What are the pros and cons of using coupons?

Couponing can save you money while shopping, but might cause you to spend more money , especially if you have trouble finding coupons for items you would normally buy or lose out on better deals from cheaper store brands.

What are the advantages of coupon codes?

Coupons can be used to strategically encourage customers to buy a new, more profitable product to help boost your profit margin . Also, coupons can create loyalty with existing customers by using the discount as a reward to ensure they continue to buy from your store.

Is it safe to use coupon codes?

As much as saving money is fun, coupon scams are a real issue. These scams work by releasing fake coupons in exchange for your contact information and in turn, spam your contact information or sell it to third parties.

Is couponing still worth it?

Extreme couponing can help you reduce costs, but it may not be effective for lowering the price of staples . Joining a warehouse club or making a meal plan could be more effective ways to reduce your spending.

What are the pros and cons of discount pricing strategy?

Pro: Great to boost sales and gain new customers . Con: Excessive discounting can lead to financial loss and harm brand reputation. As well, you could be missing the opportunity to target specific customer segments. Ex: Walgreens offering 50% off on CeraVe, Clean&Clear, and Aveeno.

How effective are discount codes?

Discounts and coupon codes can alter the perceived value of products or services by making shoppers feel like they're getting more for their money. One study found that consumers are approximately twice as likely to purchase a product that's 20% off compared to one at full price .

Do any discount codes ever work?

On average, coupon/promo codes work only about a third of the time , says Walt Roloson, co-founder of Wikibuy (owned by Capital One), a popular online shopping browser extension that finds and applies coupon codes during checkout.

Why discount codes are not valid?

The coupon has expired . Typically, promotions launched by stores are conducted for a limited time. If the period has ended, a shopper cannot obtain a discount on such a coupon.

Why do I need a coupon code?

What are the benefits of using coupon codes? Achieve sales goals faster – coupons can be used as incentives for customers to perform specific actions that help in achieving sales objectives.

What's the deal with coupon codes?

Promotional codes are alphanumeric strings that online stores offer to encourage purchases on their website and are typically associated with an overarching promotional marketing strategy. The discount associated with a promo code can apply to individual products or an entire order.

Which of the following is a disadvantage of couponing?

Answer. The primary disadvantage of using coupons as a sales promotion is that consumers might miss the limited window to use them . Costly distribution and administrative expenses must also be considered, along with the fact that not all intended price-sensitive consumers will engage with coupon usage.

Are coupons a good way to save money?

For some, coupons are a nice way to spend less on something they were going to purchase anyway . For others, their shopping process revolves around getting the best deals. Using coupons in this more intentional way is called “couponing” and it can dramatically bring down the cost of groceries and other items.

Pros and Cons of Coupon Codes: Are They Worth Your Time? (2024)

Are coupon codes worth your time? 80% of consumers are more likely to shop from a new brand if it provides a discount coupon, and that number jumps to 89% for millennials.So, yes, in short, coupon codes are an effective marketing tactic...But there’s a caveat.While coupon codes are desirable from a consumer’s perspective, there are numerous downfalls to this marketing tactic that can have an ill effect on your brand.I put together this article to help you weigh up the pros and cons of coupon codes and make an informed decision about whether they are right for you.

The Pros of Using Coupon Codes

Let’s start with the positive side of things - the pros.As I mentioned in the introduction, coupon codes are extremely popular with consumers, especially in the eCommerce industry. They’re also an excellent way for brands to engage new audiences, re-engage stagnant customer groups, and create a spike in sales.Here are the pros of using coupon codes:

Attract new customers and increase revenue

Consumers are naturally pessimistic and distrust brands before purchasing from them. Building enough trust with a prospect to convert them into a customer can be time-consuming and costly.Discount coupon codes can accelerate the conversion process by reducing the perceived financial risk of transacting with your business. They also tap into buyer psychology by creating a feeling that the customer is getting a good deal.For example, here is a coupon email from Ugmonk that offers new prospects a 15% discount on their first order if they make it within 48 hours. The code is unique and expires automatically, which is a smart use of urgency to inspire action.

Pros and Cons of Coupon Codes: Are They Worth Your Time? (1)

Ugmonk Coupon Code ExampleDepending on where you distribute your coupon codes, they can also generate traffic from untapped sources you may have never thought of. For example, there are numerous coupon listing sites, and people often share coupons with friends and family on social media. This new traffic further contributes to the conversion of prospects into new customers.You may also find that new customers purchase other non-discounted products or services from your business, creating an ancillary revenue stream from the coupons at a higher margin. In fact, 38% of couponers buy something they don’t need.All-in-all, coupon codes are a great way of attracting new customers and increasing revenue in the business. However, that comes with complications… more on this in the cons section of the article.

