In the previous two posts in this series I outlined the change in consumer behavior as they look for more sales and discounts this holiday season as well as the migration of their purchases to online coupon sites. It’s a bit obvious that as the economy goes down, consumer change their behavior and spend less on the products they buy. More and more merchants will be discounting more (this is also a good time for manufacturers to find greater efficiencies so their products cost less).

I polled the top coupon sites in our affiliate industry on their traffic over the last year as well as consumer behavior. The results were very interesting and backed up the reports from the last two articles. Was it incredibly scientific? I’m not sure the questions were perfect or the size of the field surveyed was complete enough, but it does give us some good data, in my opinion.

Survey Results

90% of respondents have seen an increase in traffic to their coupon site since the economy started its downward spiral.  54% have seen traffic grow by 25%, and 18% saw in increase of over 100%!  But that may not be entirely the economy as one respondent pointed out: Some of the increase could be due to normal Q4 increases and some to Google algo changes but overall things are up over most of 2008.” There may also be natural increases on an individual basis due to offline advertising and other factors, but the trend is still important to take note of.

90% of respondents have heard from their site visitors specifically that they are changing their shopping behaviors to shop more at coupon sites because of the crumbling economy.  As one respondent commented: Absolutely, more users are asking about how long such services as coupon sites have been around. As if they have been missing something. Also, in general a new consumer that refuses to purchase without getting a coupon or at least knowing they got a good deal.”

Not surprisingly, 100% of those participating in the survey said that having your brand on a coupon site does not diminish the brand’s perception in the eyes of the consumer. I expected this exact response from this group (coupon sites). Their reasons for this should not be discounted (get it, discounted, we are talking about coupons, discounts and sales  lol):

  • “I think there are very few merchants that this applies to. Great customer service and quality products are what distinguish brands.”
  • “But just like not all brands are equal, not all coupon sites are either.”
  • “The economy has dictated for a merchant to be successful they need to think about pricing.”
  • “People come to my sites to try and get a better deal, they associate MY brand with discounts, not the store’s.”
  • “Almost every company offer deals. If you’re company is very high end, then you can offer gift with purchase in place of a traditional coupon. This is what a retailer like Tiffany does.”

I asked if they have seen a shift in demographics of users to their site.  Most did not collect this info, but of the ones that did, this was the most intriguing answer: it seems order sizes average a bit smaller and higher-end brands are not moving as well.” One would expect that luxury brands would not be doing well as consumers shift their behavior to discount items or at least to shopping with only a coupon or during sales.

So maybe you have read this and want to work with coupon sites but you don’t have the ability or authority to give site wide, standard coupons.

Coupons don’t have to be site-wide, large discounts.  Charles Brown, Co-chair of the Promotion Marketing Association’s Coupon Council stated in a article in October: “It’s an individual company strategy. Some may be promoting discretionary items that might not be purchased if a consumer is economizing.” As some merchants are brand sensitive to couponing, not wanting to offer coupons that they feel may discount their brand, there are other ways to take advantage of the trends outlined.  “I think that what we’re seeing is a behavioral change in the consumer that could have lasting effects. If you shift buying patterns and enjoy benefits of doing that, you will likely continue in that pattern,” he said. “For the marketer, it’s an opportunities to bring in more customers and get them to try new things.”

  • Offer coupons where you don’t lose margin.
  • Offer coupons on products that are not moving or are in your clearance section.
  • Simply use the products in your clearance section as the content for your coupon partners.
  • Many merchants offer at least free shipping, that is enough to work with these sites and can add quite a bit to your bottom line. (It’s not perfect but may enable you to offer them something to get them started)
  • Loss leaders – does your company stock products that they lose money on solely to gain the customer?  Promote these products to your coupon affiliates.
  • Offer a small discount on your top items.  Product specific coupons are great ways to gain customers.
  • Offer one-time, new customer only coupons.  I haven’t seen anyone do this right yet, but it’s been attempted.  To make it work, your shopping cart must be able to identify the customer and whether they have been shopping with you before.  All in the cart.  That can be difficult.

Coupon affiliates – what other ideas can you give to merchants?

Overall, I hope this series has shown that you can’t outright dismiss the importance of this group of affiliates.  They drive an incredibly amount of sales, many are incredibly responsive, professional and really good people.  Many of them I consider close friends and leaders in this field.  Often times you can engage these affiliates in your couponing strategy and they can provide you with some great information and ideas.  Afterall, they work with your competitors and they know what converts.  They may prove to be very valuable partners.

What do you think?

1st Blog in this series

2nd Blog in this series

9 thoughts on “Coupon sites becoming increasingly important – #3 in series

  1. How about coupons in the regular outgoing employee email?Companies seem to ignore the single largest online branding/advertising venue available: their own regular external emails. Why not use these emails to market the senders company?You have a website.You send emails.Why not multiply your sales-staff by “wrapping” the regular email in an interactive letterhead?No other marketing or advertising medium is as targeted as an email between people that know each other (as opposed to mass emails). These emails are always read and typically kept.WrapMail offers a solution that is server-based (i.e. compatible with all email clients), has a complete back-office with a WrapMaker, reporting etc and only charge $5 per user per month.

  2. “About 85 million Americans are expected to shop online today as they seek savings through Cyber Monday sales” (InformationWeek – Interestingly, they reported that Black Friday was the busiest day of the Thanksgiving holiday weekend with 73.6 million people visiting stores and web sites for sales. Takeaway: More are expected to shop online today (Cyber Monday) than all shoppers combined on Black Friday.

  3. Here's my theory of coupons. Coupons are only needed for items with very elastic demand curves — items where the influence of price is strong on the likelihood of purchasing or not. That's why we don't see many coupons for gas, bread, milk, healthcare and other essentials. If there are lots of competitors (Pizza Hut or Dominoes, for example) or alternatives (pizza or chicken) then coupons become an important marketing strategy. Coupons essentially allow the retailer to charge two different prices for the same product and attract a broader segment of the population. In economist terms, coupons shift the demand curve since they lower the price and thus increase consumer demand for the product.The rest of the equation is to develop a strategy that optimizes coupon delivery and effectiveness. That requires testing and measurement to get right.

  4. The interesting part about coupon sites is that they are becoming a lense between the retailer and the consumer. Both side of the equation need the fulcrum that is the marketing and technology of coupon sites to bring about transactions that build LTV.

  5. Wow, great comment Mike. I totally agree. I think that demand curve also gets shifted, and those products most likely influenced by price increase, as the economy turns downward.

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