Do "promo codes" or "coupon codes" do more harm than good?

Question

My clients seem to love coupon and promo codes, but I’ve recently become very skeptical of them. When I’m shopping there’re times I’ll see a promo code field and I’ll wander off to other sites to find them. If I can’t find any I feel like I’m not being treated fairly: it’s not fair that if I know some secret password I could save $10 bucks. There have also been times I’ve just completely forgotten that I started to checkout and I never completed the order because I got distracted. I asked a few friends about this and they all say the same thing happens to them.

I’m wondering if I should just apply the codes automatically or maybe just create special URLs the user can enter the site with that automatically apply the codes so others just don't see the field.

Anyone ever run any A/B testing on this? My clients don’t want to part with their promo codes but I’d love to cite some real world examples. I don’t think they realize that not everyone will have a promo code.

Answer 1

It's a balancing act... you want the option to add promo codes available to those who need it, but to not have it on the radar for those who don't.

Here are some hard statistics on the effect of coupon codes on cart abandonment: In one usability test, removing the coupon code field increased overall conversion from 3.8% to 5.1% (an increase of 34%). In another study by PayPal/comScore, 27% of users said that "wanting to look for a coupon" was a "very important reason" for abandoning their cart.

Get Elastic has, hands-down, the best list of suggestions for combatting this problem: "6 Ways to Tackle the Promo Code Problem". Their suggestions are as follows:

1. Use targeted selling rules: Don't have promo codes at all; simply send custom "pre-discounted" links to targeted users (as you suggest).
2. Issue private promo codes: Link promo codes to the specific user, so they can't be shared. My concern with this approach is it still suggests the availability of a coupon to someone who isn't you, and may still harm conversion (even as it protects your margins).
3. Use the promo box to build your email list: Provide a tip near the promo code field prompting people to sign up for your newsletter (for instance).
4. Link to your own offer page: Keep people on your site by giving them your own coupons (as Macys.com does)
5. Bank on synonyms: Avoid the words "coupon" and "discount" when labeling the field. I don't care for this approach for most use cases, though, as users are trained to understand most of the suggested lesser-known synonyms at this point.
6. Don’t make it a box: Normally, UX is about reducing the number of steps to complete a task, but in this case, you can improve the experience of your non-coupon-using customers by hiding the promo code box under a button or link that says "Have a coupon code?" This approach has worked well for me in the past.

Ultimately, the right approach is going to be case-specific for your products and customers. Good luck!

Answer 2

We've got a "voucher code" option. Some brick&mortar shops sell physical vouchers (scratch cards) that you can redeem there. However, that doesn't stop us from using the same input field for discount vouchers.

As a result, we can have the public statement "Don't want to pay by Credit Card? Buy a voucher at <Retail Shop> near you.". That creates the impression that the "voucher code" option is an alternative way to pay, not a discount.

A similar option could be "Redeem gift certificate". That too suggests an alternative payment method, and you can still send out free gift certifcates to your valued customers.

Answer 3

Jacob Neilson recommends avoiding coupon codes completely. Instead, having the URL from the email encode the promotion directly (and save it to their session) so that it's automatically incorporated into their next purchase. In his $500 e-Commerce report he has specific research indicating that people get upset by coupon code boxes because you're essentially advertising the fact that someone else is getting a better deal than you are. This is not what you want customers thinking about as they check out.

Answer 4

Netflix handles promo codes in the same way that you are describing.

You cannot enter a "PROMO CODE" into a field and it prohibits the users from not signing up because they cannot find a promo code. They provide the partners with very specific URLs that navigate to the site and activate the promtion. To the user, the activated promotion shows on the page, and to any random users, the page looks the same and does not tease them with the Promo code textbox.

I think it's a very interesting way to handle the scenario and it's a great business example if you're trying to talk to someone about it.

Answer 5

Not directly related, but in the same ballpark: Groupon deals hurt reputation

http://www.technologyreview.com/blog/arxiv/27150/