Gain market share

Coupon codes also provide your brand with a competitive advantage. If you compete on price with other businesses in your industry, a coupon code could be the difference between a sale and someone shopping elsewhere.You can use a coupon code strategy to gain market share in a highly competitive industry quickly. You’re undercutting your margins to draw shoppers away from your competitors and hold onto them in the long-term.The lifetime value of the customer subsidizes the short-term loss of profit. If, of course, you provide a high-quality product and a great experience.

Re-engage current customers

It’s much easier to convince a happy customer to buy from you again than it is to build trust with a complete stranger. However, it’s also very common for a customer-to-brand relationship to be a standalone transaction that results in no further interactions.Finding ways to re-engage with your customers is critical because all of the hard work has already been done. They are your most profitable forms of conversion.One way to do so is by sending current customers an exclusive coupon code. You may choose to send this to cold contacts who haven’t purchased in a while or use it as a tool to reward loyal customers. Either way, it is a smart way of re-engaging and creating new buying opportunities for customers.This email from Marley Spoon illustrates how coupons can be used as a way of re-engaging cold customers:

Pros and Cons of Coupon Codes: Are They Worth Your Time? (2)

Marley Spoon Coupon Code Example

Capture data and enable marketing personalization

Data is all the rage at the moment, and from a marketing perspective, it’s not surprising. 80% of online shoppers are more likely to buy from a company that offers a personalized customer experience - data enables you to provide that personalization.If generated as unique codes, coupons enable you to track their redemption and each user's behavior. This information will help you personalize the marketing experience for each individual in the future by using data about which topics and products interest them.

Track affiliate and influencer campaigns

Coupon codes are often used as a means of tracking brand ambassador or influencer campaigns. Not only can you personalize the experience for each influencer or affiliate, but you can also trace all code redemptions back to the source and determine an ROI from the campaign. You’ll also find that influencers like to offer their audience something that is at least perceived to be exclusive.This is a tactic regularly used in TV or outdoor advertising, too, where a campaign-specific coupon is generated to help brands track conversions.

The Cons of Using Coupon Codes

At face value, coupon codes sound like a no-brainer - especially if you're trying to grow market share or generate a spike in revenue. But there are also several vital downsides you need to be aware of.Here are the cons of using coupon codes:

Cut into your profits

The most obvious con to using coupon codes is that they cut into your profit margins. Depending on what you sell and how tight your margins are, this can result in minimal profit or, in some cases, a loss.When you take into account advertising and promotion costs, as well as operational costs such as shipping and handling, from a purely financial standpoint, coupon codes don't make a lot of sense. That is unless your site and follow-up marketing are well-optimized for up-sells, cross-sells, and ancillary revenue so that the lifetime value of a coupon customer makes the investment worthwhile.

Reduce the value of your product or service

On top of the financial hit you may take in the short-term, coupon codes can also have an unwanted effect on your product or service's value perception. Simply put, if someone pays less for a product once, they're unlikely to want to pay more for that same product in the future.The perceived value of your offering is now less than what it retails for, meaning that you could fall into the trap of always discounting products to get sales. This cannibalizes revenue in the future and creates an expectation from your customers that discounting is normal. The trick to overcoming this challenge is to run coupon campaigns and provide discounts infrequently so that customers don't get used to it.

Be exposed to fraud

Coupons are synonymous with fraud. If you choose a generic coupon for a campaign, anyone and everyone could guess it without meeting the redemption criteria, such as giving you their contact details. You may also find that the same person uses the code over and over again under different aliases.

Pros and Cons of Coupon Codes: Are They Worth Your Time? (3)

Single-use vs generic coupon codeNow, while you want a coupon campaign to be shared with friends and family, you don't want a situation where thousands of people are getting discounts without providing data you can use in the future. It's also concerning when coupons are listed on coupon sites and other online forums without your knowledge because once it's out on the world wide web, you lose control of your brand reputation.Single-use coupon codes that are automatically personalized for each person can overcome this challenge.

Using Coupon Codes the Right Way

So, are coupon codes good or bad?Considering the pros and cons mentioned in this article, the appropriate use of coupon codes is not a simple argument.For some brands, they simply won’t make sense. But for others, they can be the lifeblood of a successful marketing campaign.If you're planning a coupon campaign, I'd strongly advise using unique codes rather than generic codes that anyone can use or distribute. A unique code is designed for single-use, which means that every user has their own code, and it can't be re-used or duplicated.Of course, creating so many codes for a campaign requires technology! ShortStack’s Prize Manager makes the setup simple and intuitive.

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