Keeping Coupon Usage Under Control

Coupons codes, or voucher codes as our friends in Europe prefer to call them, are used by retailers to offer discounts or incentives to their customers when shopping online. For the customer, coupons are familiar sight, appearing in their inbox on a daily basis from almost every online retailer they have ever shopped at.

For the retailer however, coupons are a complex marketing incentive that can be leveraged in many different ways to provide discounts to different customer segments. There are different types of coupon codes, different ways of creating them and different ways of distributing them. We'll explore these in this blog post.

Coupon Types

To shoppers, a coupon is just a coupon. If they receive the coupon via email directly from the retailer, chances are it will work provided the outlined conditions are met. If they go hunting for a coupon code on the internet (there are literally hundred of sites that publish coupon codes), often the coupon doesn't work - usually because it has expired, the customer has not met the conditions of the coupon or the retailer has voided it. What customers often don't realize is what kind of coupon they are using and how that might impact their ability to receive a discount.

Public Coupon Codes

Public coupons are intended for general consumption. The retailer generally doesn't mind if the coupon is forwarded to friends, posted on a blog or even on a deal hunting site. As far as the retailer is concerned the more customers that have and use the coupon the better.

Sometimes the retailer wants to control the usage of a coupon code to a targeted campaign group. Often this is done by creating offline print coupons that are distributed in the mail, or via flyers at a public event. To stop these coupons being virally distributed across the web the retailer can create a limited set of coupons thus restricting their exposure to the discount. Retailers often use a code generation service such as Numberator or manually generate a set of unique coupons in excel that they can then distribute to recipients. To prevent overage usage of the associated discount or offer the retailer can limit these coupons to a single usage only. Thus once each coupon code is used, it becomes void regardless of who used it. Remember to avoid using excessively long codes and easily mistakable characters when generating your codes.

Private Coupon Codes

Private coupons are intended to be used by specific customers only. The retailer wants to ensure that each coupon can only be used by the customer it was assigned to. In this case, the codes can be associated to a customers email address or account profile. As coupons are issued to specific customers, they can be viewed by the customer in their account profile and automatically applied to their cart, removing the need for the customer to manually enter the code during the checkout process.

Usage Restrictions

Regardless of the type of coupons created, the retailer may want to restrict how many times a coupon can be used by an individual shopper. With some discounts such as free shipping, allowing a single customer to re-use the coupon on multiple orders is usually not an issue. However if the coupon entitles to the customer to a free gift then the retailer may want to restrict the usage of the coupon to once per customer.

Some retailers link usage of a coupon not to an order, but to the quantity of items in the customer's cart. For example, a coupon may entitle a customer to 50 free mp3 downloads or 25 free photo prints. The usage limit of the coupon is linked to how many eligible products are purchased, not how many transactions the customer makes.

Distribution Options

Coupons can be distributed in many different ways. Often they are emailed to customers, posted on a 'special offers' page or distributed virally via social media sites. However, consider issuing coupons to customers as an incentive to shop again. At Pacsun if you spend $50 online, you'll receive a $25 discount coupon off your next purchase.

The 25% off coupon code can be delivered in the customer order confirmation email and linked to their account so that only they can use it.