Did you know saving money when you shop is good for your health? According to a Claremont University study, taking advantage of discounts can lower stress levels and increase chemicals in the brain, attributed to positive feelings. Discounting is also a healthy way for companies to drive conversion and increase sales velocity. An optimized promotional code strategy can be a powerful lever for accelerating prospects through the purchase funnel and providing insights into marketing effectiveness. We will share examples of the most common types of promo codes and dive into six leading practices on how to launch, manage, and extract value from them.
Hundreds of thousands of promo codes are issued by companies every year. No matter how they are delivered (email, text, QR code, billboard, print), they all fall within one of three categories: public, private, and limited or restricted codes.
Public codes are available for anyone with access to them (barring regulatory restrictions). They are usually discovered through coupons, store displays, traditional advertising, and “batch and blast” emails. While often designed to be “single use,” some companies will allow multiple uses to drive more purchase intensity quickly.
Private codes are issued to a targeted cohort of people based on shared activities or characteristics. This cohort might be a group of prospects attending the opening of a new store. Another might be a group of customers who spend above (or below) a certain amount. Private codes are a great way to get your most desirable prospects to buy from you repeatedly.
Limited or Restricted codes are for the sole use of a single user or account. For example, if a customer refers someone to a website and makes a purchase, a company might offer a one-time discount to the referring customer as a thank you. These codes are often set up to be used once and require some form of validation from the customer that they are the intended recipient.
So which promo code is the most effective? Companies often combine all of them to balance converting prospects and growing lifetime value with current customers. They will use the codes to collect data that will feed new insights about the market. No matter what combination is used, it’s important to keep in mind six leading practices that we’ve seen used by our most successful customers. Let’s take a look at each of them.
Some customers aren’t all that concerned with why a deal is offered to them. They’re excited to get that endorphin rush (see the health benefits mentioned earlier) and feel they’re getting a leg up on everyone else. Other customers appreciate knowing that companies they spend money with recognize their loyalty and acknowledge their experience. When possible, tie personalized messaging to the promo offer that demonstrates a recognition that a customer has been with you for five years or they had a less-than-stellar experience with you recently. And, of course, don’t forget to track and measure how these tender loving care (TLC) demonstrations translate to lifetime value (LTV) over the long haul.
Billing teams have visibility and deep awareness of a company’s ability to handle the complexities of promotion discounts, credits, and swaps. They might be among the least utilized teams when learning what works and what doesn’t. Every day, the people in Billing Ops spend all their time looking at which products customers are paying for and how they’re paying. Consulting with them early in the process to get their buy-in, feedback, and guidance could prevent launch delays down the road and improve the chances of campaign success.
With all of this tracking, measuring, reporting, and iterating, how do product and marketing teams keep up with the flood of incoming information flow and make adjustments on the fly? Establishing a technical architecture that links your customer portal, CRM, billing and revenue management platform, payment portal, and ERP together through APIs allows teams to programmatically create, validate, and consume codes while keeping data in sync. Within this ecosystem, prioritizing tools that leverage a low-code / no-code UI will allow non-techie types to access data easily, generate reports, and quickly make changes without burdening the IT team with requests to create hard-coded discount SKUs in the ERP system.
Winning promotional code strategies require a mix of customer experience and marketplace data, tools and systems that allow for quick iteration, and a discipline of curiosity around what drives behavior. Bringing these practices into your organization will help fill the top of the funnel, improve prospect conversion rates, and extend customer loyalty.