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  • Writer's pictureEvelyn

Get started with coupons: 6 steps to build a strong foundation for your promotional strategy

Updated: Jul 24, 2023

Get Started with Coupons

Any online retailer starts with setting up essentials: an e-commerce shop acting as the point of sale, social media to reflect a friendly attitude, and email marketing to communicate with the customers. All of this is crucial to running an online business. However, waiting for the customers to come will not guarantee a purchase.

Coupons play a more critical than ever role in any successful promotional marketing plan. It’s a great way to promote your product and influence buying behavior. Sooner or later, there will come a time you will face the decision of whether to offer coupons or not, to whom, when, and what type of deal to give. It's essential to implement a thought-through strong foundation for your promotional strategy that not only incentivizes the customer to complete the purchase but also activates a specific group of users, influences buying behavior, promotes the brand, and ensures the achievement of the ultimate goal of any business - making a profit!


Why use coupons?

Discounting has evolved from a desire to a demand. Bargain hunters can spend up to two hours a week looking for coupons, and according to VoucherCloud, 57% insist that they would have abandoned their purchase without a special deal. CouponFollow claims, that 84% of millennials have used coupons when shopping. The fiercely competitive retail environment has created a generation of consumers who expect compelling and consistent price reductions.

Coupons are also an excellent way to track your advertising ROI. Using different coupon codes for each promo type or distribution channel, you will be able to test & analyze which campaign and channel generated more sales and, what's more important, brought high-value customers. Thus, you can concentrate more on optimizing them by customizing your offering.

Before diving in, ask yourself the following questions:

What type of discount fits your product or brand?

Before starting any coupon campaign, it's important to reflect on what type of deals will support your positioning strategy. Make sure that the special offer you plan to implement matches the needs & characteristics of your customer persona and will not harm your brand in the long term.

Think about:

  • Will a coupon campaign suit your business?

  • Can you meet the demand?

  • Can you afford the discount?

Is your target group the right one to discount?

You need to think about whether your target group needs and will appreciate your offers or not. Coupons not only help you in customer acquisition but also in building customer loyalty.

If you are a luxurious brand or want to position yourself as a high-end brand you may want to stick more to the loyalty offers type because probably your customers won’t care about a 25% off discount. Nevertheless, offering such a discount will harm your positioning plan; unless your goal is to attract a lower segment.

What You need to do is to identify your target group's psychological needs according to their lifetime value and then decide on what kind of offers will work best.

How to develop a strong foundation for your promotional strategy?

Step one: Set up your campaign objectives.

You need to align your campaign objectives with your overall goals. Decide on your current position in the market, what impact you want to make on your target group's lifetime value and what your competitors are doing. Define your objectives then build your campaign around them. For instance:

  • You are introducing a new product to the market

Depending on your product's nature and launching the campaign, coupons can help you in making a jumpstart demand for your new product. Keep reading to know-how.

  • You want to get rid of excess inventory

You have an item in the declining stage of its life cycle perhaps you have overstocked or your sales did not go very well and sitting items in the stock means that they are not bringing you any money. But, making some room for the new in-season products will.

Customized coupons can help you speed up the liquidation process and direct customers towards this particular product and make the product desired once more.

  • You want to increase customer acquisition

Using special deals especially coupons to acquire a new customer is very easy and effective. With the help of promoters and referrals, success is guaranteed. However, giving uncontrolled promo codes will expose you to promo abuse. Check out the past posts to decrease the risk of coupon fraud: How to prevent coupon abuse?

Step two: Stalk your competitors.

As an entrepreneur, you are new to a market that may be dominated by big brands that are already offering discounts and coupons. And let us be real no one will pass on a discount offered by a well-known brand and choose to buy from you at full price (unless you have a real competitive advantage). So, in order to be able to compete, you have to operate with full knowledge about how your pricing stacks up against your top competitors.

This can be done by operating the Market price Index. MPI will show you your accurate pricing positioning in line with your competitors, where you need to be more competitive by using the special deals, and where you have pricing power that you can take advantage of to gain extra margin.

However, you need to understand what is important to your customers when they consider purchasing from you as the pricing might not be the only factor.

Step three: Further segment your target customers and personalize your coupons.

Depending on your campaign objective, segment your customers and choose the group you want to focus on to influence their buying behavior, e.g new customers, customers with high-lifetime value, customers who have stopped purchasing in recent months, cart abandoners, first-time shoppers, etc.

It's also important to reach the chosen group at the right time according to the customer lifetime value (CLTV) and measure the coupon's long-term impact on it. The perfect way to guarantee your campaign success is by personalizing your coupons using promo codes restricted to a specific channel or customer segment.

