What is Coupon Leakage?
by Andrew Reed, on Oct 31, 2022 3:30:00 PM
Coupons and discount campaigns are a critical part of any business, giving merchants the ability to attract, delight, retain, and retarget customers with lower prices on their products and services.
But coupon abuse has always been an implicit risk to the marketing strategy, where customers attempt to redeem coupons they don’t qualify for.
Not only can this harm your marketing ROI and your overall bottom line, but it can be particularly harmful to ecommerce businesses, who often exchange discounts for targeting information, or create codes for affiliates that they later have to pay a commission on.
As the ecommerce industry continues to grow, access to these often highly targeted coupons and discounts has only been amplified by the growing popularity of discount sites like RetailMeNot and coupon-scrapping browser extensions like Honey and Capital One Shopping, who aggregate coupons and distribute them unconditionally to their audience.
Below will cover how these sites and extensions get your codes, how it ultimately damages your overall revenue, and what steps you can take to protect yourself.
Understanding Coupon Leakage
What Is Coupon Leakage?
Coupon Leakage is when discount and promo codes find their way onto discounting aggregators like RetailMeNot or Honey or are improperly shared customer-to-customer, either preventing the target audience from redeeming them or rapidly exhausting marketing budgets.
These discounting groups often position themselves as user-generated databases born out of a consensual sharing of codes and promotions. But in reality, these groups can scrape your checkout cart for any previously entered discount codes and add them to their database.
And while at first glance it may seem these groups are helping to expand merchant’s audiences and bring in more sales, they actually can cause more harm than good. -- --
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How This Hurts Your Business
As a marketer, you likely rely heavily on tracking metrics and data to measure the success and profitability of your campaigns. Creating distinct codes to share across different channels can be a powerful way to discover which channels are proving to be lucrative sources of customers, and which ones you should probably leave behind.
But if these codes end up in discounting groups databases, and are shared beyond your targeted audience, your attribution date will become bolstered by improper redemptions.
This can quickly lead you to think that specific channels or affiliates are performing well, but in reality, your codes are being accessed by customers outside of your marketing campaign, usually searching for a discount at the moment of conversion - when they are most likely to make a purchase.
This can also impact your affiliate commissions by artificially inflating the success of affiliate codes that have leaked onto these discounting sites, leaving you paying out increased commissions to affiliates that had no part in driving sales, while also misrepresenting which affiliates are performing well and worth investing in.
Altogether, coupon leakage holds several pathways to rapidly drain your marketing budget, and selling an unwanted amount of discounted products can end up hurting your ROI, making it difficult to understand the success of your campaigns for future efforts.
How To Protect Yourself
Coupon leakage can impact any online business, but there are numerous ways to protect yourself:
Single Use Codes
By creating unique, single-use codes for individual customers, you eliminate the risk of that code being shared. This is because once the code is used, it is immediately deactivated.
But there are many drawbacks to this strategy. First, if the code is scraped and improperly redeemed, the customer the code was meant for won’t be able to redeem it, negatively impacting your customer experience.
Second, single-use codes limit the kind of marketing you can do. Sharing codes to mass audiences through podcasts, static ads, or video ads requires a static code to be shared, making these options - which are often the most lucrative - unavailable to you.
Also, creating and tracking countless single-use codes can be a chore of its own.
Manually Track Down Codes
Checking your attribution data, mailing lists, and social media subscribers can help you discover if your codes are being misappropriated.
If you are offering discounts to customers who subscribe to your content, and the number of redemptions does not add up to the number of subscribers, it's likely your code has ended up on a discount site.
The next step is approaching these discount aggregators and asking them to remove your code from their site, which they are typically unlikely to do.
In this case, if you want to stop the coupon leakage you’ll have to cancel the code entirely.
The easiest way to prevent coupon leakage without losing valuable time or lucrative marketing options is by partnering with an automatic software solution that protects your checkout from these kinds of injections.
At cleanCART, we provide just that. Our unique solution blocks the automatic injection of coupon codes instantly, with no negative impact on the user experience. Customers are simply informed that they have already received the best price.
Along with this, you will also have access to a customized dashboard to help track which extensions are injecting codes, as well as a free coupon leakage report outlining the discounting sites codes have leaked too.
As coupon extensions continue to grow in popularity and expand to new technologies and markets, it's unlikely you will see this problem go away on its own.
Things are probably going to get worse.
Some manual solutions can help mitigate damages, but these can be time-consuming and are far from permanent solutions.
If you are looking for a one-stop, set-it-and-forget-it solution that will end the automatic injection of coupon codes for good, partnering with cleanCART is your best bet.
If you are interested to see how cleanCART can help protect your discount codes and improve your ecommerce margins, you can sign up for a free trial here.