Introduction to coupon code

Coupon codes are alphanumeric strings that online stores offer to encourage purchases on their website and are typically associated with an overarching coupon marketing strategy. The discount associated with a coupon code can apply to individual products or an entire order.

How coupon codes work

According to Microsoft, a coupon code, sometimes known as coupon code or discount code, is made up of a combination of numbers and letters. It's used for specific purposes, such as a holiday marketing campaign.

The discount can either be a percentage or a specific dollar amount. Coupon codes also provide customers with free shipping or gift-wrapping. This marketing strategy essentially gives customers yet another reason to buy your products.

Why coupon codes work

When a store issues coupon codes, they're providing customers with an incentive to buy, which benefits both the customer and the business. Customers get the products they want at a lower price, and the ecommerce store generates revenue. One of the most useful things about coupon codes is that they work well with both new and returning customers. These incentives even have a direct impact on the overall shopping experience, according to research conducted by the Center for Neuroeconomics Studies at Claremont Graduate University.

"Getting a coupon, as hard as it is to believe, is physically shown to be more enjoyable than getting a gift," said Paul J. Zak, director of the Center for Neuroeconomics Studies at Claremont Graduate University.

The study showed that people who received coupon codes had heightened levels of oxytocin, which is a hormone that creates feelings of happiness. With that very physical reaction in the minds of your prospective customers, it's a smart idea to experiment with incorporating coupon codes into your blog business plan regardless of how you're monetizing your website.

Tracking marketing efforts with coupon codes

Coupon codes are an effective way to track your marketing efforts to see which platforms are generating the most traffic or leading to conversions, according to Inc. magazine. Store owners can track their efforts by attaching a certain coupon code to a specific marketing campaign or advertisement. Different codes can trigger the same discount, so you don't have to create a different discount for every advertisement. You just need a new coupon code. For example, you could create slightly different codes (SaleFB, SaleTW, SalePT) so that any ads or marketing efforts on Facebook, Twitter and Pinterest have unique, platform-specific coupon codes, according to Inc.

Assigning specific numbers and letters to a certain ad is particularly helpful if a customer sees the coupon advertised in an email or on social media but doesn't click through immediately to follow through on the coupon. You'll still be able to capture and analyse the ROI of advertising on that platform because by entering the tailored coupon code, the customer is also telling you where he or she saw the sale advertised.

How to use coupon codes

When a customer enters a coupon code during the checkout process, the store confirms that all conditions of the coupon are satisfied before validation. If the coupon code offers 20 percent off on shopping carts of $200 or more, for instance, the code will not work if the minimum threshold hasn't been met. You can also tailor the requirements to exclude certain brands or products.

Using multiple codes

Depending on your site, you may be able to allow customers to enter multiple coupontion codes or limit customers to using only one code. While deciding how many codes a customer is allowed to use is up to you, it's important to ensure the transaction is still profitable for you no matter what combination of codes are used.

What are the different types of coupon codes?

There are three different types of coupon codes store owners can choose from.

• Public codes
  Anyone can see or use a public coupon code. These are useful for enticing new customers and encouraging previous shoppers to come back for more.

• Private codes
  Stores use private codes to target a specific group of people. Commonly provided to loyal customers for special shopping opportunities, such as first-time shoppers, private codes are a good way to bring in new customers.

• Restricted codes
  A code that is restricted is targeted to a single user and can only be used once. For instance, you might send a customer a restricted code as an apology for a delayed shipment or as a thank-you for making their 50th purchase with your site.

In most cases, it's best to utilize all three types of coupon codes on your site. This will ensure that you're connecting and providing a wide variety of customers with a reason to make purchases.