How to Use Coupons in Your Business

(Episode 1 of 2 with Kathleen Booth)

How to Use Coupons in Your Business

Kathleen Booth is the VP of marketing at clean.io. She is a serial entrepreneur, marketing leader, and host of the long-running podcast Inbound Success. She was named by TopRank as one of the 50 Top B2B Marketing Influencers of 2019.

In today’s episode, we’re going to discuss how coupon extensions can erode our profit margins, and how we can protect against coupon extensions and use coupons effectively. We’ll also discuss Kathleen’s journey and the impact COVID-19 has had on buying behaviors.

Kathleen’s Journey

Kathleen received two graduate degrees, including an MBA in marketing, because learning is her passion. She owned a marketing agency for 11 years and had her biggest home runs with this agency. She said she loved to see her clients succeed with the marketing they’d done together. The success had a huge impact on the client, the business, and everyone who worked there, and Kathleen loved to see that.

After she sold her agency, she worked in the marketing departments for  a number of cybersecurity companies. She’s had to learn a lot on the job because there isn’t much training in cybersecurity for marketers. 

Now Kathleen works for a company that brings marketing and cybersecurity together. Clean.io has two cybersecurity products for marketers. They help companies protect their brands and their user experience from third-party code on their websites.

Biggest Failure in Cybersecurity 

The biggest mistake people often make with cybersecurity is only worrying about the scary hacker in a hoodie sitting in the dark and wiping all their information. That is a threat we need to protect against, but it isn’t the only threat or the most common threat.

There are so many more subtle_Blog copy

Kathleen said, “There are so many more subtle ways that cybersecurity can impact our lives that we don’t tend to think about that can impact our businesses and our revenue.”

When we go outside, we don’t spend all our time worrying about getting struck by lightning;it is more common for us to worry about smaller hazards such as tripping on the sidewalk.

“It’s just far less common and some of these other things are much more common. It’s the subtle ways especially as marketers with our website, which in today’s world, particularly with COVID-19, has really emerged as our number one marketing tool but also [our] salesperson, we can’t afford for that site to be compromised,” she said. 

How Coupon Extensions Erode Profit Margins

Coupon extensions are one of these risks that we don’t tend to think about. Kathleen said, “My best monetization strategy is to put your coupon codes on lockdown. I’m not saying don’t use them, but use them very sparingly and certainly don’t allow coupon extensions to interfere and hijack them or auto inject them in your site, because it does not drive incremental conversions and it erodes your profit margins.”

My best monetization _Blog

Before we had ecommerce and digital coupons, we used to only get physical coupons in the mail. The coupon was typically used at the very top of the funnel, meaning it was meant to hit somebody who was not necessarily thinking they needed to buy a product or service at that moment.

For example, how often do we need to shop at Bed Bath & Beyond? Certainly not once a week and likely not once a month. However, when the coupon comes in the mail, it makes us think, “Oh, I have 15% off. Maybe I’ll just go walk around the store and see if there’s something I like, and I can save money on it.” 

Coupons sent that way are designed to spur demand in a moment when it didn’t previously exist. In that sense, they drive incremental purchasing habits. It’s revenue we would not have gotten if we hadn’t sent the coupon. These types of coupons are all about incentivizing behavior and making more money than we would have made in the first place.

With online shopping, deal sites emerged. At first, people would go to the site to see if there was a coupon. Now, we can install an extension in the browser and it will automatically find coupons. The difference with these coupons is that people using them were already going to make a purchase. The customer was on the site and already had items in their cart when the coupon extension kicked in. 

“For the merchant,” Kathleen said, “it just means they’re making less money. It’s not incentivizing a purchase that wouldn’t have otherwise happened. . . . With digital couponing, coupons have moved to the bottom of the funnel, whereas they used to be at the top of the funnel, and that’s not really how they were designed to be used. Because of the extensions, the retailers have very little control over that.”

Why We Need to Protect Our Coupon Codes

The CEO of Kathleen’s company often tests a lot of sites to see the extent of their problem. He was on a site for men’s apparel looking at shirts when he noticed one of the coupon extensions popped up. He put a $50 shirt in his cart, but the code was good for $75 off and the merchant hadn’t put a floor on the purchase amount. He got a free shirt, but he reached out to the company and told them about the problem and that he would return the shirt.

