Five steps to using online promotions successfully

Online vouchers, discount codes, e-coupons, or whatever you call them, are an excellent tool for increasing sales conversions, especially around busy seasonal shopping periods.

Nowadays online shoppers are increasingly savvy. It’s a legacy of the recession and today’s more austere living.  They expect to be able to get voucher codes before they commit to any final purchase. Without them, consumers may opt to shop around a bit more, just in case they can find the item cheaper elsewhere. Even if they can't find a better price, you are likely to lose the order because they'll probably buy it at the last site they visited if the price is comparable.

Recent research conducted by VoucherCloud showed that 57% of customers who used a coupon code said, “if they had not received the discount, they would not have bought the item(s)”.

Benefits

Discount voucher codes are an effective online sales and marketing tool for:

• Increasing sales - Discounts help to incentivise customers into making a purchase instead of waiting, and can help to boost sales on a product that isn’t selling as well as expected.
• Building brand loyalty – Rewarding existing customers with offers will improve customer retention, placing your business back on their radar and improving the likelihood of a spontaneous purchase.
• Driving traffic and acquiring new customers – A well timed email or advert containing a voucher code for your website may make new customers more willing to take a risk and buy from a business they’ve never used before.
• Launching new services, products or websites – New products don't have a track record, so customers will err on the side of caution and wait for others to be the first, which leaves you in a deadlock. Discounting encourages the uptake of a new line by early adopters willing to take the risk and trial something at a great price.
• Sweetening complaining customers - Giving disgruntled customers a discount on their next purchase as part of your apology will help them forgive and forget, instead of spreading bad press about you to their social circles.
• Generating leads – Letting people know you give exclusive offers to your social media followers and email newsletter subscribers will help boost customers numbers signing up to receive information from your business.

So, why are discount codes so effective?

1. Loss aversion

Voucher codes work best when they are time-sensitive, e.g. “48 hour 20% off sale”, or have limited availability e.g. ”20% off for first 100 customers only”. This forces a consumer into making a purchase sooner to avoid losing out.

This tactic plays on the well-established human instinct of loss aversion which triggers impulse buying. Use a clear call to action in your marketing to reinforce this, e.g. “Buy today to avoid disappointment”, “Stop wasting time and save money today”.

However, it's important to highlight the benefits of what they're buying along with the money they'll save, so the customer is reminded why they want it and what they will gain by having it, e.g. “4 times faster than xyz”, “Stores a million songs....”

2. Increased order value

By focusing on how much money the customer is saving, they'll feel that they have more to spend and will be prepared to splash out on something extra they couldn't have otherwise afforded at full price. The net result is that your average order value increases and the customer still feels they've saved a fortune.

3. Upselling opportunity

When the customer arrives on your site to buy the item on offer, use that as an opportunity to upsell a more expensive model. The customer may be enticed into buying the better item at a price that is similar to what they would have paid before the discount. Psychologically they won't feel like they are spending any more and will feel good having a superior model.

4. Spreading the word

A marketer’s dream is for a campaign to “go viral”, so you need to encourage people to get the message out about your offers among their friends. Include social sharing buttons in your email marketing and publish your offer on all your social media pages.

Maybe invest in social media advertising, so people know about your great deal. Consider adding a further incentive of an extra discount for everyone that shares the offer with others on social media.

5. Retail promotional calendar

There's effectively a retailer’s discount calendar where shoppers simply expect to see discounts: New Year's Sale, Easter Bank Holiday Sale, ‘Black Friday’ (the fourth Friday in November) or ‘Cyber Monday’ (the first Monday after Thanksgiving), etc. If you’re not part of these events your shoppers are likely to go elsewhere because they'll know there's an offer to be had somewhere.

Avoid overuse

When was the last time you ever considered paying full price for a new sofa? Why? Because there was a time when it felt like there was an advert for a sofa sale every week. And as a result, this meant you didn't feel you were getting a special deal and expected a lower price all the time. So now you're annoyed at having to wait until the next sale before you don't expect to have to wait.

Used tactically, discount codes can offer a short-term profit boost, but get this wrong and you could have a serious impact on your long term sales.

Comply with the promotional code of conduct

There are advertising codes of conduct to comply with when running promotions, as set out in the  UK Code of Sales Promotion and Direct Marketing. Read these guidelines so you'll know that your promotions aren't accidentally overstepping what's acceptable. The Advertising Standards Authority can take steps to remove or amend advertisements which breach these rules.

Final word

Used wisely, discount codes have the opportunity to increase sales, grow customer numbers and encourage repeat business. Define clear objectives for what you want to achieve before starting a campaign. Set measurable goals, such as sales revenue targets or new customer acquisition numbers, and determine how long you can afford to run the discount for, so you remain profitable.

Simon Horton is founder of ShopIntegrator, an ecommerce plugin that turns existing websites into webstores without coding.