Should I use coupon codes on my eCommerce website?

Coupon codes sound great in theory; you can offer a short- or long-term discount, rewarding your existing customers or attracting new ones.

You can see one in action on the new General Pants Online Store:

But for the most part, I reckon coupon codes, vouchers, promo-codes, call them what you will, do your online sales more harm than good, and here’s why.

I don’t know about you, but every time I see a coupon code field in a shopping cart process, I race off to Google and type in “retailer.com coupon code”. And I’m not alone; there are thousands of searches every month on Google for just those terms.

Here’s proof.

You can see from keyword research that approximately 74,000 searches are conducted monthly at Google for “newegg promo code” and for Amazon, it’s around 49,000. The numbers in the middle column are estimated local searches.

And with the rise in popularity of Smart Company award winning sites like Retail Me Not the trend can only continue upwards.

See, when someone sees a coupon code field, they often think to themselves, “How come someone else can get this cheaper than me?” or “I don’t want to be a sucker and overpay!” And they’re perfectly reasonable feelings to have in anyone’s book.

The other risk coupon codes pose is you (the customer) losing your flow and leaving the middle of checkout process to go off in search of a coupon code online so you can score a better deal. And if you can’t find one, there’s a chance you’ll get annoyed and not complete the purchase at all.

Of course, the other downside to coupon codes is the margin they take away from your profits. Not only that, some (sneaky) affiliates will often attach their special tracking to your coupon codes (in a link) so you’re paying affiliates and the coupon discount for any sales generated.

I also think that for some brands, coupon codes can potentially damage the brand by cheapening their image and condition their customers to expect a discount time after time. They may not be willing to pay full price with you again.

I read recently (but can’t for the life of me find the article to cite, so you’ll have to trust me!) that one online retailer couldn’t figure out why so many people were dropping out of the checkout process at one particular stage. So they tried A/B split testing and in one of the variations, they removed the coupon code field. It immediately unblocked the cart and sales rose dramatically.

So is there a solution?

Well, yes, sort of.

I think the best solution is not to display a coupon code field at all and offer no codes to anyone. Instead provide ‘those in the know’ a unique link to the promotion. You’d need a developer to set this up, but you’d make a subfolder like this:

//uatcdn.smartcompany.com.au/20-percent-off

Hitting that subfolder would create a parameter which would include the coupon code and automatically apply the discount at checkout, meaning customers wouldn’t see a coupon code field at all.

Sure the link might be shared around, but it would stop people seeing the coupon code field and heading off online to get one.

It would stop me.

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Chris Thomas heads Reseo, a search engine optimisation company which specialises in creating and maintaining Google AdWords campaigns and Search Engine Optimisation campaigns for a range of corporate clients.