Promo codes & e-commerce: which strategy to adopt to be profitable?

promo codes

The promo codes , also known as coupons or simply the couponing are clearly preferred by consumers online during their buying process. Indeed, the fact of benefiting from a reduction sometimes “unexpected” or “found at the last minute” has a powerful effect on your potential buyer, and can even be the element which will make him finalize his purchase. If we had to make the analogy with traditional commerce, it is as if a customer who had just filled his shopping cart, in a supermarket, went to the checkouts, and during the queue discovered a misplaced discount voucher on the floor or forgotten on the edge of the crate. You will agree that it is very rare. And yet this is commonplace in e-commerce, and unfortunately a major erosion factor for e-merchant margins, if it is not exploited sparingly.

On the other hand, there is also the classic use of the promo code, as an excuse to buy. For example you receive a brewdog discount code Voucher and this encourages you to consult the site in question, to see if there is not a good deal to seize.

Communication levers for promotional codes in e-commerce

There are two main channels for communicating on these coupon codes: communication directly from the e-merchant (e-mailing, posting on the website directly, via social networks, etc.) and, if you have an affiliate program, for example , communication via partners (coupon code sites). The first has the merit of being the least expensive in terms of margin: on paper it comes down to a pure reduction in your margin. The second takes the same thing as the first, but also adds marketing costs, since via the affiliation you pay a commission on each sale to the affiliate.

So, if your promo code is 5%, and your affiliate commission is 7%, then you will:

  • reduce your turnover including tax by 5% (on a purchase of € 100 including tax, the customer will ultimately only pay € 95 including tax),
  • retrocede to the affiliation platform 7% commission on your turnover excluding tax (€ 95 including tax -> € 79.17 excluding tax, 7% representing € 5.54)
  • If we do not separate the marketing costs from the turnover, a gross view of this sale amounts to saying that you only earn € 89.45 (€ 95 – € 5.54). It then remains to calculate your real margin, impacting the order processing / preparation costs, storage costs, etc. If you cumulate the discounts made in promo code over a year, you will see that it starts to represent a lot of shortfall, you still have to be sure that this shortfall would still be earned without a reduction code.

The behavior and use of the promo codes by the consumer

We will not hide it: the main factor that generates the need among consumers for the promo code … It is you, e-merchants who are at the origin! How? ‘Or’ What ? Simply by displaying a “Promotion code” or “Discount coupon” field in your basket. Remember, when you buy for yourself or your business, the presence of an empty “Promo code” field has never tickled you, to the point of doing a Google search for “promo code + site name”? Or never make you want to look in your e-mails if this e-merchant has not already sent you a discount coupon in his newsletters … It is true that to say that you are 100% the cause is false, since in consumer psychology, he knows that e-commerce offers discount coupons, in the same way that supermarkets offer loyalty cards which pool purchase coupons. However, one of the decisive elements is their view of the empty field during their purchasing process. He sees it as an option to make a deal. It is therefore obvious that, if we make the link with the use of coupon code sites by your own customers, the share of sales coming directly from your site is the majority. This client, whom you have also made come to your site via your Google Adwords keywords, via your retargeting or even via your presence on price comparison sites … so he is a client for whom you paid to bring him ! You would even earn a commission on their commission. Despite everything, the merit of these coupon code sites is to be extremely well referenced on Google, and to answer a question that Internet users ask themselves at a moment.