What are the alternatives to coupon codes for brands and retailers?

by | 12 Oct, 2021 | INSIGHTS

Promotion is a marketing strategy used by a large number of brands and retailers, whether they have an exclusively online activity or a network of physical stores. Promotional techniques are known to encourage buying behaviour among consumers. It is ideal to increase turnover and boost sales in the short term. Perfect, in short.

Although it is supposed to be an occasional technique, it has been used a lot, and in a permanent way by many brands, along with the wave of the Internet and pure players. Today, consumers are used to it and promotional codes have become a reflex. So, can we still say that they are effective? How can we differentiate ourselves from competitors who also use coupons?

The coupon, an overused promotional tool

Coupon codes have boosted businesses…

Promotion is a strategy that works and it has been proven many times by the biggest brands and retailers. There are several reasons and objectives for using such a technique:

  • To encourage a new product or product collection trial
  • To acquire new consumers
  • To get rid of unsold products
  • To increase the average basket

Then, with the arrival of its dematerialised version, the e-coupon, the coupon has quickly become a standard. The digital version has accelerated its use and adoption, making the process easier for brands, while adapting to the new expectations of Internet consumers.

Moreover, these promotional tools have become so widespread that 60% of consumers say that coupons directly influence their purchases. Even better, 1/3 of e-shoppers would systematically look for a coupon code and many abandon their cart if they can’t find one. *

*Forrester, 2015

…but have become a standard

And it’s precisely this “systematic” gesture that is finally the heart of the problem. The coupon is supposed to be a stimulus. But today, we see that if consumers do not find a coupon code online, they usually abandon their shopping cart.
Because of the overuse of coupons by brands, Internet users are used to this tool, which they clearly see as a technique used by the brand to push them to buy. We can say that coupons don’t really have any value anymore in the consumers’ eyes. It’s simply an opportunistic offer, not a reward.

And Internet users take advantage of it, always on the lookout for the best code, never wanting to pay the starting price. Very often, they forget about the brand in the process. If they find better elsewhere, they will leave. Not sure if they will come back to buy if a new promo code is not available. The result: short-term revenue only, and the brand image is degraded by the multiple coupons.

So, are there any alternatives?

The digital gift card, a more effective reward

The e-gift card, a new dematerialised version of the physical card, can also be used as a promotional tool. Massively used in the United States, but still little in France, it allows to answer the disadvantages of the promo code and to better control some variables for the brand.

Why is the dematerialised gift card so effective for the brand?

Instead of a simple coupon, retailers can offer a digital gift card of a limited amount directly to consumers.

A reward

Rather than holding a percentage of an unknown amount, users receive a defined amount that can be spent with the brand. It already has intrinsic value compared to the simple code. More importantly, it will always have a much higher impact, even if consumers get a smaller discount compared to coupon code. Why? Consumers associate the card with a true personalised gift, as if they were receiving it from a loved one. A reward, rather than a percentage, allows to value the brand that will be present on the card. Commitment will then be even higher.

We go from a simple discount program to a reward program that differentiates from other brands on the market. A program that will create much more engagement and participation.

A better income

Second point: we don’t cut into revenue. With a promo code, brands lower their prices. With a gift card, they open up to new revenue. Let me explain. The Internet user in possession of a digital card will more easily initiate a pleasure shopping. He will be led to make impulse purchases and to move upmarket. The additional income, on top of the card, will therefore be substantial, enough to cover the promotional operation.

Multiple benefits

The gift card as a promotion tool brings other benefits for the brand:

  • Choice of parameters: the card is flexible and can be created specifically for promotion purposes. Can it be spent online, in-store, or on the app? When can they spend it? On which product or product category can it be spent? It is very useful to create habits with consumers.
  • Any medium: the e-gift card is easily accessible on a smartphone or via PC, or even on paper if the person has decided to print it. But it is also compatible with wallet applications, which are widely used by Millennials. These applications represent a communication gateway for brands. Thanks to geolocation, bitcoins… they can send targeted push messages via these apps when the consumer enters the store.
  • Know your customers: the gift card being a means of payment belonging to the brand, it is possible to have anonymous transactional data. When, where, what… All data on the gift card use, whether online or in store. This makes it possible to better control the new customers’ behaviour and to significantly improve marketing campaigns.

E-card applications as a promotion

If the e-gift card is a powerful tool for promotion, what is its concrete application? There are, in fact, several ways to use it, all depending on the initial objective of the brand.

  • For any purchase, you can offer a gift card that can be spent later. The customer will then be invited to come back to the store of the website to treat himself. And by playing with the use dates, the brand controls the flow on these channels.
  • The brand can decide to send massively via an emailing campaign, for example, free gift cards to invite to try a new collection, or the new mobile application.
  • To encourage customers to make their purchases, such as those for Christmas for example, a brand has the possibility, following the purchase of a card, to offer another card to the buyer. This will push him to come back to do his shopping.

The e-gift card performance vs. promotional codes

For brands that have taken the plunge, consumers using the e-gift card are convinced. 80% prefer to have a real reward rather than a simple coupon. *

*NAPCO

Moreover, their buying intentions are reinforced: +13% with a reward compared to a coupon code. *

*Ifeelgoods

Regarding brands and retailers, the e-gift card can lead to more than satisfactory results:

  • Revenues grow faster with rewards (36%) than coupons (28%). *1
  • The profit margin is higher: 24% for rewards vs. only 18% for coupons. *1
  • Rewards provide better brand image (+21%) compared to coupons. *2
  • Brands using e-cards are differentiated in the consumers’ eyes.
  • Commitment to future purchases is higher

*1 NAPCO
*2 Ifeelgoods

The gift card has everything to appeal to both consumers and brands in a promotional strategy. As an alternative to a coupon code, it allows a brand to quickly differentiate itself, to create an impactful campaign with customers, without degrading its brand image, nor cutting into its results.

Suggestions for further reading

Top 10 reasons why a brand should offer digital gift cards

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