Coupons might seem like a foolproof way to grow your online store – but that’s only true if you use them correctly. Without the right techniques, discounted offers can negatively impact your bottom line.
Fortunately, if you’re aware of some of the most common coupon mistakes, you can easily prevent them. That way, you can effectively leverage this useful sales tool. As a store owner, you can customize your discount strategy to increase customer acquisition, satisfaction, and retention.
In this post, we’ll discuss why coupons are important for online businesses. Then, we’ll go over the top nine mistakes that new e-commerce owners should avoid when managing coupons. Let’s get started!
Why Effective Coupons Are Important for New Store Owners
Most buyers are always on the lookout for the best deal. Therefore, offering coupons can direct these customers to your online store. When you manage coupons effectively, they can help to grow your online business:
Here are more potential benefits of finding the right coupon strategy for your online store:
- Improve conversion rates
- Increase customer loyalty
- Boost new customer acquisition
- Encourage buyers to feel reciprocity
As a new store owner, you have many discount options to choose from, including Buy One Get One (BOGO) deals, loyalty programs, percentage-based coupons, flash sales, and more. In your store’s beginning stage, you’ll want to find the deals that maximize revenue rather than decrease profits.
9 Mistakes New Store Owners Make With Coupons
Unfortunately, there is a learning curve when it comes to digital coupons. Let’s discuss the most common mistakes that new store owners make with coupons. That way, you can steer clear of them!
1. Always offering percentage-based discounts
Two of the most common coupons are percentage-based discounts and dollar discounts. Although it can be difficult to choose between them, there are a few things to keep in mind.
Percentage-based discounts are promotions that reduce the total sale price by a certain percentage. Before you pick this coupon strategy, let’s discuss why it might not be right for your business.
You would be wise to keep in mind the rule of 100. This states that dollar discounts are more effective for products or services over $100. The opposite is true for percentage-based discounts. If your products or services are typically less than $100, it’s best to offer a certain percent off:
This is based on how the average buyer thinks. For every purchase, your customer wants to believe that they’re getting the best deal. When buying a $150 item, customers tend to appreciate a $30 discount more than 25% off.
Since percentage-based discounts aren’t always effective, it’s best to evaluate your goals. However, if you want to hold a site-wide sale, this could be the right option. With percentage discounts, your customers may feel inclined to add more items to their carts.
In other cases, you may be better off using loyalty coupons. With this method, customers redeem points after so many purchases. This could be a great way to retain customers and generate word-of-mouth recommendations for your business.
ThredUp is a secondhand clothing store with an excellent loyalty program:
With ThredUp Rewards, customers receive one point for each dollar spent. After gaining enough points, they can redeem them for free shipping, exclusive events, or even percentage-based discounts.
Another option is to use BOGO coupons. This method might be more effective during e-commerce holidays (when web traffic is higher than usual).
2. Not making the offer interesting enough
Nearly every online store is running its own coupons, discounts, and sales. Therefore, in order for your business to succeed, your special offers will need to stand out.
This might mean daily deals, clearance sales, or customer reward programs. The bottom line is that your discounts should make your customer feel like they are scoring big time.
One way to do this is by offering limited-time-only coupons. These can motivate indecisive buyers to act quickly. Otherwise, they might wait around to take action.
A customer reward program could be another effective option for making coupons interesting. When you offer perks and gifts to your existing customers, you can create an exclusive club that people want to be involved in.
Sephora is a beauty brand with a highly successful rewards program:
It created a Beauty Insider membership that encourages customers to make repeat purchases at the store. Each customer can even earn up to four times the normal rewards points by spending $1000. This allows them to unlock higher tiers of exclusivity.
3. Using a difficult coupon code
Customers typically apply a coupon code at checkout. These are much more memorable when they are simple.
You could use a randomized code, which can be more secure, but is often difficult for customers to remember. Straightforward codes minimize customer effort, which means your coupons are more likely to be redeemed:
Plus, you have an opportunity to be creative with your coupon codes. When you use clever and unique codes, you can make your coupon stand out. This may draw in new customers, as they will appreciate that they can easily remember your fun discount code. Ultimately, an intuitive code makes this process easier.
