What is a coupon system?

05 Feb.,2024

 

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You’ve finally cleared the office and it feels like you just finished a marathon. What a Monday. You’re head's still spinning from dashing to endless meetings and returning so many emails. Time to grab a glass of wine, some Netflix and just relax.

But first: the grocery store. You’re on a mission to grab the Malbec, the wasabi crisps, the hummus to match. No one faults you for indulging in that bar of dark chocolate. Before you can say sweatpants, you’re at checkout.

Monday night’s looking good until … you see a coupon for laundry detergent. Oh, for cereal too. Then deodorant. Crackers next. Forward progress grinds to a halt. Time is slipping away and you think, how much of my life will be spent on coupon management?

Which is not to say that savings aren’t important: 40% of smartphone users will redeem a mobile coupon this year. And 60% of consumers want to receive digital coupons, shows Invesp via B2Community. Savings never go out of style, only how we get them. Thankfully, penny-pinching has moved online. One day, Monday’s exercise in coupon fatigue will be history.

These days, online businesses are doing more than promoting savings. They’re driving engagement, increasing loyalty, and improving revenue with online coupon management software. Rather than competing for bottom-dollar pricing, marketing departments are saving everyone time and increasing targeting while collecting important user data.

Coupon code management software is an effective way to leverage discounts while tracking consumer spending through mobile devices, establishing affiliate promoters, rewarding customer referrals and earning higher revenue.

This post will show you the 6 crucial elements of a successful digital coupon campaign.

#1 Measure Coupon Performance

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An online coupon management system allows your marketing team to track and report on a variety of valuable metrics. Every redeemed coupon provides feedback on individual coupon performance.

Creating unique codes returns pinpoint information on customer conversions and the channels they come from. Using a coupon platform lets your team pool and analyze your campaign performance metrics by looking at redemption rates, average time to redemption, and revenue per coupon.

By monitoring the mobile statistics in real-time, you can determine while coupon style or promotion type appeals to your audience. Use the geolocation reporting to find which users are responding to which deals for further segmentation. This way, your brand gets a wide-angle view of your user’s behavior.

“Coupon codes are an excellent way to track and measure your advertising ROI. Simply use a different code for each ad outlet (i.e. Google vs. Bing vs. Facebook) so you can see exactly how many sales each campaign generated. With a little bit of tech work, you can also use coupon codes to track — down to the keyword level of your search ad campaigns — which is critical for optimization.” -- Phil Frost, Main Street ROI

This Forever 21 offer ‘ Buy 1 Get 1 Free’ appeals to a large segment of their customers. Further segmented coupons by channel lets the brand track what promotion mix and offer type is most effective.

#2 Manage Coupon Fraud

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According to the Coupon Information Corporation, businesses lose $600 million every year to coupon fraud. Whether disobeying the terms of redemption or creating false coupon sites, the obvious risk of couponing is giving out free discounts en masse.

Many users fall subject to spammy links suing brand imagery that direct them to sites that present fake coupons for personal and financial information. This can erode brand trust and negate any benefits of ongoing marketing.

Coupon scammers will sometimes try to redeem false online coupons as well. Not to the worry though. Here’s a handful of tactics to impede fraudulent coupon redemption:

  • Unique URLs

    prevent offers from being picked up on discount sites giving the brand the control to shut them down and stop cannibalizing revenue.

  • Single-Use Redemption Codes

    become invalid after a single use. Auto-generated by the coupon management software, this limits exposure across any channel.

  • Date and Time Restrictions

    applies an expiration window that reduces fraudulent behavior while increasing conversion rates due to the scarcity of the promotion.

  • Review Reports

    to ensure that coupons are being used in an organic fashion. If one user is redeeming multiples, amounts are off, or redemption dates are past - investigate!

  • Animated Countdown Timers

    eliminate any danger of screenshot fraud by integrating a dynamic visual. Without an active countdown, the coupon is invalid; also great for creating a sense of urgency.

Nordstroms uses Valentine’s Day gift cards with a countdown to encourage sign ups. Tracking the coupons and gift cards by number is an effective way to ensure that discount dollars don’t fall into fraudulent hands.

#3 Create Targeted Coupon Campaigns

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Coupons are great because they return precise information and can be implemented for immediate effect. Get specific with the offer amount and expiration date to drive the results you want in your target customer segment. Introduce coupons for a specific reason, focus on one aspect of your product or service in doing so, and then move onto the next coupon campaign. Use the psychology of scarcity to your advantage in setting an end date or a rolling time period for expiration.

Introduce coupons for a specific reason, focus on one aspect of your product or service in doing so, and then move onto the next coupon campaign. Use the psychology of scarcity to your advantage in setting an end date or a rolling time period for expiration.

Coupon management services are flexible in their ability to assign, distribute, and design campaigns. Being able to generate codes,  monitor redemptions, design coupons  and  apply templates to suit your brand image in a way users will respond

LuhseTea uses Instagram to great effect for this holiday 20% coupon promotion. The image ties in with the idea of Thanksgiving and sets a tangible Monday closing window. The e-commerce tea-tailor is generating strong brand awareness and steeping in new sales from this campaign.

