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How to Succeed With Couponing As Your Marketing Strategy

How to Succeed With Couponing As Your Marketing Strategy

There has been a constant battle between whether one should go for discounting or not. If you do, you come across as a brand that is too approachable, and if you don’t, you lose out on some great revenue. Some say that giving coupons devalues the product’s inherent value and diverts the customer’s attention from that value to the value offered in dollars.

We have addressed this tug-o-war in some of our articles previously too (thisthis and this), but today
we have a guestpost from putting an end to that discussion by

– highlighting the occasions where couponing can prove to be a great marketing strategy, and

– how to do it right.

How Are Branding And Coupons Related?

Offers, or coupons, would be a powerful tool in your eCommerce arsenal if used strategically. Most use it for customer acquisition, but very few for building customer loyalty. Now, why is that? Why such divergent goals? It all depends on how you want to position your brand – as a higher end brand or something within approach.

Goal #1: Customer acquisition – for consumer brands that can offer healthy deep discounts like weekly sales for hitting their goals

Goal #2: Customer loyalty – for higher end brands or with those that have slimmer margins

But What Exactly Are Coupons?

If you look closely, coupons are nothing more and nothing less than a promise. A promise made to the prospective customer that a sum would be waived off from a certain product and they’d get it cheaper than their counterparts.

This is just the idea, but as someone wise once said, the devil lives in the details. So, the question shouldn’t be if you can offer discounts, but the how of it so that it fetches profits for you at the end of the day.

Let’s see what discount offers do to people’s psychology.

#1 The Psychology Of Assuming Legitimacy

Most people assume that any offered discount is a legitimate decrease in the original price. What it means is that the brand might have raised the prices, and then offered a discount to excite the customer.

#2 The Psychology Of Sense Of Urgency

Because of the fear of losing out on a discount offer, people feel a sense of urgency to make the purchase and thus, it leads to many impulse purchases. This infused sense of urgency also dissuades people from looking for other offers at other stores or do a price/feature comparison.

#3 The Psychology To Expect Discounts.

What happens with regular discounts is that people become accustomed to making a purchase only when it is available at a discounted price. They expect discounts and not providing them may lead the customer to drift to a competitor’s website.

Understanding Which Discount To Offer

Because of the above three reasons, especially the last one, it is essential that you train the minds of your customers to expect discounts only when it is mutually beneficial for both the parties. Now, customers do not care if the discount is beneficial for you or not. All they care about is their choice and its price.

So you need to position your offers in a way that lures the customers and still makes an impact on your sales and revenue.

How To Present (Position) Your Discount Offers For Maximum ROI

Let’s look at these three discounts to understand how a consumer’s mind works when it comes to discounts:

  1. $100 off a $399 Smartphone
  2. A $15 necklace marked down from $36
  3. Buy a pair of shoes for $80 and get 50% off on the second pair

Which one do you think is the best deal?

The correct answer is 2nd one. If you’ve chosen this, you know your way out of crafty offers. It is clearly a discount of 41.6% on a necklace while first is 25% and the third is 50% off but after a payment of $80+.

If, however, you felt that others were a better deal then there is nothing wrong with you. You just walked with customer’s boots on.

Drawing a simple conclusion from this – most people do not like to do the math of discounting. This brings us to a crucial element of using discounts – positioning, to present them in a way that makes the customer feel that he is reaping the maximum benefit he can.

So let us look at the 7 different kinds of presentations available for offers:

Amount off – It is merely a reduction in the overall price and applicable to a certain product or the entire order. However, it makes a customer feel that they are missing out on a certain credit if not used impromptu.

Example: $20 off on Sterling Silver Necklace!


Percentage off – These are best used when trying to liquidate the merchandise that is old and isn’t moving.

Example: Up to 50% of all x brand shoes


Buy one, get one – In short called as BOGO, it is used to prompt shoppers to purchase more items.

Example: Buy one, get 50% off on the next item


Bulk discounts – Such discounts are used to increase the average order value and quantity.

Example: Buy three, get the fourth item free OR get 25% on any purchase above $150


Threshold rebates – These are used to give an illusion of additional value for the same price.

Example: Buy any three for Rs. 999.


Shipping charges off – Often cited as one of the major reasons for shopping cart abandonment, it can prove to be a superb way to mollify this and increase conversion. They are best used in conjunction for bulk purchases.

Example: Free shipping on orders above x amount.


Free gift – This scheme is an intelligent way to increase AOV, provide additional value whilst getting rid of products that aren’t moving.

Example: Free grater with every kitchen appliance more than $35.


14 Fab Ways To Position Your Discount Coupons

#1 Weekly discounts to meet conversion goals


#2 Prelaunch offer to get a wholesome list of subscribers


#3 Holiday/Seasonal offers to make the best of the season


#4 Abandoned cart offers by email to bring back the lost ones


#5 A discount in exchange of email newsletter subscription


#6 Another discount/freebie in exchange of social media liking, following or sharing


#7 A referral candy to widen your reach, organically and trustfully


#8 Warming-up welcome discount for any first-time visitor


#9 Exclusive offer for volumes or cart sizes above your AOV


#10 Exclusive offers on social media as a reason (reward) to follow and subscribe you


#11 Customer loyalty rewards to retain customers for longer


#12 Exit intent offer for last moment conversions


#13 Influencer discount for bloggers, micro-celebrities, etc. to influence a wider audience


#14 Marketing on coupon sites to tap prince-sensitive crowd


The bottom line is that if you plan on an experiment with dispensing coupons, first understand how they will fit into your long-term business strategy.

Good luck with couponing!

Download an interesting research on what works (and what doesn’t) in email marketing for e-commerce by TargetingMantra.

[This article is contributed by folks at TargetingMantra.]

Note: The views and opinions expressed are solely those of the author and does not necessarily reflect the views held by Inc42, its creators or employees. Inc42 is not responsible for the accuracy of any of the information supplied by guest bloggers.