Someone could do this 10 times and get 10 free shirts. This is why we need to protect our coupons from coupon extensions.

How to Protect Our Coupon Codes

Kathleen said we should be using coupon codes in the right way. We should still allow our customers to type in legitimate codes they have, so that we can still use them to incentivize purchases. The codes these extensions scrape from our site are often for employees or veterans, codes not intended to be widely available.

To protect our codes, we can prevent coupon extensions from auto injecting the code. Kathleen’s company, Clean.io, has a product that will prevent the coupon extensions from auto injecting the codes on our site. There are other solutions out there as well. 

These solutions will give us a fighting chance because most users will not want to manually type in 10 coupon codes to see which one gives them the biggest discount. If we use solutions like these will most likely be left with the people who got the codes legitimately.

How to Use Coupons Effectively

To use coupons effectively, we first have to understand what it is that we’re trying to incent through the coupon. Kathleen said, “We want a coupon to be additive. We want it to add to our profits and to our sales. We want it to attract new customers. Go in with your eyes open and really set a goal about what success looks like if this coupon really works.”

Once we know what success looks like, we can structure our coupon code by following a good discounting strategy in where we show it. We also need to think about what it means in terms of our future business. Kathleen has seen data suggesting that customers who come in and make their first purchase through a coupon or coupon extension, have a lower lifetime value or spend less with us. There can be drawbacks to coupons so we have to really think through how we want to use them.

Once we’re doing coupons, we need to carefully watch our analytics. We should have a good platform where we can track usage of the codes because when problems happen, it’s pretty easy to spot in the analytics. There will be a sudden massive uptick in usage of a particular code, but it won’t be traceable to a marketing action.

For example, if we are using the code with affiliates or influencers and we see a spike in the usage of that code and neither us nor the influencer has promoted it in the last 24 hours, a coupon extension has likely scraped it and now it’s widely available.

When we discover this, we can try to reach out directly to the coupon extensions and ask them to remove the code. For most merchants this doesn’t work very well; they will likely ask us to join their affiliate program, which means we would pay them a commission to give us more control.

The other thing we can do is shut off the code. This can be a pain in the neck because we’ll have to replace it with a new one and call our affiliates so they can replace it with a new one. If the hassle is too much, we may want to consider purchasing a tool or hiring someone to do it for us.

COVID-19’s Impact of Buying Behaviors

One of the biggest tectonic shifts Kathleen has seen is the effect COVID-19 has had on buying behaviors. “Our expectations as consumers . . . are that we should be able to get what we need digitally and have less contact as we try to complete the sale process,” she said.

In the ecommerce world, we’ve seen things like, “buy online, pick up in store,” or we’ve seen businesses shift from brick and mortar to be more digital. In the business world, we’ve seen the shift to doing sales meetings over Zoom, to being able to do demos online, and to automating a lot more of our processes.

Kathleen said, “I think what we’ve recognized as a society is that there are ways—for people who don’t want to interact in person—there are ways of delivering for those people just as effectively as there are ways of delivering for the people who do want to interact in person. . . . That is never going to be rolled back.”

Key Takeaways

Thank you so much Kathleen for sharing your stories and insights with us today. Here are some of my key takeaways from this episode:

  1. There are many subtle ways that cybersecurity can impact our lives that we don’t tend to think about that can impact our businesses and our revenue.
  2. We should put our coupon codes on lockdown.
  3. Coupons should be incentivizing a purchase that wouldn’t have otherwise happened.
  4. To protect our codes, we can prevent coupon extensions from auto injecting the code on our website.
  5. We need to understand what it is that we’re trying to incent through the coupon. We want a coupon to be additive.
  6. Once we’re using coupons, we need to carefully watch our analytics for a sudden massive uptick in usage of a particular code that isn’t traceable to a marketing action.
  7. Consumers expect to get what they need digitally and have less contact as they try to complete the sale process. We should provide ways to deliver our products and services digitally and in person.

Connect with Kathleen

To learn more about or connect with Kathleen:

Next Steps

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    About the author

    Nathan Gwilliam

    Nathan Gwilliam

    I help organizations navigate tectonic shifts that are transforming the business landscape, so they can optimize marketing, accelerate profits, and make a greater difference for good.

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