Do promo/discount codes work?

My last post regarding whether or not to include freebies with orders mentioned an alternative idea to include promotional/discount codes if a shop owner was unable to or unwilling to include freebies.  This post will explore that topic a bit more to determine if this type of marketing strategy works to bring in more sales.

The idea with coupon/promo codes is to entice the customer to come back.  Hopefully they love your product and the plan is to give them extra incentive to return and buy more by offering a certain dollar or percentage off or even free shipping.

“I do offer a 10% discount to returning customers, in a hand written note (together with a thank you message and a polite suggestion that feedback would be very welcome :) ) and it seems to work nicely.  I have quite a few customers who come back the next time they need a gift for a baby shower and they usually send me a message to get the discount I promise,” says Robyna of Robynas (Zaza Hammocks).

From Robynas

How to go about:

Most sellers who utilize this plan typically will write a note on the back of a business card, on a thank you note or on the invoice indicating a discount on future orders.  This can mean:

  • a certain percentage off (or a graduated amount based on the amount spent – i.e. 10% off up to $30 spent, 20% off on purchases up to $60 spent)
  • a certain dollar off (also can be flat or graduated)
  • a free product with the purchase of an item (i.e. “free mascara with purchase of facial kit” or “free sampler pack with the purchase of $30 in body care products”)
  • free shipping on the order

From KrugsEcoLogic

Additionally, some sellers use code words for the type of scenario.  Examples include:

  • “return” for a returning customer
  • “referral” for a new customer that a current customer refers to you
  • “new” for a new customer that perhaps you’ve met out in public or with acquaintances that you choose to offer a discount in order to bring them to your shop.

Some sellers prefer to give unique codes that they can track to help them do market research and/or to help them watch for people trying to reuse codes (though the general sentiment in the forums is that most sellers don’t mind someone trying to reuse codes as they welcome the repeat business).  It’s entirely up to you how you go about this – whatever feels right for your business.  Perhaps you try different methods to determine what works best for your shop as you may find that one method works better than another.

From Robynas

Some thing to keep in mind and potential pitfalls to avoid include the following:

  • Make sure you indicate to customers that discounts (if a percentage or dollar amount off) is off the purchase price and not shipping so they don’t expect more of a discount
  • Keep in mind that the way Etsy is currently set up, there is no way to enter a coupon code, so make sure customer understands that they need to enter in their codes in the “message to seller” and that you will need to refund them the difference in Paypal (or you can have them email you ahead of time and send them a Paypal invoice with the correct amount before they make the purchase in Paypal – this may change with the new checkout so be sure to research this fully); or you can create a custom listing with the reduced rate
  • Understand that if you refund a customer, that you won’t get a refund in fees taken from Etsy, so it may mean an additional loss
  • Some sellers wisely recommend that you put an expiration date on your coupon code (like a true coupon) to create a sense of urgency; if there is no date on it, it may linger for months or years and may be less likely to be used (or could get used years down the road when you may not be participating anymore).  One seller  in the forums graciously offered the following line in her thank you card: “Thanks for your order, Spend $15 in my shop on your next order and get a FREE Eye Shadow. Just use code XXXX and state color choice. Expires XXXX.”

From KrugsEcoLogic

Are customers making the connection?

The downside oft cited in the forums is lack of follow through.  Many sellers even stated that many repeat customers still came back without mentioning the coupon code, having forgotten (which means that the discount had no bearing on their decision to come back).

“In my experience the coupon codes in the package rarely work… then  again I offer enough codes weekly [that] they wouldn’t even need the one in their package.  Free samples always bring them back for that new scent,” says Erin of Krug’s Eco-Logic.

Overall, I think the jury is still out on whether offering promo/discount codes translates into repeat customers and thus sales.  Certainly, it’s up to you to try this out and see if it works for you or not.  It doesn’t need to take a lot of extra work and has the potential to yield some additional sales.

Has anyone else had success (or lack thereof) with this type of strategy?  Please share with the group!

Comments

  1. Love all your suggestions. Thank you so much for the tips.