Amongst the myriad of strategies used to optimise your eCommerce site is the notion of leveraging discount codes, the tried and tested way of incentivising consumers to complete their purchase by either offering a discount and providing a way of applying it themselves. 

The importance of voucher codes for consumer’s purchasing choices is underlined by the fact that 36% of coupon code users will choose to purchase their items somewhere else if they don’t have an available code to use. Much more than simply encouraging conversions, the correct use of discounts can increase consumer average order value with online shoppers who use coupon codes spend 24% more than shoppers who don’t use them, and reportedly 29% of online shoppers will add a purchase if it’s heavily discounted that they did not originally intend to purchase. 

With this in mind, it is important to be aware of the differences between discount codes and automatic discounts, how it can impact a consumers propensity to purchase, and how you can think about applying it to your campaigns. 

What are automatic discounts?

Some eCommerce sites find benefit in showing products that are already discounted on listings or providing automatic discounts at the checkout phase. Whilst this may seem like it may not have any psychological impact on a customer’s decision to purchase, showing the previous price can have the impact of ‘anchoring’. 

With discounts, marketers aim to anchor consumers to the original item which is sometimes artificially inflated and then presented a new, lower discounted price that creates the impression of a cut-price purchase. Black Friday is a prime example of when this marketing technique is leveraged. The bigger the discount shown, the bigger the bargain they are getting. 

What are the pros and cons of automatic discounts? 

There are clear benefits to opting for this style notably for eCommerce businesses looking to leverage discounting without overtly offering out codes. Firstly, by displaying a price that has been subject to discounting that consumer is able to visually recognise that they are getting a deal and the value they are saving. Secondly, by having discounting built into the eCommerce website’s presentation, the need for customers to enter codes is eliminated reducing their need to enter data. Finally, this also means there are fewer fields to fill out at the checkout stage of the customer journey, something that is often thought to be a source of frustration leading to cart abandonment. 

Unfortunately, by displaying these discounts to all consumers lose out on the feel of it being exclusive, personalised offers which they are privy to. Instead, the widespread offering dilutes this and makes this strategy lack the edge which codes leverage. 

What are discount codes?

In comparison to automatic discounts, discount codes are offers to consumers to are usually given in exchange for communication details. The typical example of this will be a discount code in exchange for access to an email address for marketing purposes. 

With discount codes, they can be offered at key touchpoints in the customer journey, via communications and newsletter, or simply published online to help encourage customers propensity to purchase. Importantly, discount codes give you strict control over pricing and promotion by offering certain values. For example, merchants on the Cloud.IQ platform often try to incentivise customers to purchase by presenting discount codes on personalised overlays that optimise key touchpoints. 

What are the pros and cons of discount codes?

One of the major benefits of discount codes is their use in optimising the customer journey and helping nurture consumers by generating a feeling of exclusivity. You can, for example, only choose to show the discount codes to specific segments such as customers showing exit intent and as a result not have to have a discounted price on all purchases. Furthermore, by offering a discount code in exchange for an email address you are able to build a marketing database that you can then reach out to with effective communications and hopefully generate brand loyalty. 

One of the few negatives of discount codes is the possibility of consumers sharing codes online without your permission causing widespread reduced profits, although this can be offset by one-time code generation which is now common. 

To be a beneficiary of customer journey optimisation and make use of discount codes in nurturing consumer past key touchpoints, give Cloud.IQ’s free trial a go here. Alternatively, reach out to customersuccess@cloudiq.com for more information on how to leverage discounts to your store’s benefit and increase sales. 

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