Online shopping’s popularity has exploded in recent years. According to a 2021 CouponFollow report, online sales reached $861 billion in 2020, a 40% increase from 2019. And these consumers are more price-conscious and discerning than ever, proactively seeking ways to lower the costs of e-commerce shopping via coupons, promotional codes and other cost-saving measures.
We’ll explain how online coupons work and how businesses that sell online can incorporate coupons into their loyalty programs to attract new customers, retain existing customers, and boost repeat business and referrals.
Why should your business offer online coupons?
There’s a vast online shopping audience ready and willing to spend money – if the deal is right. When your business offers online coupons, you can attract a significant customer base for the following reasons:
- Customers want a deal when they purchase. Everyone wants to feel like they’ve found an excellent deal on something they want. With countless online retailers vying to make a sale, customers understand they have the upper hand when making online transactions. A different retailer may have a better price, and it takes only a few clicks to get there.
- Shoppers actively seek coupons. Shoppers looking for savings often search for coupon codes. According to the CouponFollow report, 96% of the 1,300 people surveyed said they actively search for online coupons before making a purchase. Additionally, 51% of respondents told researchers that they search for an online coupon code nearly every time they buy something online.
- Lower prices attract more customers. Price may be the most crucial factor in a customer’s buying decisions. In the CouponFollow survey, 84% of respondents said that price impacts what they buy, and 61% named it the single most important factor.
Once your business has attracted coupon-using customers, you’ll benefit in the following ways:
- Coupons increase customer loyalty. Frequent deals and special offers can entice customers to shop at your store instead of competitors’ sites. Coupons are effective at creating repeat customers when included in a customer loyalty program.
- Coupons bring a higher chance of conversions. An item on sale for half-price is often more desirable than one selling at full price. Coupons can entice customers to buy items they otherwise would’ve left untouched, which can boost sales.
- Coupons can lower marketing costs. News of frequent online sales and lower prices can eventually spread to others via word-of-mouth advertising. Since it costs less to generate a promo code than print sheets of paper coupons, you can lower your marketing costs. Additionally, it’s free to promote promo codes via your social media accounts and website.
Price-conscious consumers and coupon shoppers have the potential to bring serious revenue. Businesses that offer online coupons incentivize current and new customers to buy from them and potentially stick around and develop brand loyalty.
It’s essential to be informed about the effects of coupons on your business. Coupons can attract new customers, but if you mishandle your coupon strategy, you can end up reducing revenue and disappointing customers.
How do online coupons work?
Instead of cutting coupons from the newspaper or a store catalog, online coupons present a fast, convenient way for consumers to save money when shopping online or in a brick-and-mortar store. Two typical online coupon disbursement methods are barcodes and promo codes.
- Barcode online coupons: Businesses often provide barcode online coupons via their mobile apps or website. Customers bring barcode coupons to a physical store for retailers to scan, just like printed coupons. QR codes are another way to direct consumers to your latest promotions.
- Promo codes: Promo codes – strings of letters and numbers – are often used in online transactions. Customers enter a promo code at checkout to apply their savings. Businesses can offer promo codes via their apps, websites, email marketing campaigns, social media marketing efforts and more.
The first coupons offered in America came from Coca-Cola in 1887. They were handwritten flyers that entitled customers to one free soda.
How to offer online coupons
There are many ways to distribute online coupons to your customers. However, each method’s effectiveness often depends on your current business model and target customers. Below are some of the most common and effective coupon marketing strategies to help you find one that works best for your business:
- Offer coupons for first-time customers. If your product or service is on the pricier side, offering deals to first-time customers can help persuade them to try it out. A downloadable coupon or promo code they can enter at checkout adds value to everything you offer. This is especially true if you frequently hold other promotions for returning buyers.
- Email coupons as part of a customer loyalty program. Customers often give businesses their email addresses to sign up for customer loyalty programs. This way, you can send them promotions about your new products and include coupons.
- Promote coupons in online ads. If you run Google Ads campaigns or other online ads, include a coupon code to track the ad campaign’s effectiveness and ROI.
- Use coupons as an incentive for completing surveys. Customer feedback is essential for ensuring your business stays aligned with consumer interests. However, getting responses to your customer surveys without some incentive can be challenging. Pairing your surveys with online coupons can increase the number of responses, letting you adjust more precisely as your customers’ needs change.
- Offer coupons in social media marketing campaigns. Social media is an excellent platform for generating more leads and engaging with customers. Consider including special offers like promo codes in your profile bio or promoting new products in posts and including a discount code.
If you’re contacting customers via email to share promotions and discounts, ensure you abide by online business laws that regulate email marketing campaigns.
What types of online coupons should you offer?
There are many factors to consider when deciding what coupons to offer. Consider the following best practices for offering online coupons:
- Offer discounts that don’t cost you money. Discounting can be challenging to get right if you’re inexperienced. While new customers can be enticed to purchase something with a discount, you could lose money if the deal doesn’t consider your cash flow. Discounts on old or outdated products often involve the least risk because you might otherwise never sell them.
- Determine the right percentage for your discount. The percentage your store offers as a discount shouldn’t be arbitrary. It should be large enough that customers feel they’re saving money but not so large that they question the product’s value. Try discounts of 20%, 33% or 50% off a product’s regular costs.
- Decide between a limited-time discount and buy one, get one free. Many businesses use limited-time discounts to entice customers to buy their products. This is effective due to FOMO (fear of missing out). While a limited sale can drive sales to current customers, it can also attract new customers if it’s targeted at audiences you don’t normally reach. Additionally, it’s the perfect opportunity to test the appeal of brand-new products because, if they’re unpopular, the limited run won’t strongly impact your bottom line. A BOGO (buy one, get one) sale can also motivate customers to purchase products.
BOGO offers can be effective at driving sales. You can still charge full price for an item while lowering your stock levels, which is also great for effective inventory management.
Online coupons can help grow your business
You’ll need to consider several variables when choosing the best online coupon offer and format for your customer base. For example, which coupon offers will work best for your audience, and what’s the best way to get coupons into their hands?
After fine-tuning your coupon strategy to entice customers without adversely affecting your bottom line, you’ll enjoy the benefits of offering online deals to current and first-time customers. With a thoughtful online coupon campaign, you’ll enjoy boosted sales, customer loyalty, repeat business and referrals.
Andrew Martins contributed to the reporting and writing in this article.