Amazon Coupons: A Secret Weapon to Drive Sales
Lightning Deals and 7 Day Deals aren't your only avenues of promotion
Introduction
One of the challenges with selling on Amazon is that you do not have much control over your promotion plan. Amazon controls if and when you are able to run a lightning deal and determines if you qualify for a deal of the day. This can be incredibly frustrating and whether you need to liquidate excess inventory or are trying to accelerate a new launch your promotional options are limited. That’s where coupons come in to play - they are of the few seller-controlled levers you can pull to impact performance in a hurry.
Throughout this post, I am going walk you through the benefits of running coupons, common testing hurdles, and outline a few scenarios where coupons can be a major driver of performance.
Coupons Drive Click Through Rate & Conversion
Click Through Rate
Coupons are a great driver of sales performance, but those aren’t the only impacted metrics. Based on my experience, you can expect a 300+ bp improvement in click through rate and similar improvement in conversion and that is where the magic really happens. Why does the coupon impact CTR? It adds a green badge on the search results page that catches the customer’s eye and pulls them towards your listing. In a sea of similar items, it’s critical to do anything in your power to drive attention to your listing.
Why is boosting your click-thru rate is so important? For one, it boosts the total amount of traffic to your listing. We most commonly talk about CTR through the context of PPC, but this will impact your organic traffic as well potentially leading o a strong increase in free traffic. Number 2 - improvements in CTR have been correlated with lower CPCs. As the cost of advertising continues to increase you will need to do anything you can to keep your advertising cost low. Lastly, CTR and traffic are signals to Amazon’s organic ranking algo that your item is relevant which should help to boost your rankings.
Conversion Rate
The other benefit of leveraging coupons is that they will help to drive your conversion rate and measure the impact. Seller Central provides reporting by coupon which will enable you to measure and track performce. You will be able to quickly track attributed revenue, totally redemptions and with a little effort calculate conversion rates, AOV and the total efficacy of the coupon!
A logic question to ask is why should I run a coupon when i’m charged $0.60 / clip when I can just lower the price? Most items on Amazon already have a strike through price and most consumers do not know what your everyday selling price is on each listing. Most customers will assume that the strikethrough price doesn’t mean anything (let’s be honest, it doesn't) and that you are trying to show an inflated value of the product. Coupons on the other hand make a customer take an action by clicking to redeem the coupon and it taps into the customer’s psychology that they are ‘earning’ themselves a deal. By requiring a customer to take an action, you will see a secondary benefit of coupons which is that no all customers will choose to take advantage of the offer. This will lead to breakage 1 on the coupon and a lower effective discount which will result in more margin in your pocket than a typical sale price reduction.
Now choosing to run coupons at all is a great first step towards generating incremental demand, but not all coupons are created equally. Amazon gives you the ability to run either percentage or dollar off coupons and I would encourage you to test both types of offers. In my experience you will have more success with a dollar off coupon, even if it is a lower effective discount because customers do not want to do the math. Make it easy and clearly tell them how much they will be saving — it’s easier to understand that you will save $5 on each item rather than 15%!
Why You Should Test Your Coupons
Like I mentioned above, in my experience dollar off coupons tend to be the best driver of demand, but what I suggest to all my clients is to do your own testing. Different products and categories can elicit differing customer responses. Testing in e-commerce is one of the things that “says easy and does hard2”.
The easy part of testing is running multiple offers and letting the data tell you what is the better offer. Now the hard part — you need to control the other variables to truly understand the impact of the coupon. I’ve included a few quick tips of issues to mitigate when running a your tests.
You need to keep your marketing activity consistent between the two test periods. Obviously if you drive an influx of traffic during the dollar off test and do not curing the percentage tests the results will be meaningfully different.
Do not make any material changes to your product page until you have completed the testing process. If change your images in the middle of your test, you’ll never know if it was the image or coupon that drove the improvement in conversion!
Define Success - this is the most critical component of any test. You need to clearly define what you are looking to accomplish. Is the goal showing an improvement in conversion rate or to improve your ROAS performance? I grew up in classic retail so my measurement of success: did the coupon drive an increase in margin dollars?
Step 1: Do promotions drive an increase in unit velocity that offsets a lower AOV from discounting?
Step 2: Assuming the answer to step 1 is ‘yes’, you then you would test the various types of coupons to see how you can squeeze the most margin dollars possible out of your couponing. Your testing should not stop with % vs. $ off coupons, but should iterate to include different integers of discounts to ensure that you are maximizing your yield!
When Should I Use a Coupon?
I’m a proponent of having an always on approach to couponing and keeping the discount low, either 5% or $1-2 off, but that might not be the right approach for your brand. Below are a few suggestions of times and situations where it might make sense for you to leverage coupons.
Tent-pole Holidays: This should be a no brainer, but during events such a Prime Day and Turkey 5 you need to be aggressive and discoverable. The ideal scenario is to be approved for promotions such as Lightning Deals, 7 Day Deals or ultimately a Deal of the Day, but that isn’t a reality for most sellers. Coupons are a nice alternative that offers customers a discount while adding elements of discoverability to you listings.
Launch of a New Item: It might be counterintuitive to immediately discount a new item but starting fast on Amazon is critically important. Whether you are looking to try and organically rank your product for target keywords, drive your BSR or just get some early sales coupons can help customer overcome the hesitance of trying a new item.
Overstocked and Discontinued Inventory: If you are looking to liquidate overstocked items or turn slow moving inventory into cash, using a coupon can be a quick an effective tool to help you clear through the product.
Conclusion
While coupons might not be the most desirable type of promotion, they have been a consistent driver of performance over the past couple years and have become a staple in our promotional planning process!
Like what you read? Subscribe:
Bowtied Amazon is proudly brought to you by Benitago Group
H/T to @moslon_hart