Coupons are great…when used properly. There have been various surveys that show that approximately 50% of online shoppers wouldn’t have purchased without a coupon. So it makes sense to provide a coupon to that 50%. But what about the other 50%? When you promote a coupon to EVERYONE you are giving away margin unnecessarily. That’s what I call “promiscuous couponing.”
What if you just offered a coupon (or maybe free shipping or a free gift) only to those shoppers that won’t buy without one? What would be the impact on your bottom line? Interestingly the increase in net sales is modest, maybe 5% to 10%, but every dollar not given away in unnecessary discounts falls right to the bottom line (“found money”). That can increase your net profits from 40% to 90%.
That’s compelling, but how do you do this? You have to restrict your discount offers to those shoppers that won’t buy without one. Consider the following:
Two shoppers enter your store. One knows exactly what they are looking for. This shopper finds their product on your site, decides that the price, shipping costs and return policies are acceptable. The shopper places the product in the cart and completes the sale. Do you want to provide a coupon that erodes your margin if you don’t have to? Of course not!
The other shopper isn’t exactly sure of what they want or maybe not sure they want it enough to pay what it costs. This shopper browses around, thinking, procrastinating, not sure what they want to do. This is the kind of shopper you need to give a little “push” to. In a brick and mortar store a salesperson saunters over and closes the deal. In an online store you would offer a discount to complete the sale.
Finally, A shopper places items in the cart and then decides not to complete the purchase. They abandon the cart. Now would be a great time to offer an immediate discount to complete the sale.
If this makes sense to you and you are interested in taking the “stop promiscuous couponing” pledge then check out Conversions On Demand.
Image courtesy FriendlyJoe