Improve the ROI on Your Discount Strategies With Better Coupon Hygiene
by Kathleen Booth, on Dec 9, 2021 10:30:00 AM
- Conventional wisdom dictates that coupon extensions are good for your business, but in reality, they reduce your average order value and claim credit for sales they had little or no part in driving.
- If you don’t have a strong handle on the coupons you’ve issued, it can be impossible to know when they’ve been picked up by a coupon extension. Implement a single source of truth for discount codes to better understand how they’re being used.
- Heading into the holiday season, merchants are facing enough challenges with supply chain issues. Blocking coupon extensions is one strategy that could quickly help your bottom line.
Coupon extensions — which help customers discover and automatically apply coupons in shopping carts via a browser extension — can be a great tool for bringing new customers to your site and driving checkout completions.
But they also contribute to coupon leakage, which can lead to a range of problems like overpayment of coupon affiliate fees and sale misattribution. (Coupon leakage happens when shoppers share coupons user-to-user, add them to deal sites like RetailMeNot, or when coupon extensions scrape the codes that their users enter at checkout.)
Long story short, brands are giving away a lot of money by enabling extensions.
And that’s probably not what you intended to do! There is a better way to build a more profitable discount strategy and protect your customers' experience, your brand and your revenue.
On an episode of the eCommerce Fastlane podcast, I discussed how to improve coupon hygiene as well as how ecommerce brands can ensure that customers use coupon codes that are authentically earned.
In conversation with host Steve Hutt, I also talked about the negligible impact coupon extensions have on incremental revenue and how retailers stand to boost average order value just by blocking them (seriously).
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How Coupon Extensions Hurt Your Checkout Rates
While coupon extensions can help drive traffic to your site and increase cart completion rates, they probably don’t help as much as you think they do. Here’s why.
There are two main ways extensions like like Honey and CapitalOne Shopping could interact with your brand:
- They send out newsletters with information about retailers having special promotions or sales. In this case, they push people to your website and function as the original source of a visitor session (helpful!).
- They offer likely discount codes during the last mile of the customer journey before the customer — who might have reached your site via an ad or another way that has nothing to do with the extension — is ready to checkout.
That second interaction is a lot less helpful. Merchants often assume that extensions help reduce cart abandonment. But given our data, that is just not the case.
When a retailer first starts using our cleanCART tool, we run an A/B test where coupon extensions are blocked from auto-injecting codes at checkout on 50% of the traffic. The other 50% is used as a control.
When coupon extensions are blocked, we’ve seen conversion rates improve and cart abandonment drops 90% of the time.
It may seem counterintuitive, but we've got the data to back it up.
Not only can extension blocking improve your profit margins, but it can give you a more accurate picture of what's working — and not working — with your marketing strategies.
How to Improve Ecommerce Coupon hygiene
Now that you’ve seen how coupon extensions could be working against your marketing efforts and hurting checkout rates, here are some things you can do as the holiday season hits and consumers are looking to make purchases.
✅ Maintain a single source of truth for discount codes
Many retailers, like those in the apparel industry, simply aren’t aware of all the coupons floating around that can be applied to their checkout experience. In fact, cleanCART users are often surprised when they get a list of all the codes the tool blocks .
It’s vital to have a single source of truth for all of your discount codes so you can track which ones are active and how customers are using them at any given time. In other words, you need to maintain good coupon hygiene!
It doesn’t have to be complicated. You can track your codes using a Google Sheet or an Excel spreadsheet where you list the codes, the expiration dates, and other pertinent campaign details.
✅ Pay attention to coupon redemption data
Knowing which coupons are active is important, but understanding how your customers are using them is the most valuable data. On a daily or weekly basis, you should be reviewing coupon redemption trends.
If the redemption volume of a particular code spikes suddenly, you should be able to tie it back to a specific marketing activity.
Was one of your campaigns responsible? An influencer or affiliate? If you can't tie the spike back to one of those things, you have a coupon linkage problem. At that point, you have a couple of undesirable options:
- Deprecate the code. This could introduce friction in your relationships with affiliates and influencers.
- Appeal to coupon extension sites directly and ask them to take your code down. We find this approach often has mixed results.
By monitoring redemption data regularly, you’ll catch anomalies faster and reduce the chances of having to resort to one of the above steps.
A coupon extension won’t offer you the redemption volume data you need, but cleanCART will.
Bonus tip: Create limited or one-time-use codes whenever possible to reduce the likelihood of unintended use.
✅ Use proper attribution to determine the source of your sales
Coupon extensions can also present an expensive attribution problem. Coupon extension companies could send your company a large bill for affiliate fees — even if you’re blocking auto-injected codes with a tool like cleanCART.
Why does this happen? When working with affiliate platform partners and a coupon extension is activated, the platform opens an invisible browser window and drops a perpetual first-party cookie that claims credit for that sale and, potentially, any sale connected to that retailer for 30 years!
This cookie effectively overwrites original source attribution, whether the coupon extension is successful in finding a valid coupon or not. If the user completes their purchase, it then charges the merchant an affiliate fee for using an extension (even though it did nothing to help with the sale).
Luckily, we are beta testing a new product that will prevent extensions from dropping a cookie when they haven't applied a valid coupon. This product will solve a couple of key problems:
- It will support accurate attribution. When you have accurate data about where your sales are coming from, you can make better marketing investment decisions.
- It will reduce overpayment of invalid affiliate fees — now and in the future.
cleanCART Success Spotlight: Caraway
Caraway, a ceramic cookware brand, used to be frustrated with coupon extension losses. As soon as the brand released a discount code, coupon extensions would pick it up. It got serious enough that Caraway was spending countless hours finding unauthorized codes , deprecating them and issuing new ones.
Caraway started a 14-day free trial of cleanCART and used an A/B testing approach. Blocking extensions resulted in a .13% increase in conversions and a 3% increase in cart completion rate.
In the first few months, the brand saw a 1,500% ROI from their investment in cleanCART and a 5.6% increase in average order value.
Conventional wisdom dictates that coupon extensions should drive sales and help counter cart abandonment, but according to our data, that just isn’t true.
To minimize the damage extensions could be doing to your bottom line, take control of your coupons strategy by diligently tracking all of your codes and using a tool like cleanCART to catch any that slip through the cracks.
👉If you are interested in learning more about cleanCART, you can sign up for a free 14-day trial here.
👉 This is based on an episode of the eCommerce Fastlane podcast featuring Clean.io CMO Kathleen Booth.