If your objective is to introduce a new product to the market, you can offer a pre-launch discount, sent only to customers who signup before the product is launched. This way you will have an estimation of the demand for your product early on and collect the user base in advance of the product launch. However, it depends on the product's nature. It works best when you are launching something worth the early demand for, launching a new brand or a completely new product.

Another example is if your product is in the growth stage, and you want to acquire new customers by using referrals. Here you do not want to send a generic coupon. But rather chose to send it to your loyal customers or the ones who have already purchased from you. This way you have more chances to acquire high-value customers instead of bargain hunters and you will protect your coupons from abuse. So, segmenting your customers according to their lifetime value and personalizing your coupons really pays off and has better ROI.

A very effective tool you can use to personalize coupons is geolocation by targeting customers in a specific location by creating geo-targeted codes by zip code, city, or country.

An important tip here is to keep in mind that it's not always about the money. If you want to send a retargeting coupon for a cart abandonment or for a customer who has stopped purchasing. Rather than sending a coupon right away build a campaign chain by first sending a reminder to complete the transaction or asking for feedback in exchange for the coupon. Try to identify and solve the problem first before sending out coupons.

Step four: Prepare the coupon creative.

An effective coupon must be well-designed in order to stand out from the crowd and achieve its purpose. It should contain the following:

  • Your company’s logo: In 2012 commissioned a study where they investigated the effects of coupons on shoppers using an online grocery site, half of the participants received a 10$ coupon while the other half did not. those who received the coupons had 38% higher Oxytocin levels. furthermore, they became less stressed and more relaxed as their heart rates became slower by 5%. by putting your logo those positive feelings will be associated with your brand and recalled once they see your logo again.

  • The coupon hook: basically it's the coupon headline. which must clearly communicate your promotional message that should include why the customer should care or what she will get by redeeming the coupon.

  • Attractive visuals: Colors have different psychological effects on human behavior, red attracts attention and has a passionate and powerful impact on the eye, unlike green which gives a balancing and calming sensation. Here, you want to stick to the primary colors or ideally use your brand scheme colors with simple graphic elements. However, you should not use too many elements, you must keep the design simple and fresh.

  • Simple and clear language: simplicity is the key in the design world, use less text and more graphic elements. Using too much text can hide your message and fill the design with noise. instead, use bullet points that clearly communicate the offer.

  • Clear, but basic terms and conditions: keep the rules simple - clearly mention the terms and conditions of the coupon redemption, eg. how the coupon should be redeemed and when it expires.

Step five: Decide where to distribute the coupon.

It’s important to send the coupon to the right customer at the right time and also through the right channel. There is a variety of channels you can distribute your coupons on like social media, Influencers, Coupon sites, affiliate partners you work with, or email lists.

In a study held in UK and USA, respondents said that the top four channels they prefer to receive coupons on are; Email, websites, text/SMS, and mobile wallet.

The percentage difference between the numbers is minimal, which highlights the importance of effectively coordinating your coupons across all channels. It is crucial to conduct tests and determine the preferred coupon distribution channels of your target customers.

However, if you choose to offer a flat promotion for instance, on social media, it's best to distribute it using unique codes in order to protect the promotion from being abused and improve its trackability.

Coupons communication channels rates preference

Copyrights: UrbanAirship. Number of responders=2000, Millennials (18-34), Generation X (35-54), Baby Boomers (55+).

Step six: Limit the time of promotion to your business goals.

Coupons can be used as a call to action by adding an expiration date. Whenever possible tell your shoppers when the promotion will end, this way you will be limiting their cogitation time and giving a clear timeline for deciding to buy. FOMO or “fear of missing out”- The fear that others are having a much better time or having more rewarding experiences than they do- can be applied here. Ignite the fire under your shoppers by putting a countdown timer to show them how long they have until they miss out on the deal or showing the number of sold and remaining items in stock. A very important step here is to push reminder notifications to redeem the coupon. Urban Airship reports that nearly half of the customers - 48% allow coupons for products they're interested in to go unused or expire because they forget about them. Therefore, it's crucial to send timely reminders of coupon expiration through emails or wallet passes delivered to their lock screens to increase coupon redemption rates.

Wrapping up

Coupons can be a great tool to acquire new customers and keep the existing ones engaged. However, in order to achieve this, when launching a coupon campaign you need to prepare thought-through planning, a full understanding of how it works, and invest in an internal or available system to secure a process that will track creation, monitor redemptions, and control the budget to protect it from any form of abuse.

Need some additional advice? Please shoot us an email at, we would be happy to support you in launching your promotional strategy.

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