Follow Up: When Coupon Codes Are Bad For Business

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This is a short follow up post to my article on Are Coupon Code Searches Costing Our Online Store Money?. I got a lot of good responses and just wanted to summarize some of the main points. Ultimately, I decided to make a small change to our store based on one particular reader’s input and I wanted to talk about the effect this change had after just 2 days of operation.

Usually, two days of testing means absolutely nothing but in this case, it firmly cemented in my head what I needed to do.

From the comments, pretty much everyone agreed that as a customer, seeing a coupon code field and not actually having a coupon code carries a negative psychological effect on the whole shopping experience.

For one thing, most of you that responded stated that seeing an empty coupon field is an instant signal to go off and search online for a coupon code which usually means either putting off the purchase or leaving the ecommerce site altogether.

The other camp of people never ever look for coupon codes, complete the purchase anyways but feel ripped off because they could have gotten a better deal with a coupon. Both of these cases are bad for business.

A Possible Solution

As discussed in my last article, I don’t really want to remove the coupon code field altogether because we do offer coupons to some of our biggest customers. Yet we don’t want the negative effects associated with offering coupons.

Mike King of Learn This offered up a possible solution which I liked.

I too don’t like the idea of online coupons actually. You’ve be way better off to simply offer a limited time sale price for an extra deal or bundle price for a sale instead of the coupons. I see what you mean for preferred customers, but then you should call it that so people don’t go searching for coupons. Change the field name to say, preferred customer code, and no one will go searching for a coupon.

Mike’s solution sounded like a good one so I gave it a try.

The Outcome

The outcome wasn’t exactly what I was expecting. Instead of people ignoring the field and checking out, we received several inquiries on how to become a preferred customer and how to get a preferred customer code.

Some customers that we responded to either didn’t complete checkout and one customer even left a rather negative note after making a purchase. We were kind of shocked. Here’s the note below.

If you would like me to come back please put whatever promotional code for free shipping or 10% discount is out there for preferred customers. It is in the best interest of future business – obviously you have one. Thank you in advance

In any case, I have temporarily removed the coupon field altogether for now until I can come up with a better solution. I may just end up using cookies and a special link to implement my discounts.

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10 thoughts on “Follow Up: When Coupon Codes Are Bad For Business”

  1. Ouch! Thanks not only for the follow-up post, but for being a guinea pig for what sounded like a reasonable solution. I’ll definitely re-think that strategy. Great opportunity for an enterprising webpreneur to come up with a solution for ecomm sites. (Anyone listening?)

    Keep up the great work, Steve. You inspire me!

    1. @Alexa
      Yeah, the result of the change was somewhat surprising since we rarely get inquiries about coupon codes. It pretty amazing what a subtle difference in terminology makes. In any case, I’ll probably just whip up something myself. It’s not that urgent.

      @Tyler
      I agree. I guess people are conditioned to finding deals and coupons online for any merchant. Thanks for sharing your feedback and your views on coupons with my last post. It was very helpful.

  2. When people expect a certain “service” or way of doing business it is tough to go against the current. At least you didn’t waste much time before finding out it didn’t work.

  3. Interesting turn around results Steve! I’m surprised to see that happen so suddenly actually. I guess in some ways people wanting to become a preferred customer and contacting you is not a bad thing. It gives you a better chance to offer more and create a closer relationship with your customer. Of course, you have to want this which may not be good for the conversion to sales / effort basis, I understand that.

    I guess its just back to if you want to have a sale, have a sale. No exclusively then. I believe however, this result doesn’t represent the value of exclusivity, but obviously it requires more thought on the benefits and how to promote it. I certainly don’t want you to guinnee pig my suggestion again, but if I was to offer some exclusive preferred customer, I would certainly describe it and make it very clear how to be preferred and what the benefits are. Perhaps, the trial has jumped the gun in this case?? Who knows.

  4. Pete says:

    I’m thinking of offering occasional coupons in email newsletters. So may be you can say something like “got a coupon from our newsletter? Use it here” you can probably word this better, but i think this can increase subscribers and sales to returning customers, which is a huge revenue source for any well established business

  5. Jen says:

    I garee with others that having a placeholder for a coupon code is an encouragement to buyers to go and look for one, and to wait for one if they can’t find a coupon straight away.

    Zappos uses a separate url (vip.zappos.com) with inbuilt benefits (free overnight shipping is the main one, but I guess you could offer anything).

    The VIP status is conferred by email and then the person has to log into the vip site in order to use it.

    Abit of effort on the programming side but seems like a solution that won’t put off regular customers.

  6. Shar says:

    I know this was posted quite some time ago, but, I figured it couldn’t hurt to offer a suggestion. I don’t like the idea of coupon code fields but want to offer previous customers a buyer’s incentive as well, and one idea that I’m batting around is some sort of gift certificate. I’m considering having the option of buying gift certificates on my site but will also send complimentary “gift certificate” codes to my preferred customers from time to time. So, instead of having the coupon field named as such or as a preferred customer field, it would say something along the lines of “gift certificate code” which should eliminate people searching for coupon codes but still give me the opportunity to offer my best customers a deal. Not sure how much of a coding nightmare that would be, but, its a thought.

  7. Sarah says:

    I have not opened my online store yet (still in the research phase), but I do sell a few items on Amazon. I always mark up my original prices and have a perpetual sale price that is in line with the current market price. People are paying the same price they are everywhere else, but they think they are getting a deal so it makes them feel better about their purchase.

    Similarly, when I buy from some of my favorite online clothing stores, they always have some sort of storewide sale going on with a catchy coupon code that is automatically applied at checkout. I am sure that they mark up their prices to offset these constant sales, but I still feel better when I purchase from them and appreciate not having to do my normal coupon code search.

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