To Coupon or Not to Coupon? That Is a Great Question!

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Email marketing strategy is my occupation, which means that I view every email I receive with a critical eye. However, I am also a consumer, which means that I respond to coupons and discounts as any other consumer does. Well…maybe even more than others. I am a sucker for a good deal!

As marketers, we know that couponing is a tried, true, and effective tactic for driving conversion. But the question remains: is every time the right time to offer up a coupon code or discount? I'll argue "no" on that point. Here are things to consider before tossing another coupon code or discount into your email.

1. What is the goal and/or objective of offering the discount? The usual answer to this question is typically something along the lines of, "to sell more stuff." However, when marketers are pushed for greater clarity or definition around this goal, the answers get a little more, well...mushy.
   
   Truly understanding why you are providing the discount goes a long way in validating your decision. For example, I recently had a birthday. As a gift, a retailer I frequent emailed me a single-use coupon code valid for the next 30 days. It was a nice surprise for me and may well cause me to make a purchase I would not have otherwise made. The incremental purchase was probably this retailer's goal, or maybe they just wanted to thank me for being a loyal customer…likely both. There are a number of other reasons you may choose to leverage coupons as well, including: depletion of distressed inventory, new product launch, abandon cart, or other behavior-based interactions.
2. Was the effort a success? After years of working with marketers, I always find it interesting that when asked if a program was a success, only a few can definitively answer with any real supporting data. To understand the impact of your coupon program, complete the goal-setting exercise in point No. 1 above, then state a hypothesis - what do you think the outcome will be and what do you deem success?
   
   Here's an example:
   The goal is to drive first-time purchases from new subscribers. Our current conversion rate with this audience is 2 percent and we would like to double conversion over a control group.
3. Is it the right offer? Do you need to provide a dollar-off or percent-off discount to motivate your customer? How much is enough to incent the desired behavior? When do you introduce the offer? Finding the right combination of offer and timing is likely situational and is something you should test. Too often we assume we know the most effective offer. For example, you "know" that giving customers 20 percent off is most effective. But after testing you may find that that $10 off is not only a more effective converter, but it also reduces your costs. Given the simplicity of testing in email, it is never advisable to guess your way into a strategy.
   
   It is also important to remember that not every situation requires a coupon. In fact, you could be reducing your ROI by over-discounting.

I will leave you with this example: I have been on the hunt for two accent chairs for my new dining room table. I found the ones I wanted and put the chairs in the cart to determine timing on shipping, only to discover that the chairs would deliver smack in the middle of my summer vacation. So I abandoned the cart, choosing to wait to buy until I got back. Two days later, I received a 15% off coupon from the brand, valid "today only," so I made arrangements to have the chairs delivered to my neighbor during my vacation. The result? The retailer lost over $100 in order value that I had planned to spend as soon as I returned home. So was this cart abandon coupon program successful? You tell me.

Clearly, there's no way for marketers to avoid this type of occurrence every time. But if you start with a goal and clear success metrics, and if you only coupon based on achieving those two things, you can feel confident that your program is strategic and that it is driving your business in the right direction.

Image on home page via Shutterstock.