Implementing a strategic coupon policy

Like any marketing strategy, coupons can encourage higher order sizes or shrink them and they can erode profits or expand them, the difference is in the execution.

Putting a sustainable coupon policy in place will help to maximize your profits and not cannibalise them.

Instead of banning coupon affiliates, retailers should embrace them when possible: As long as coupons exist, coupon sites are not going away. If a retailer does not affiliate with a coupon site, that doesn’t mean their coupons won’t end up being posted there. Instead, it means that coupon site is not governed by any affiliate/network agreement so they can post anything – including unauthorised coupons.

Our suggestion is to embrace as many reputable coupon sites as possible to control or manage the space. A merchant’s affiliate agreement should clearly lay out the terms for coupon posting and, if they want to work with you and earn commission, the coupon site will have to follow your rules. It’s win-win that way.

Carefully plan your coupon strategy
Plan it just as customers carefully plan their shopping cart size to maximize coupon discounts and free shipping thresholds.

For example, if your average order size is $80 you might consider a $10 off $100 coupon. That means you and your customer both give up $10, but bottom line, you grow your average order size by $10, which, now $90, represents a 12.5% improvement. If you had discounted just $5 off $75 then you would likely end up with a lower order size than before. 

That would cannibalise your sales numbers and would be a poor coupon strategy and would be a lose-lose strategy for you and your affiliates.

Control the coupon box in your shopping cart
 If possible, auto-populate the coupon code in your shopping cart and automate the discount displayed in the shopping cart when an affiliate link is clicked from a coupon site. If a coupon link wasn’t clicked, consider suppressing the coupon box altogether. If you cannot do that, then create a generic “placeholder” coupon and message it as your everyday low price or similar.

The goal is to discourage your customer from leaving the shopping cart to search for a coupon. You also don’t want them to have any doubt in the back of their mind that they are getting a good buy or your best price.

To eliminate the problem of last minute coupon search we always recommend that merchants implement what is being coined the “Macy’s solution.” The essence of it is to discourage people from leaving your website (in search of coupons) by allowing them to “search for coupons” right within your shopping cart. Every merchant should have something like this in place (especially, if you have an affiliate program).

The Macy’s Solution

In March 2010 Macy’s implemented a simple, yet tremendously effective solution to the problem of last minute coupon search. Right next to the “Have a promo code?” box on the shopping cart page, they added a small “Find one now” link.

The end-user can then review all of these without leaving the merchant’s website (and no affiliate cookie is being set unless they were originally referred by an affiliate). Macy’s haven’t disclosed “how much the change boosted sales” they did state that “it was far larger than we thought it was going to be.”  We partner with a number of technology providers who can assist to implement this type of technology if you are unable to. Get in touch with your Commission Factory account contact to get more information.