· Issue 21 · January 2013
Do Coupons
Add Value to Your Business? by Blair de Jong
C
Blair de Jong
oupons, discounts, vouchers, promo codes – whatever you call them, we all use them as part of
coupon. Additionally, as these customers purchased twice the
our everyday shopping.
average order value, they were eight times more valuable.
Who doesn’t want to find the best deal when making an
online purchase? But, as coupons have become more and more a way of do-
Do Coupons Provide a Negative Brand Perception?
ing business, there is increasing pressure as merchants try to
The argument here was that coupons “cheapen” the brand
justify the incremental value coupons and coupon affiliates
and turn away customers. However, we demonstrated how
add to the business.
our competitors were using coupons as a tool to retain loy-
Earlier in 2012, we had seen tremendous 300% annu-
al customers. We feared that if we did not have a presence on
al growth with the iStockphoto/Getty Images affiliate pro-
popular coupon affiliate sites, we would simply be handing
gram, predominantly from coupon affiliates. Yet, there were
over our customers to the competition.
too many naysayers from the business challenging us, claiming that coupons and coupon affiliates were not adding incremental value to the business. Here are the tough questions we faced and how we responded.
Would Customers Buy Without a Coupon? The only way to truly test this theory would be to turn off coupons completely. But, with affiliates contributing more than 10% of our online business, we weren’t prepared to take that chance.
Do Customers Spend Less With a Coupon?
Instead, we experimented with different discount levels
Some argued that by giving away a discount, customers
to see if offering a higher or lower discount would impact reve-
would buy just as much, but at a lower price. We showed this
nues. We found that raising or lowering the discount level had
to be the complete opposite. People took advantage of the dis-
minimal, if any, impact to overall revenues. This suggests that
count savings available to them by spending two and a half
while the discount percentage may not be as relevant, the fact
times more on average per order than those without a coupon.
that people perceive there to be a deal is what motivates them to buy.
Are Customers Who Use a Coupon Less Profitable? By giving away a coupon or discount on the first order, there was the thought that we would not attract loyal, “sticky”
Based on our findings, we have established that coupons do add incremental value to the business and are, in fact, necessary to acquire new customers and retain loyal, existing customers.
customers. But after looking at these customers a year later,
We continue to use coupons in our affiliate program
we found that these new customers acquired through a cou-
and will continue to experiment with different offers to fuel
pon purchased four times more often than those without a
growth for our business.
☞ Blair de Jong is the Affiliate Manager for iStockphoto and Getty Images.
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