Voucher/Coupon codes Good or Bad?
Voucher codes a good thing or bad thing?
The UK has seen a dramatic increase in affiliates requiring and using “Run of site” discount vouchers. Many sites have been set up for the sole purpose of offering discount vouchers to the general public. We all know consumers are after a bargain.
So is this a good thing or a bad thing for the industry?
For new and small businesses that want to focus on new customer acquisitions and sales a “run of site” discount voucher will do the trick in most cases.
It helps build a brand and gets the merchants company out there in front of their target market and its all pay on performance. Just as a fyi, if a merchant offers 10% off a product o their customers who came via an affiliate link, the affiliate gets 10% less commission, in some cases affiliates are agreeing to less over all affiliate commissions just so they can have a voucher/coupon code to pass on to their visitors, there are even some affiliates who in addition to less commission will accept a reduced cookie or simple a session cookie, so this really is good news for the merchant, or is it? Just for the record, Im not a big fan of run of site voucher codes, but some ecommerce platforms cant support anything else. See hints and tips blow.
A generic run of site discount voucher/coupon needs to be carefully thought through, how does this affect the overall margins? Example on white label goods, margins can be already tight. Short term financial loss for long term financial gain approach based on the life time value of a customer perhaps?.The savvy merchant will know their metrics, they will know what the life time value of their customer is and be able to work out the financial cost associated to acquiring a new customer. They can factor this in with regards to giving a run of site vouchers/coupons to their affiliates. They will have their analytics in place and be able to interpret and understand the numbers.
Here is the first problem, there is a given industry assumption that the merchant knows what they are doing when they give out a run of site discount voucher/coupon to affiliates, we all assume that the merchant has factored in the costs associated, the affiliate commission, the affiliate network override, the cost price of the product (VAT), the postage and packaging, the storage, the labour costs. It may come as no surprise then when I say that some small to medium merchants don’t have a the foggiest idea of analytics or how to work out the cost of acquiring a new customer and focus only on first time sales. Just what the percentage is that don’t understand, I wonder if I would be too far off by suggesting 85% of small online businesses are operating a business using a scattergun approach, could be higher. I feel a survey coming on, any volunteers?
When run of site voucher codes gets out of control.
Scenario, you are anymerchant.com you rank No1 for your name on organic search (if you don’t then most likely you are new, less likely but possible you are black listed) Back to topic, so you rank No1 for your name then below you comes “ anymerchant.com discount voucher here”. As a consumer, what am I going to do?
A) Go to anymerchant.com browse products and buy direct?
B) Got to anymerchant.com browse products then go to anymerchant.com discount voucher here affiliate site and grab the voucher code and use it?
C) Go directly to anymerchant.com discount voucher here?
Just look for your self, type in discount vouchers or discount coupons then cross reference, some sites are still promoting voucher codes from merchants who have closed their affiliate program. Is this ok? I don’t think so. Some sites force cookies meaning the visitor gets cookied before they even see the merchant’s site.
Affiliates who don’t stick to the rules.
Well again it may come as no surprise that some affiliates don’t stick to the rules as has been laid out in the terms and conditions. Whilst rogue affiliates are few in numbers they are a real pain in the ass to deal with when I comes to run of site and in some cases category or product specific voucher codes (we will talk more about category and product specific voucher codes later on) such a pain in the butt that AffiliateProgramAdvice.com is now reviewing voucher codes re their clients (period).
The problem is three fold, the first I have explained above, the second is… if a merchant gives an affiliate an exclusive discount voucher code to a trusted affiliate (what is an exclusive voucher/coupon code?, myaffiliatesite.com has a merchant voucher/coupon called myaffiliatesite.com, means that myaffiliatesite.com is building a brand and by having a voucher for visitors to use helps reinforce the brand of the affiliate site for the purposes of coming back. Its also a clear signal that the affiliates site has the backing from the merchant.) What we have seen in the UK is an epidemic of rogue affiliates stealing and promoting some other affiliate’s exclusive discount/coupon code. It’s a mess out there! “Jess kick the rogue affiliate off the affiliate program”! I hear you shout? Errrm not that easy. Some rogue affiliates have no clue which merchants codes they have
a) stolen from other affiliates
b) which were legit
c) What planet they live on.
Essentially, even though the affiliate no longer earns commissions, they are still displaying voucher/coupon codes that most likely expired anyway (affiliates who don’t display expiry dates regardless of the code being authorised for that affiliate or even stolen codes, it may not have occurred to them but this can cause a logistics nightmare for customer care, if an affiliate promotes a voucher that has expired the consequences not only harms the merchant and the industry, but an irony if the affiliate thinks he/she is pulling in traffic this way then what are the chances of that referred visitor coming back to the affiliates site? Or even remaining in the merchants affiliate program. Im please to report that the majority of affiliates do display an expiry date).
Thirdly, the human resources that goes into policing this is not cost effective and a useful way to utilise time, are we really turning into an industry where by 70% of the time is spent on policing and 30% o relationship building?