4. Not automatically applying deals
Another mistake new store owners make with coupons is not automatically applying them at checkout. Your coupons should aim to benefit the customer. This involves making their checkout process as easy as possible:
Here are some more possible benefits of automatic deals:
- Less effort for a customer to claim an offer
- Fewer questions for customer support
- Increased customer satisfaction
Fortunately, you can use our plugin, Advanced Coupons, to make this process easy. After you create a coupon, our tool can automatically apply the deal during checkout. That way, when a customer’s cart conditions match the terms of your coupon, you can surprise them with a great discount.
5. Not setting a threshold for shipping offers
Many online stores are starting to offer free shipping to satisfy their customers. In fact, 50% of consumers prioritize businesses that provide this benefit.
You might be tempted to provide blanket free shipping to make your customers happy, but this could cause revenue problems. For smaller orders, shipping costs could outweigh your profits.
To solve this problem, consider setting a shipping threshold. This allows you to provide free shipping, but only for a certain purchase amount.
A good example of this comes from Amazon. For order totals over $25, Amazon offers free shipping:
Creating a shipping threshold can be a great way to satisfy customers while also increasing your average order value. When customers know they can achieve free delivery, they’re likely to spend more to qualify for this discount.
6. No free gift at checkout
Customers often value their purchase more if you surprise them with a free gift. This can be an effective method to retain customers and increase their satisfaction with your services.
Fortunately, you don’t have to give away expensive products. Customers often appreciate small gifts, such as downloadable PDFs or cheat sheets.
To implement this kind of deal, you could offer a conditional free gift coupon in your online store. This requires a customer to make a purchase to qualify for the freebie. For example, you may decide to only give free gifts if customers spend over $50. By doing this, you can upsell your products.
Furthermore, when you advertise your free gifts, customers may spend more time on your website and make a purchase. With this coupon, you can likely reduce your return rates and increase customer satisfaction.
7. Not using opt-ins to capture emails
It’s often difficult to direct your coupons to the right audience. By collecting emails on your website, you can generate high-quality leads. Then, you can send coupons to these visitors, who are already eager to know more about your products.
Creating a pop-up email sign-up form can be an effective way to do this. You can even customize your form to feature your current coupons. This may further incentivize visitors to join your mailing list.
8. Not following up with a second order offer
After you land an order, it’s important to follow up with that happy customer. This can be much more cost-effective than searching for new leads.
That’s because the probability of a new customer making a purchase is 5-20 percent, but for existing customers, it increases to 60-70 percent. Therefore, taking care of your existing customers should be a high priority.
If you want to improve customer retention, try following up with a second order offer:
To do this, email the customer a reasonable amount of time after their first purchase. Since these customers still have your product on their minds, they may be more likely to make another purchase.
You can even cater to their preferences by offering them similar or complementary products to the ones they already bought. This type of targeted discount offer is highly effective.
9. Not having an abandoned cart offer
Cart abandonment is a major issue for online businesses. Around 70 percent of e-commerce customers ditch their carts before completing a purchase.
Furthermore, consumers note that extra costs and fees were the biggest reasons for cart abandonment. You can help solve this issue with discounts.
One often neglected group of customers you may want to keep in mind is wholesale buyers. They often appreciate bulk coupons. However, every type of consumer can be swayed by an abandoned cart offer.
This is an effective way to target customers who are on the fence. Fortunately, Advanced Coupons can also help you out with this:
With our WooCommerce plugin, you can configure certain cart conditions to apply added discounts upon checkout. These can further encourage indecisive customers to commit to the purchase.
Digital coupons can offer many benefits, but they also present some challenges. Before launching your coupon strategy, it’s important to avoid the top missteps that new store owners make. That way, you can boost customer loyalty and increase your revenue.
Unfortunately, many business owners don’t make their coupons interesting or easy to use. They may also be losing profits due to shipping fees and abandoned carts. However, you can solve these problems by offering simple coupon codes, automatically applying discounts, and even setting shipping thresholds on your orders.
Do you have any questions about how to optimize your coupon strategy? Ask us in the comments section below!