5 Signs of Coupon Code Abuse and Neglect

sam.engel Feb 1, 2013

For more than a decade, coupon codes have served online marketers rather well. They’re an excellent arrow in the quiver, capable of accomplishing a variety of goals—gaining new customers, re-engaging loyal ones, clearing inventory and much more.

But since those first coupon codes were introduced, the market has become more and more complex. Blogs gained widespread popularity, discount shopping sites found their niche, and websites entirely devoted to coupon codes started popping up.

All those new channels have made it difficult to control how coupon codes spread. And while most marketers intentionally make use of them, they can be a challenge to keep in check. To stay ahead of issues, we recommend that you keep an eye out for the following:

1) Overly Successful Coupon Codes

It’s generally a plus if your coupon code is generating lots of traffic. After all, this is often a goal in the coupon strategy. But when a code is far more popular than anticipated, it may have found its way into unexpected channels.

Some sample cases where this might come into play: A) if the coupon was sent out as a targeted email campaign, the number of redemptions might be greater than the number of people it was sent out to, B) the entire site is experiencing an abnormal spike in visitors, C) the code is being used on accounts that it wasn’t issued to. For example, if it was distributed to specific email addresses but then redeemed on accounts associated with different email addresses.

When Tracking Success Becomes Tricky

If coupons are showing up in unexpected places, it can be nearly impossible to get any meaningful insights from the campaign. With such compromised data, everything from ROI analysis to evaluations of your affiliates can be rendered fruitless.

2) Anomalies in Website Behavior

Coupons should change your visitors’ habits. They’re supposed to. However, if you’re experiencing a dramatically different response from what you expected, there’s cause for concern.

For example, if coupons intended for loyal customers have resulted in high traffic from one-time shoppers and new accounts being created, perhaps your coupon channels need a closer look. Likewise, if a coupon targeting recent shoppers ends up being redeemed on many accounts that hadn’t logged in for months, be on alert.

It’s useful to create a set of expectations based on behaviors observed in the past. By approaching a coupon campaign with a good idea of what you should be seeing, you’ll be more prepared to respond early.

3) High Incidence of Coupon Failure or Rejection

If coupon entries are failing at an abnormal rate, it’s likely due to a fraudulent or expired code appearing somewhere online. Unaware that the code will fail, customers go through to checkout and fill in the code box—only to be disappointed. This may even happen a few times in a row for a given customer, cycling through a list of fake or old codes found on a particular website.

4) Extra High Commissions for Certain Affiliates

If you distribute specialty codes through certain affiliates, you may see some interesting results when coupons are copied by other sites.

Let’s say you negotiated a special partnership with Affiliate A. In exchange for being featured in Affiliate A’s “Top Deals” on their homepage, you provide Affiliate A with a unique code that includes an extra discount (your normal discount code is 20% off, but you gave a 25% off code to Affiliate A). To balance out that extra discount, Affiliate A takes a lower commission than normal.

Other websites would clearly be interested in providing that code to their visitors. 25% off is a better deal—and therefore more likely to result in conversions. And for systems that assign commissions based on cookies alone (either a first click wins or last click wins basis), this could cause some trouble.

If any of your other affiliates happened to copy the code, they would get their full commission and the sales they generated would be at an extra discount. Even worse, because of the higher conversion rate from the 25% discount, they’d generate more sales. Highly discounted sales with a full commission. That’s a double-hit that most merchants can’t afford.

If You Use Commission Overrides:

One way to prevent those double hits is to automate commissions based on the code entered. Overrides can ensure that every time the specialty 25% off code is entered, the commission goes to Affiliate A.

In these cases, you’re unlikely to notice extra high commissions. Your system should prevent affiliates other than Affiliate A from cashing in on that code. And Affiliate A’s commissions won’t jump too high, since they take a lower commission rate.

But while overrides can prevent unearned commissions, they can’t stop coupons from being redeemed at unexpectedly high levels. Excess coupon traffic from those unauthorized affiliates can turn your carefully targeted promotion into public knowledge—meaning no one pays full price. In other words: even if those other affiliates aren’t profiting, they can still cost you.

5) Resorting to Code Cancellation

Canceling a code is not an ideal outcome for a merchant. It generally means two things have happened:

A) the merchant was either about to lose, or was already losing money, and

B) customers who try to use the code later will be frustrated.

In such cases, coupons can become a liability for marketers. They persistently inhibit marketing efforts. And although codes may sometimes be canceled simply because demand was higher than expected, the coupon channel can often be responsible. If it is common, it might be a sign that some change is needed.

So How Can Marketers Respond?

Come back next week and we’ll discuss some methods for monitoring your codes.

Topics: affiliate marketing

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