The Most Common Coupon Strategy Mistakes (And How to Avoid Them)

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Coupon strategies can seem like a magic bullet when it comes to boosting sales. In a previous article, we even highlighted the ways to effectively implement a coupon strategy. However, while lowering prices can certainly help, it is vital to implement incentives in a methodical manner. Without careful planning, discounts can ultimately hurt more than help. To help you avoid such issues, we’ve highlighted the three most common missteps retailers make when implementing a discount strategy.

 

One-Size-Fits-All Discounts

When creating an incentive, many businesses offer non-tiered incentives. While this can positively impact sales, these discounts encourage people to purchase something from you and not more from you. Offering free shipping on orders of $30 or more means that a customer with a $30 order has no true advantage over a customer with a $300 order. The same is true, proportionally speaking, when offering 10% off any purchase of $30 or more; there’s no incentive to buy more than $30 worth of goods.

To combat this and encourage larger purchases, online retailers can benefit from tiering discounts based on cart value. For example, a business could offer a 10% discount to customers with carts values below $100 and a discount of 15% to carts exceeding $100. Abandonment becomes progressively more likely as cart value increases. By using a tiered incentive strategy, you can increase the likelihood of retaining high volume customers while still offering an incentive to visitors with lower cart values.

 

Offering Incentives to Low-Intent Visitors

As most e-commerce professionals know, not every visitor is going to buy from you. In fact, the majority won’t and there are many different reasons for that. So why invest time and money on low-intent shoppers?

The solution is simple. Instead of offering a discount to everyone, only launch the discount after a user has added an item to their cart. Even more cost effective is launching only upon abandonment. A car salesman doesn’t take $5,000 off a vehicle’s sticker price for every person that walks onto the lot. In fact, he may reserve such a move for a customer who appears prepared to walk away. Incentives can be treated in a very similar way.

 

Relying Solely on Discounts

There’s no doubt that discounts are generally an effective way to increase sales. However, to maximize the effectiveness of a discount strategy, it’s important to combine the tactic with urgency.

There are a number of ways to accomplish this. Some sites use countdown clocks to indicate the length of time left in a particular sale. One such example is PacSun, a retailer which hosts a popular end-of-season sale once per quarter. The clock begins counting down as soon as the sale starts; the company also sends periodic emails reminding customers how much times remains in the sale.

Other retailers use “stock alerts” to indicate how many of a particular item are available at a given price, thus encouraging customers to buy before they no longer have the option to. Still another option is to create make particular discounts a “limited time offer.”

Instead of creating a discount clock for an entire sale, simply offer the customer a discount for a pre-set period, such as 5-10 minutes. This tactic may require some A/B testing; the allotted time needs to be short enough to spur a customer to act, but long enough for them to fully understand what they’re buying.  Regardless of method, urgency tactics are a great way to further increase conversion rates at the point of sale.

 

Conclusion

When executed skillfully, coupon strategies can create a burst of improvement in sales, which can in turn create loyal customers. By launching incentives strategically and implementing a tiered structure, you encourage bigger purchases. Finally, by combining discounts with a sense of urgency, retailers can leverage this tactic effectively while minimally impacting their bottom line. It’s a win-win.

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