A Quick Guide to Using Coupons and Discounts on WooCommerce

Have you ever wondered why coupons have such staying power for increasing sales? 

Sellers have used the incentive strategy behind coupons since humans began trading at markets and over campfires. You can imagine our savvy ancestors haggling back in the day, “Give me six of the big shells, and I’ll give you the fish 2 for 1.”

Many of our grandmothers collected stacks of neatly sorted paper coupons. Online coupons are the virtual equivalent of Grandma’s coupon envelope in today’s wired world.

Buyers go through a series of yes / no stages when considering buying a product. Experts say coupons work because they short-circuit the cost/benefit analysis stage. Coupons also satisfy a “hunt and gather” competitive instinct, which is stronger in some buyers than in others. Psychological studies found that habitual coupon users don’t pay as much attention to the actual price as non-couponers, and they often spend more money in the long run! 

All of the above give sellers ample reason to consider implementing a coupon or discount promotion. Yet there is still more good news for eCommerce sellers. With the lockdowns of the global pandemic and lingering uncertainty into 2022, digital couponing has gone mainstream. 92% of shoppers report searching for coupons or offers before buying online, and Retailwire reports online coupon redemption projections of at least $90 billion this year – up from $47 billion in 2017.

Read on to learn about best practices and several strategy ideas to get your creative juices flowing. 

The Difference Between Coupons and Discounts in Ecommerce

Coupons and discounts are closely related, but they are not the same thing. It may feel simplistic to define each, yet a good reason to do so is to be very clear with your buyers about your offers. Clarity is one of the coupon promotion best practices you will learn more about later in this post. 

A coupon is any special incentive offered to a buyer to purchase. Common examples include buy one get one free (BOGO), free shipping, or a free sample. 

A discount can be in the form of a coupon, but not all coupons have to be a price discount. A discount is a percentage or set amount off the price. The discount can be given automatically at checkout or in a “coupon” code the customer enters. 

Regardless of format, the important point for sellers is that they can create global promotions that apply to any purchase or target different customer segments. Those decisions are where the strategy comes in, but first, let’s look at the pros and cons of using coupons and discounts in eCommerce. 

Retailwire reports online coupon redemption projections of at least $90 billion in 2022 - up from $47 billion in 2017. Click To Tweet

The Benefits of Coupons and Discounts

From simple global discounts to special coupons targeted at specific customers, a coupon strategy can have many benefits for sellers. Benefits include:

Increased Sales Conversions

As pointed out in the introduction, most people believe they are getting a good deal and saving money using coupons, so it’s no surprise that one of the most significant advantages of coupons is increased sales conversions. For example, Walgreens moved their printed circulars to online-only and saw an 80% increase in redemptions.

Higher perceived value

Coupons increase perceived value in a product relative to competitors’ products. Who out there hasn’t chosen one brand of paper towel or toothpaste over another on Amazon just because of that little orange 10% off coupon? 

Customer Acquisition and Retention 

Coupons and discounts can also encourage new customers to try a product. For example, 86% of Millennials in 2020 said they would consider trying a new brand if offered a discount. Using coupons strategically can also increase average order value and improve customer retention.

Inventory Management and Revenue Loss Control

For sellers with perishable or seasonal inventory, well-timed coupons can help minimize losses by triggering sales to clear items out before they expire or fall off the trend curve.

Tracking Customer Behavior

One significant advantage is that eCommerce sellers can target coupons and discounts to specific customer segments and track which customers take advantage of the promotion. 

Coupon and Discount Downsides

Even though coupons are a “tried and true” strategy, they have pitfalls that sellers may avoid by planning. Watch out for these drawbacks when creating your promotional plan:

Degrading perceived value

Anytime a price is discounted, it may cause a buyer to question an item’s “real” value. Some luxury goods never go on sale for this exact reason. 

Training Buyers to Wait

Just like frequent sales promos train buyers to wait for items to go on sale, thus diluting the number of full-price sales, coupons that are available too often may train buyers to only buy with a coupon. 

Attracting One-off Bargain Hunters

Coupons may attract bargain hunters who are difficult to turn into repeat customers. This can be a problem if most buyers don’t convert to long-term customers during a coupon promotion. The solution for this is to target specific customer segments. 

