By Elmer on May 8, 2009

We often see website e-commerce sites offer promotional vouchers or codes on shopping carts. We understand the aim and purpose of adding them in the online shopping experience. These vouchers offer reduced cost of acquiring certain products or services.

We know one side of the coin, but what about the other? Let’s think of the adverse effects of using discount vouchers or coupons (or whatever we may call them).

How Coupon Codes Works to a Shopping Cart’s Disadvantage

Coupon code could invite savvy customer to leave the shopping experience — even for a short while — in an attempt to locate a code he/she can obtain a discount. For example, if BeansBox sells coffee beans online, but customers can buy them cheaper if they enter a valid discount voucher code. Cost-conscious yet savvy customers go to Google and search for “beansbox coffee voucher” instead of being driven to finish the whole buying process to enjoy a freshly brewed coffee.

Needless to say, the customer is distracted by the experience and could end up abandoning the whole shopping cart journey if he/she is unsuccessful in finding the coupons online. This stems from the fact that certain customers hate to pay more than others.

With discounted offers, you are already reducing the profit margin of what you sell. Every successful purchase with valid coupon code, you earn less than what you should.

If you are into affiliate marketing, you potentially provide incentive to affiliates who earn extra bucks without really contributing to the bottom line of your sales.

Such arrangement could also distort information on how you track performance of your campaigns. For example, if you had EDM campaigns to promote the product, the attribution becomes less defined because of the behavior of your customer. If visitors were referred from search engines, tracking could now be attributed to direct traffic if the customer leaves the site, and returns later (through bookmark or typing the URL) armed with coupon code.

As a result, our findings on which channel delivers best ROI may become inaccurate.

Sometimes the presence of voucher coupons and the like creates an impression that your site is desperate for a sales conversion and therefore, the whole experience only tarnishes its brand value in the long run.

You aim to attract customers with an in-your-face coupon code text box. The next time customers visit your site, the first thing they ask from you are discounts and incentives.

So am I saying that coupon codes and similar offers are counterproductive and should therefore be scrapped? Not so fast. These are challenges to online marketers that use this method that need to be addressed.

How Do We Address The Problem

Show the offer only to those who have coupon codes to enter. How do we know if customers have them? When these customers come from affiliates or e-mail promotions, they can follow a link to the shopping cart. The link URL will have a parameter that indicate that the customer using the session has the coupon code to enter. To those who navigate to the shopping cart from other links, they don’t see the coupon code form.

Better yet, save the privileged customer the trouble and automatically embed the offer into the page, showing that he or she gets the discount in the shopping cart interface.

Photo credit: Rad Jose

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