Are promotions and coupons worth it? You may be screaming at your phone as you read this, “Of course! Duh!” However, if not done correctly or if they are not in line with your specific brand, they can actually do more harm to your eCommerce traffic than good.
Promotions and coupons aren’t just about running seasonal sales. They can be strategically integrated into a variety of marketing funnels such your Google search campaign extensions, be part of your email capturing tactics, used to grow your Instagram followers or drive your loyal customer retention.
In this post, we will go through the pros and cons of using discounts, promotions and coupons, outline the main types of offers online stores have at their disposal and look at how you can make promotions and coupons work for you.
Promotion, Coupon and Discount Types
There are four main offer types you can offer at various stages of your sales funnel. These include shipping discounts and promotions, percentage discounts, gifts and dollar-value discounts. Let’s discuss each in more detail.
Shipping Discounts and Promotions
Shipping discounts and promotions are an effective way to increase sales and lessen cart abandonment. This doesn’t mean you have to offer free shipping; there are many promotions you can A/B test to find the winning combination for your brand. These include:
- Free shipping on everything
- Free shipping to different locations
- Tiered shipping rates based on different dollar amounts
- Free shipping if a customer exceeds a certain dollar amount in checkout
- Flat rate shipping fees with upsells on faster shipping
- Free shipping to VIP customer groups
- Same-day shipping guaranteed
Pro Tip: Whichever you choose, even if you opt for no shipping promotions, make sure your shipping costs are explicit. Hidden shipping costs are one of the top reasons for cart abandonment.
Percentage discounts are pretty self-explanatory; they are a percentage off of the sale. These can be anywhere from 5% to 50% depending on where you are using the discount – introductory discount or liquidation sales. You can test different discounts at different sales funnel stages to find your converting sweet spot.
Pro Tip: Home page coupons can increase your sales by 33% or number of social followers by 25% per month on average.
Gift promotions are strategic giveaways you can use to increase an order size, get rid of extra stock or reward loyal customers. Or, a strategically-placed item in your packaging to improve your unboxing experience and leave a long-lasting good impression of your brand.
These are discounts or promotions that include a set amount off and can be perceived as far more valuable to your customers. One report noted that dollar-based promotions could have a 170% chance of converting. This can also be in the form of a dollar-amount donation.
Pros and Cons of Offering Discounts and Promotions on Your Online Store
The biggest con for running promotions and offering coupons is decreased margins and profitability. Additionally, if not used strategically (i.e. running the same discount on your store all the time) they can cheapen your brand and drive away price-driven shoppers who won’t come back. However, if you can add value promotions and plan ahead, the pros far outweigh the cons.
How? There is no doubt that discounts and promotions increase customer acquisition, brand loyalty and conversions. They also allow you to move stock and increase sales. If you think of discounts from the start, you can mitigate the cons mentioned above and plan ahead.
How to Make Promotions and Coupons Work for Your Brand
According to Shopify, store owners with active discount codes are 8 X more likely to make a sale and 17% of total sales in a year were converted through a discount code. The secret is offering discounts at strategic stages of your sales funnels. For example, Neil Patel found that 54% of shoppers will purchase products left in shopping carts if a discount is offered on those products.
In a case study by PC Hero, they found a 200% increase in conversions and a 64% decrease in CPAs when implementing a 30% discount in search ads.
In our Coupon Pop case studies, we have found promotions and coupons to be very effective. One brand was able to grow its Instagram followers by 6,000 in just one month. Another was able to generate $200k from a strategic coupon promotion. while an apparel store merchant generated $40k during a 10-day promotion.
Bonus Content: Finding the Best Discount Amount for Your Promotions
So are promotions and coupons worth it? They are most certainly worth your time, money and effort.
However, it is important to note that you will need to do your own tests to see what kind of discount at different stages improves your rates. There is no doubt that promotions and discounts encourage first-time shoppers to buy, increase the lifetime value of your shoppers and help grow email and social lists.
Here are nine places you can test promotions and coupons for your specific brand and target shoppers that could yield awesome results.
- Newsletter sign-up discounts
- Referral promotions
- Pre-launch offers on new products
- Seasonal email sales and deals
- Abandoned cart offers
- Minimum purchase discounts, shipping promotions or gifts
- Adding promotions and coupons to remarketing campaigns
- VIP promotions for loyalty programs
- On-site promotions and coupons
Ultimately, every brand will be different because different potential shoppers will respond differently in different niches. Testing promotions and coupons to see whether they are worth it for your eCommerce brand is the key to your success. It is also important to review active promotions and discounts on a regular basis, especially as seasons and markets change.
If you can get that right, promotions and coupons are definitely worth it.
Nicole is a content writer at StoreYa with over sixteen years experience and flair for storytelling. She runs on a healthy dose of caffeine and enthusiasm. When she's not researching the next content trend or creating informative small business content, she's an avid beachgoer, coffee shop junkie and hangs out on LinkedIn.
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