#4 Distribute Your Coupon Promotions

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Promote your coupons to users through the most relevant channels. Whether you’re sharing discounts via in-app messaging, push notifications, email, in-store, a call center, or social media -- you need to place coupons where and when users will make use of them.

For example, above is a triggered email example from Birchbox which arrives after cart abandonment. Such discounting can be extra nudge users need to complete a sale (note the deadline as well). According to B2C Community, emails with a discount receive a 17% increase in open rates and result in a 27% hike in transaction completion.

“44 percent of email recipients made at least one purchase last year based on a promotional email. I was absolutely blown away when I learned this statistic.” -- Candice Galek, Bikini Luxe

Social media is great for increasing engagement and brand awareness, while push notifications find users right where they can redeem a mobile coupon. Use a coupon to incentivize app usage or finalize onboarding.

Coupon campaigns drive profitable customer actions depending on the channel and context of the campaign. You could create a coupon based on the shopping cart size for upsells, or simply offer free shipping based upon pre-calculated order history.

#5 Engage Customers with Refer-a-Friend Campaigns

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Friends and associates love to share savings, especially when everybody wins. Since 74% of users identify word of mouth as a driver for purchasing, double-sided coupons are an effective way to encourage new spending. Unite customers around your brand to promote new engagement while strengthening existing brand loyalty. Plus, helping a friend save is the altruistic impulse that drives sales.

This DODOcase email makes it easy for referring users to invite friends to savings. The iPad retailer creates an easy-share form topped off with clear $20 benefit for both parties. Giving the highly visible option between an email and social CTA encourages the referral invites.

When it comes to design and copy, take a page from DODOcase for coupon creation. People are much more likely to purchase if referred by a friend - just make sure your coupons facilitate this process.

#6 Establish Coupon Redemption Rules

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Last but not least: define the expectations around coupon redemption for users. Do this to avoid confusion and potential backlash, but also to remind customers of scarcity and encourage coupon use. Establish claiming options that work for your brand’s marketing objectives.

For example, a customer must purchase a certain amount before reaching a discount drives larger shopping cart sizes. Coupons for a first purchase engages new users. App installs, social shares, and video views are also common. Or referred customers must purchase a certain amount or plan/tier, which encourages higher recurring revenue per campaign.

Above, Harry’s uses a progress bar to chart for users the benefits of tiered referral coupons. At each amount, the rewards increase up to the point of a year of free shaving razors. By incentivizing advocacy, Harry’s shaving discounts are sure to reach a wider audience.

The Final Clip

Coupon code management software heralds the end of waiting for savings. Today, marketers are able to target and track their user segments by the coupons they share. When setting out to create a coupon campaign, start with a goal and build out your discount size and coupon design from there.

Coupons apply to many channels, so reach your users with incentives that will drive actions that help your brand. Take steps to avoid coupon fraud. Clearly lay out redemption rules and utilize analytics to gain insights and optimize future initiatives. 

If you use coupons, you know that when you reach the check out counter, you hand the cashier your coupon(s). The cashier scans them and puts them into the cash drawer. What happens next depends on the store, but here's a typical process. At the end of the day the coupons in each cash drawer are added up as if they were cash, and that amount is added to the cash sum to be sure the overall total for the drawer is accurate. Then all of the manufacturers' coupons (and any coupons issued by the grocer) are sent in plastic bags or pouches to the store's corporate headquarters, typically once a week.

In the big store chains, the value of the coupons can easily total several million dollars per week. There is a person in headquarters in charge of processing the coupons. That person boxes all of the bags of coupons (still separated by the individual stores from which they came) and ships them to a third-party clearinghouse.

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This is where the real work starts. The clearinghouse has to sort through millions of coupons, largely by hand. The first goal is to separate the coupons by manufacturer. Another goal is to separate coupons with scannable UPC codes from damaged (torn, smudged, etc.) coupons. This is so much hand work that some clearinghouses pay other clearinghouses -- in Mexico, for example -- to do part of the work. One system places scannable coupons face up on a conveyor belt, where they are moved along under a scanner that reads the UPC codes and tallies the amounts, then adds up the total value of each manufacturers' coupons. Damaged coupons that can't be scanned have to be sorted by hand and added up separately. The other system is to do the whole thing by hand. The clearinghouse then sends all the sorted coupons with an invoice to the manufacturer.

Several things can happen here. The manufacturer might reimburse the clearinghouse for the amount of the invoice, and the clearinghouse will send a check to the store for the amount of the coupons. Or the manufacturer will send a check directly to the store and the store then pays the clearinghouse. The clearinghouse is paid a certain amount per coupon by the store, plus shipping and handling. The whole cycle takes about a month. In many cases, the manufacturer will recount the coupons to avoid fraud -- a process that may send the coupons through another clearinghouse!

This is another great example of how a simple idea -- "let's give people a little scrap of paper that they can redeem for 25 cents off a can of beans" -- turns into a whole lot of work for somebody!

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