Flawed Strategies Decrease Profit Margins

Ideally, future purchases from customers more than make up for sale discount or coupon loss. A coupon strategy that does not consider customer lifetime value or an upsell or resell opportunity may decrease profit margins. 

Coupon Abuse

Another risk sellers need to avoid is coupon abuse from individuals or sites that publish coupon codes outside of the seller’s ecosystem. We’ll discuss ways to diminish fraud risk in the Best Practices section below. 

Best Practices for Using Coupons and Discounts in eCommerce

Because coupons have been around for a while, the best practices are not complex, especially for sellers who know their metrics and segment their customers. Here are tips for best practices:

1. Create specific goals for the coupon promotion so you can repeat what works well or figure out what didn’t work and needs to be tweaked.
2. Know your numbers to estimate how the coupon promotion will affect your margins.
3. Create and communicate precise terms and conditions. Can buyers use the coupon more than once? If so, how many times? Can they combine it with other offers? For example, can a buyer use their birthday discount coupon during their birthday month as a storewide 50% off promotion?
4. Be very clear about what the customer gets when redeeming the coupon. 
5. Avoid coupon abuse by setting expiration dates and changing coupon codes frequently.
6. Be sure your coupon and redemption process is mobile-friendly, especially if your target customer is under 50. Many Millennials have never clipped a paper coupon in their life and expect a seamless experience in redeeming a coupon. Juniper Research also projects that 80% of all coupon redemptions will happen on a mobile device this year.

With best practices as your foundation, you can move on and develop your strategy with confidence. 

Strategy Ideas for Coupons and Discounts

As with any eCommerce sales or marketing promotion, a coupon or discount promotion needs a strategy. The correct strategy depends on the goal of the promotion, the product, and the target customer. We’ve hinted at some common strategies in this post; here they are with some other ideas as well. 

• Personalization: Know your customers and personalize the offers for different customer segments.
  
• Timing: Factor in holidays and other life events like back to school, sports events, or summer holiday planning. Last-minute flash sales increase a sense of urgency and scarcity, too.
• Tiering strategy:  To encourage higher average order totals, create tiered discounts so that the more a customer spends, the higher the discount.
  
• Collect birthdays: One study shows that birthday email transaction rates outperform promotional emails by 481%!  One well-crafted birthday coupon strategy might be all you need! 
• Type of groups: Offer discounts to people with something in common, for example, followers, subscribers, members, students, alumni, employees, “inner circle” loyal repeat customers, fans, mobile app users, and more. 

As you can see, there are dozens of options for coupons and discount strategies. Now let’s look at how WooCommerce helps you implement your plan.  

WooCommerce Plug-ins To Customize Your Coupon Strategy

WooCommerce currently offers several coupon-related plug-ins to meet specific promotional needs to make launching a coupon promotion as easy as possible. You can see a few below.

• Volume Discount Coupons: Customers get automatic discounts based on purchase volume.
  
• Woo Conditional Coupons: This plug-in helps you optimize timing by offering the most relevant coupons at the optimal step in the order process.
• Skyverge / URL coupons:  A plug-in that automates discounts and adding products to a customer’s cart. 
• WooCommerce Group Coupons: Control and target coupon recipients by user group. 
• Smart Coupons – The most comprehensive coupon plug-in for WooCommerce includes functionality for discounts, coupons, credits, gift cards, product giveaways, offers, and promotions. 
• Birthday Coupons: A plug-in that sends a Birthday greeting coupon that customers can redeem for purchase discounts. 
• Gamification – Help your customers play while they purchase! Rewards customers with badges, ranks, points, and discount coupons.  
• The SpinWheel plug-in is for all the Vanna White fans out there. It features an interactive “Wheel of Fortune” that customers may spin to see which discount they win.
• Last-Minute Offer – cart abandonment is a challenge for store owners.  This plug-in helps stores decrease their cart abandonment rate by giving them a discount coupon if they try to exit checkout before paying. 

Moving Ahead

As you can see, there are many excellent reasons why coupon promotions seamlessly transitioned from brick and mortar to eCommerce. Now that you have an overview of the benefits and best practices for coupon and discount promotions, you can dive in and set up your strategy. 

And don’t forget, when you are ready to launch, we’re here to help. CheckoutWC’s custom shopping cart for WooCommerce integrates with many excellent plugins, and most will work right out of the box. Take a look at what you can use in your cart here.