Running an incentive campaign is complicated. Between selecting the incentive, organizing the promotion, and tracking results, there’s a lot to think about. This week we’re focusing on a simple aspect of these campaigns that many campaigns work with – coupon codes.
If you’re reading this article, I’ll assume you have a basic understanding of coupon codes: a keyword or series of characters that trigger an incentive at checkout. Coupon codes are the industry standard, and for good reason.
As opposed to offering a discount on an item, coupon codes emulate the experience of redeeming a physical coupon. Psychologically speaking, coupons are powerful: they’ve been shown to reduce shopper stress and increase oxytocin levels.
While coupon codes are highly effective, they are complicated by the potential for “coupon hacking” – i.e., manipulating coupon codes. This isn’t a new problem; however, the practice reduces both a coupon code’s value as a marketing and sales tool.
In order to reduce the impact of coupon hacking on your business, we need to take a look at coupon codes themselves.
The 2 Types of Coupon Codes Structures
Although there are many variations on the concept, coupon codes fall into one of two structures:
Randomized: A code made up of random letters and/or numbers
Static: A code that utilizes a word or phrase
Each of the methods offers distinct advantages and disadvantages. First let’s talk about random codes.
Benefits of Randomized Codes
The biggest advantage to random codes is their security. The odds of would-be coupon abusers guessing a random code is extraordinarily low. For instance, a 10-digit numerical code has 10 billion possible permutations, making a sheer guess unlikely.
In general, random codes are unique to individuals. That is, a set number of unique codes are created, then sent to customers for use. These codes are typically single-use, so they cannot be shared after the fact. While they’re very secure, random codes do have downsides.
Randomized Codes are Hard to Remember
Have you ever found yourself trying to memorize a new phone number without writing it down? It’s very difficult, and generally, only successful in the short term. The same thing is true of randomly created codes. They aren’t catchy, and there’s little chance your customers are going to remember them.
That means that customers need to copy and paste the code into the coupon field of your site while shopping. While that’s completely plausible, the method of delivery can create unwanted variance. Random codes are secure because they’re hard to guess – but they’re also hard to remember.
In short, random coupon codes are more secure, but can lead to redemption issues if a customer isn’t able to easily recall what their unique code was.
Static Coupon Codes
Many ecommerce sites like to tie their coupon codes in with their current promotion, and doing so has advantages. First, it means you don’t have to individually create and send out thousands of individual codes.
The other upside to this type of codes is memorability. If your site is having a spring sale, a code like “Spring15” is much easier for customers to remember than “X4T391FR7Z”.
Problems with Static Codes
Static coupon codes come with their own set of issues. If your campaign utilizes multiple coupon codes with different discounts (i.e., 15% off and 40% off), it’s important to use significantly different codes for each of those offers. This may seem obvious, but many sites simply pick a keyword then add the discount to it, such as SEASON15 or SEASON40.
While static coupon codes keep things simple, many consumers have caught onto this pattern. This means that customers can simply enter a number after the “Season” keyword, guess popular discount percentages, and redeem the highest one. This is one of the most popularly used “coupon hacking” techniques, and it’s simple to avoid.
The Importance of Coupon Code Expiration Dates
It’s also important to make sure that your codes have an expiration date. Popular sites like RetailMeNot and Honey can catalogue coupon codes for years. This can lead to thousands of coupon redemptions that were outside of the initial campaign. While it’s fine to re-use codes from previous campaigns, it’s vital that they don’t work all year long. Remain transparent and communicate the expiration date to the customer, but don’t assume that customers won’t try to use a discount you offered them months ago – they will and do.
Since coupon codes are a fantastic tool utilized by most retailers, implementing smarter practices that can shield you from coupon hackers. By integrating a level of detail to your campaigns that is reflective of coupon code best practices, you can ensure customers are engaging with them and continue shopping with you.
“Coupons.com and Claremont Graduate University Study Reveals Coupons Make You Happier and More Relaxed. Business Wire, 19 Nov. 2012.