This is an abstract from a recent educational whitepaper on Social Coupons.
Digital coupon usage is growing at a rapid pace and that’s actually a GOOD NEWS for online retailers! A recent Forrester research report suggests that online coupons and promotion codes generate new users, increase overall spending and close the deal for 88% of the shoppers when they are undecided. An estimated 88.2 million shoppers, or nearly half of US adult Internet users redeemed an online coupon in 2011.
However, offering a coupon does not a sale make! This paper discusses how combining social media technology with consumer psychology insights can create a brilliant social couponing strategy.
While most retailers have understood the importance of promotions and have embraced it, their distribution strategy suffers from some critical drawbacks:
- - Lack of virality: even good offers don’t achieve the reach they deserve
- - One size fits all: everyone gets the same offer
- - Lack of exclusivity: offers are usually available just for the taking
- - No segmentation: even price insensitive customers end up getting a discount
Using insights and actual data gathered from multiple sources, this paper recommends the following simple, but powerful improvements to the current couponing flow:
- - Add social virality to online coupons by encouraging users to share the coupons with friends. Research shows that nearly 60% of shoppers are willing to share a good deal.
- - Make users “earn” or “unlock” the discount by performing some social action rather than giving it away. It creates an aura of exclusivity and shoots up the conversion rate. Users earning their coupons convert at a phenomenal 25%-45% rate. Adding a small barrier to ‘earn’ a coupon also segments the users automatically. Price insensitive users simply bypass the step and pay the full price. Coupon clipping barrier for offline coupons already uses the same strategy very effectively.
- - Offer targeted coupons to website visitors. Combination of coupons and proper targeting can boost conversion rate, increase AOV and reduce card abandonment.
- - Add social proof to the promotions by showing how many other users are using it. Most users like to follow the crowd. See the example below.