Using Coupon Codes: Good or Bad

Nov 01, 2018, Miray Bildik

You've got this month’s salary, and now it is time for shopping! You’re surfing in the Amazon, here are the earphones that you wanted to buy for a long time. You added it to cart. What a coincidence! There is a discount option with a coupon for this product. This must have made you happy as everyone loves discounts!

Offering coupons is a common trick that used by e-commerce businesses to drive customers. However, there are plenty of pros and cons of discount coupons. I will try to explain both; thus, you can make up your mind about whether you should offer coupons or not. Let’s start with the cons.

  • Coupons may make you lose your customer. When companies offer coupons to attract new people, they alienate their loyal customers. Also, the new customers cannot be sustainable because they may buy the product with coupon, then never come back. A study at Rice University reveals that only less than 15% of people who redeemed Groupon coupons came back a second time to purchase products at full price.

  • Coupons can create disappointment on your customers when they see the coupon option and cannot reach them. Let’s change the story above a little bit. You saw that there is a coupon option. Then, you searched for a coupon code, but you couldn’t find it. Then you gave up and did not return to the website to buy the product. It is a complete disappointment, both for customers and companies.

  • Coupons also may decrease the perceived value of your product and, damage your brand image. Your consumers may think that if there is a discount coupon, the product may not worth to buy for the current price. Even, they may believe that there is something wrong with the product so there is a coupon for it.

  • Coupons may make you lose money. You shouldn’t consider only the discount that you made with the coupon, you should think the other costs of the product such as marketing, advertising, manufacturing, etc. All these costs, plus discount means that you lose money. Also, if you offer a coupon to customers who would still buy at full price, you drop profits from all sales.

After that, you may curse the coupons and think that they are evil. On the other hand, coupons have beneficial sides. Let me mention the pros of the coupons.

  • First things first, coupons create happiness! The study conducted by Dr. Paul J. Zak in 2012, reveals that people who got a $10 discount coupon experiences a 38% increase in oxytocin levels and felt %11 happier than people who buy the product without a coupon.

  • Coupons are also known as a sale-booster for startups. Startups use this trick to gain new customers. As you gain more customers your market volume increases. Eventually, you grow faster.

  • Also, thanks to coupons you may sell products faster. Remember Thanksgivings, Black Fridays, Cyber Mondays... People shopped online like crazy on these days due to the discount coupons. According to NRF’s annual survey, for Thanksgiving 2017, nearly 174 million American consumers shopped during the holiday weekend. Even in such a short time, you can increase your sales by virtue of coupons.

  • Coupons can provide you with free advertising. You can reach thousands of people by offering coupons in social media groups and pages. Thus, the traffic on your website increases which results in higher brand awareness.

Now, you have enough information about coupons to decide whether you should offer coupons or not. I believe that couponing is an excellent way of attracting new customers. You can convert the hesitant leads to happy customers by using coupons. Plus, you can build brand awareness. But, don’t offer them too often. If you do that once a year, or two, you can even drive profit.