The Perils of Voucher Codes and Discounts

Case study

The economic downturn, combined with the rise of online shopping, has led to more savvy online buyers. Groupon, a site with the sole aim of capturing impulsive deal seekers, has thrived in these conditions. Online retailers have also responded to this consumer behaviour by often offering discount code and online vouchers.

Discount success

Vouchercodes.co.uk asked Forrester to analyse the impact that online voucher codes have for advertisers. You can see the full report here, but the key findings were:

  1. The frequency of use of online voucher codes is increasing
  2. Online voucher codes reduced shopping cart abandonment
  3. Vouchers often finalised the deal for undecided shoppers
  4. The use of vouchers drove more customer conversions
  5. Spending by those who use online voucher codes is increasing

I have some reservations about this study, not least that I would be amazed if Vouchercodes.co.uk chose to publish a report that heavily condemned the use of voucher codes. It also appears that the findings were based on interviews with only five eCommerce executives and 508 voucher code users, rather than on the raw data. I would like to have seen analytics data across five ecommerce sites comparing the abandonment rates of those that start to interact with a discount voucher fields versus those that chose to ignore that field (or on websites without one), but sadly, I could not find such a study (if you know of one, please post it in the comments below).

There are certainly arguments for using voucher codes, but the focus in this blog is the possible pitfalls of using them.

Giving users a reason to leave

When users come across a voucher code box within the checkout process, two things may happen. One bad, and one really bad:

  1. They may press back, or leave the checkout to search for a discount code on your website
  2. They may (either after step 1 or independently of those) leave your site entirely to head over to a search engine to find a discount code.

The second possibility is particularly dangerous, as they may find an affiliate site offering a similar product for a discount on a competitor’s site rather than yours. Even if they do not find one, they may simply tire of this hunt and give up on the purchase entirely.

At the very least, a prominent discount field will put doubt in users’ minds, and will instil in them the idea that if they looked hard enough, they could get money off of your product. If they have made it as far as the checkout process, this is not a good thing, as they will have likely decided that the quoted price was one they were happy to pay for. By having a prominent discount code field, you are putting doubt in the mind where none existed before.

This 2009 study by Paypal and comScore found that 45% of shoppers had abandoned multiple shopping carts in a three week period, and of those 27% had done so in search of a coupon.

Users become used to discounts

Discounts codes are addictive. And if you give them freely and advertise their prominence on your checkout, you are only feeding this addiction. Your website may actually be training people to only purchase from your site when they have a discount.

Extreme Couponing

How else would a show like this exist?

Take the following example of MyProtein.com:

MyProtein

The discount code box is prominent and will likely be seen by most visitors to this page. What do you suppose those visitors then do?

MyProtein2

They head straight to Google and search for discount codes (according to Google, there are over 12,000 such searches a month). What do they find when they get there?

Search results for 'my protein discount code'

Sources of voucher codes

None of the organic searches are from MyProtein.com, and are instead affiliate sites. The paid results at the top are for MyProtein.com, but this effectively means that they are paying twice for one customer – once by giving them a discount and losing revenue, and once again when they click on their paid listing at the top of Google! And that is of course, only if they do click on the paid search results.

With Boohoo, a similar state of affairs. Prominent Promotion code button:

Boohoo1

High number of searches for Boohoo discount code (over 8,000 a month):

Boohoo2

None of which link to the Boohoo website:

Search results for 'boohoo discount code'

Searching for a discount

Both of these websites therefore encourage their visitors to look for discount codes, and clearly a lot of them do. Boohoo has taken one approach to remedy this outpouring of visitors, and that is to display promotional codes on their own website:

Boohoo4

As you can see, both at the top left and at the bottom voucher codes are displayed. Practical Ecommerce reported back in 2010 that Macy’s had started publishing its own voucher codes in a similar move. Macy’s reported that 40% of these visitors converted in the same session. Puma also does the same (in celebration of the mighty Usain Bolt triumphing again in the World Championships):

Puma

This is one possible approach that can keep even the most deal savvy customers’ on your website.

Another approach is to make the ability to add a discount to the checkout less prominent. Apple’s checkout is a good example of this:

Apple

The Promo code button is small and at the bottom, rather than wedged into the checkout process itself. The rationale behind this would be that if you have a discount code before going through the payment process, you will be looking for the appropriate place to enter your code. As long as it is on the cart somewhere, you will find it. It will also stop as many visitors thinking they should have a code only after starting the process, and they will not necessarily see the field.

This blog also suggests another way: to rename the field. They recommend testing (as ever) different labels, and it suggests that calling the field ‘gift code’ or ‘gift certificate’ will lessen the number of visitors that depart to find these codes. These labels imply that you must have received them as a present (you lucky things), not that they are widely available to all those who want to find them.

This blog suggests some other linguistic tricks to try out, including the addition of ‘(if any)’ after ‘Discount code’ to indicate that discounts are in fact rare, and you may be wasting your time trying to find one on Google.

So should I not use discount codes?

You can use codes as an effective method to get a surge of visitors to your site. But if you do, consider these guidelines:

  1. GetElastic recommend that only displays a discount code box when they arrive via an affiliate link or email campaign, and this is done by including a parameter in the URL that they follow, or automatically applying the discount as part of the checkout process should the visitors follow a promotional link.
  2. Make the discount box less visible, as with the Apple example above.
  3. Publish your own discount codes prominently on your website, as Macy’s, Boohoo and Puma have done, and link to them from your checkout page.
  4. Try using different labels for the discount box field
  5. Don’t have voucher codes fields at all – does your business suit the use of vouchers, and should it form part of your long terms strategy? Not all businesses do, so have a think.
  6. Have a ‘how do I get these?’ link under the promo code field, as mentioned in this GetElastic blog

Now, if anyone has some 80% discount codes for either Amazon or any sort of Xbox product, please leave them in the comment below…

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