order, new patrons might enjoy a 15 percent discount for their first purchase.
8. Another rule of thumb is that user-friendly coupons lead to higher conversion rates. Overall, coupons have a better performance when they can be activated from the user's click, thereby skipping the step where the consumer must enter the coupon code during the check-out process.
9. At check out, sites that do choose to use coupon codes should keep their entry boxes clearly marked so that users can find them easily. Entering the coupon code or clicking on the link should activate the code and allow the user to see their discount. It is best that the discount be seen as a line item in the shopping cart before they complete the transaction so that the savings are visible and the consumer knows that the discount has been applied.
10. Finally, coupons should be linked to a specific page. Merchants new to the world of internet coupons will sometimes link a category-specific coupon to a generic landing page, leaving the customer to search for the discount or appropriate page. Merchants should make every effort to link a coupon directly to a landing page that represents the discount. By customizing this landing page, merchants save the consumer time and ensure them that their coupon has been activated. This simple task typically results in considerably higher conversion rates.
Overall, the performance of a coupon is largely dependent on where it can be found on the web. A more established site will have the ability to generate repeat traffic and develop a loyal consumer base familiar with the concept and use of online coupons.
As such, these established sites will see higher conversion rates than sites that are relatively unknown. This type of behavior is particularly seen with sites like CouponCabin.com, which educates its visitors to help them become familiar with the site and become more likely to convert their interest into a sale.
Scott Kluth is the president and founder of CouponCabin.com, the internet's premier online aggregator of consumer discount code and coupons for internet retailing. Read full bio.