”Jess get the networks to sort it out”. Errrm not that easy either, some affiliate networks are better then others at policing rogue affiliates. But the majority of affiliate networks are not kicking the rogue affiliates out, rather they keep them for the sake of the legitimate codes that they have been issued, remember the affiliate network gets a % of the sales and leads. The networks have responded by offering a voucher/coupon tracking code that the merchant has to implement on their website, all fine and dandy but for a lot of merchants it was all they could do just to get the basic pixel tracking in place. The assumption here is that merchants are technical, marketing, analytical when in reality the basic day to day running of their online business is their priority. My question has got to be, if we report a rogue affiliate, what on earth are they still doing in that affiliate network weeks/months later, still promoting other merchants? A rogue affiliate is a rogue affiliate, period! There can be no allowances made. Aff networks holler “we are cleaning up the industry!!!” In this particular instance I would say you are doing some light dusting but have yet to take the vacuum cleaner out! The industry is getting to the point where by what started out as genius is degenerating into a cacophony of anarchy and all because there are few to police this bad practice and those that do police end up being seen to be the bad guys and get stick on forums and blogs for being “mean” “not affiliate friendly” simply because the networks allow this to continue. A merchant has ultimate control over how his/her products should be promoted, if the affiliate breaks the rules then not only should they be ousted from the affiliate program but ousted from the affiliate network too. This way I can give exclusive voucher codes to my trusted affiliates and know that they wont have to do battle with other affiliates who know the bucks, pounds and Euros that they generate for the networks will protect them.
Voucher/coupon codes offline and the general public.
Scenario, you got a great offer being promoted in some relevant magazine “get 10% off when you purchase x product, enter coupon tottenhamhotspursrule at check out (don’t knock em we won the Wembley cup). There are affiliate sites out there where the general public can post vouchers/coupons for other registered members. Now your offline stats are skew. If this has or is happing to you, contact the website owner either via the network or directly and state “You do not have our permission for your users to display this code, please remove”. The law states that information in the general public arena is acceptable, in theory anything a merchant publishes in a magazine for example, is not protected per say. Copyright infringement? Not when it comes to coupons/vouchers. So there is very little you can do here. Weigh up the pros and cons first.
So what can you do?
Never issue run of site voucher codes unless you are a new online business and you are looking to acquire new customers. Attach affiliate terms and conditions and one of them MUST be for affiliates to display an expiry date, at the very least. I hate run of site vouchers, my preference would be to have a generic first time customer incentive (providing the e-commerce platform can support this). A one time only discount either % or free P&P. Going forwards keep offline and online promotions the same and issue codes for either category or product specific only. This way merchants can work on their products that have bigger margins. Another good use of voucher codes is based on basket value, get % off when you spend $£x.00
Keep promotions short, issue clear guidelines to affiliates and to your PR agency or media partner. Category and product specific coupons will do the same job as a run of site voucher/coupon, how ever this will not resolve the problem of the code being plastered all over the net.
Don’t issue voucher codes unless you have the analytics in place in which to measure by. Merchants and affiliates alike should be measuring every click. Acquisitions, retention, sales, clicks, impressions, campaigns, basket abandonment, bounce rates, competitors (and their affiliate program). It’s a lot of work and data mining but if you don’t invest in this from day one I will hurt you financially down the line and you will be operating your business blindfolded and using best guess and not looking at worse case scenario.
You can use the affiliate networks voucher/coupon tracking code, ask them for it, this would be the easiest way providing you have a tech head that can implement it on the site. If you do have a tech head then ask them to write a script that will do the same job if your network can not provide the tracking.
Id hate to see the day when I could not issue an exclusive code to one of my trusted affiliates, that day is fast approaching, unfortunately.
I love the guys and girls that I work with and have built up a good long term relationship with and these affiliate partners are a merchants dream come true by the way they promote them. I wont have a word said against them and some require exclusive voucher codes and for me, no problem at all. But it’s the rogue affiliates that are forcing merchants and agencies to rethink the whole voucher code allocation.
Solution, aff networks have got to get a zero tolerance approach or voucher codes for affiliates will soon become a thing of the past, can we all look beyond the here and now and start reading the writing on the wall.
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Comments
Hello,
Well when I was an affiliate manager I am given the max I am allowed to give out for coupons and do add it into my cost of advertising.
Really nice article,
I think the voucher system I have had the most success with is a free postage one, based on getting discounted or free insured postage on items when they buy a certain set.
Nice article Jess and very topical.
Personally I back discount codes for selected products or Free Delivery codes when you have a minimum spend. Promotions and discounts are nothing new for marketeers but it does seem a lot of merchants have fallen into the trap of thinking it always needs to be a blanket discount.
I have been implementing product based voucher codes for Stand-Out.net and Great Little Trading Company and clients in the past. I agree if you are new to online retailing a ‘first customer’ blanket discount code can help your entry to market, but you should enforce a minimum spend.
Selected products/lines will mean more work for voucher/discount sites as codes will usually be issued more frequently than say a blanket discount.
Although it’s more work for the affiliate I think they certainly benefit from the variety of codes. Varied and frequently issued product based promotions create a much more ‘sticky’ site for affiliates. Users no longer know that this is the place just to come for a 10% off everything code but to check back regularly to see what the latest offers are. If a merchant has set up a promotion correctly they should upsell/cross sell full price products which increases AOV for the affiliate. Most retailers have products with higher margins, and these are perfect to focus on.
I think networks do need to step up a gear on this. I personally believe all networks should be reporting any voucher codes in conjunction with a sale. This will help merchants see the leakage of offline codes used through affiliate sites. It certainly helps consultants like myself identify affiliates who do not have permission to use offline codes.
Another issue for merchants is the cashback sites where users are getting codes direct from a merchant through email and then buying through the cashback link using the voucher code. One solution for merchants is to consider lowering the commission to cashback sites to combat loosing out on repeat sales and users using voucher codes in conjunction with the cashback trackabale link.
Just my 2 pennies 🙂