Why Coupons Drive Incrementality in Performance Marketing

August 1, 2019

The assumption that consumers look for coupon codes after putting items in their baskets is a tale as old as time. However, recent trends show that coupons are motivating buyers to shop. Smart shoppers, or consumers with a higher household income, typically maintain a strict budget and stick to it, which means they may need an incentive to buy. According to a study by inmar, 83% of consumers changed their buying habits when presented with a discount code. When equipped with coupons, smart shoppers have been known to buy more, more often, and from retailers they may not have shopped with organically.  

Coupons are a critical piece of the performance marketing puzzle. Some of the areas coupons impact include consumer behavior and incrementality within a brand’s affiliate program. According to a 2018 study by Wikibuys, more than 25 million Americans use couponing apps to save each month. Leveraging coupon codes can help brands reach buyers outside of their existing consumer base, expand brand awareness, positively impact buyer habits, and increase sales with elevated brand exposure.

First and foremost, coupons can help drive incrementality in affiliate programs by increasing AOV and LTV. For e-commerce brands, coupon codes can help to drive sales over an existing AOV by offering a discount for orders over a certain amount. For example, if a brand’s average order value is $50, offering a “20% off orders of $100 or more” code would incentivize consumers to spend at least that amount to obtain the discount, while simultaneously increasing that brand’s AOV. The same goes for subscription brands who are looking to increase their LTV; offering buyers a deal if they purchase a longer subscription or pay upfront will assist in driving a higher LTV.

In addition to increasing AOV and LTV, coupons can help boost upper-funnel awareness by purchasing paid placements on a flat fee. For example, coupon sites offer packages such as homepage placements and targeted email drops based on consumer buying behaviors, which can get brands in front of an audience who may not have been looking to buy. It’s important to note that not all consumers who use a discount code were even aware of the brand prior to receiving the coupon. 

According to a 2018 by Google and comScore, 94% of consumers had not visited the brand’s site prior to finding a coupon code. Paid placements present coupons to consumers as a way of getting the brand in front of a new buyer, who may not have interacted with the brand otherwise. Additionally, according to a study by Wikibuys, there will be an estimated 1.09B digital coupon users in 2019. That being said, whether the consumer is new or existing, coupons help boost conversion rates from site to purchase.

All in all, coupons play a vital part in performance marketing. Although coupons are generally assumed to reside in the lower-funnel, they can also find their way into the upper-funnel by way of desktop and mobile paid placements. By integrating these discount strategies, brands are most often guaranteed to see incrementality and an increase in conversions. On the flip side, eliminating coupons can be detrimental to the health of any brand’s affiliate program. 

Interested in learning more about how couponing can help to grow your performance marketing? Reach out to Ignite OPM now to learn how you can implement these strategies and more.

Sources:
inmar
PerformanceIN
Wikibuys