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The value of the voucher: Are vouchers and discount codes still useful for businesses in 2018?

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The value of the voucher: Are vouchers and discount codes still useful for businesses in 2018?

For start-ups and new businesses, successful marketing campaigns are essential in order to promote the company and build up a core base of customers. Vouchers and online discount codes aren’t a new phenomenon in the world of business, however, with a great deal of businesses now online, these special codes have rapidly grown in popularity – with sites such as Groupon and My Voucher Codes becoming much more widespread.

It is now common for e-commerce sites to ask customers to input a discount or voucher code at the checkout stage of their shop – this is so that customers will be encouraged to check other sites for a valid code that will get them discount. Exclusive deals, student discounts and limited-edition codes have encouraged many of us to search far and wide for a good deal. In this world of Groupon discount deals and online savings, we ask – are these codes still useful for businesses and consumers in 2018?

Are customers actually making savings?

As online shoppers rely increasingly on vouchers and discount codes, some consumers have questioned just how much of a saving they are making, and whether these ‘too good to be true’ discounts are actually just marketing tools in disguise.

Which? Investigated this issue and discovered that a great deal of online discount codes on sites such as VoucherCode.co.uk and Groupon were either past their limited-time-only date or completely invalid. Owner of MyVouchers.co.uk, Mark Pearson, had this to say: “The majority of our listings are official codes direct from retailers, but we see it as our job to list any code that has a chance of working so, if a code comes from a consumer, we’ll check it works and then list it as ‘user-generated’, making clear we can’t guarantee how long it will work.”

Limited-time-only codes are common in the e-commerce world; this is so that customers are encouraged to buy their goods straight away, rather than waiting to purchase. Online fashion retailers regularly use this type of discount code, sending regular emails to their customers which contain a valid discount code in order to increase customer retention and encourage people to buy. 10% and 15% off codes are the most common, as brands are aware that by offering customers a small saving, they can encourage future sales and gain an advantage over the competition.

Not all discount codes are online however; takeaway restaurants regularly use direct mail in order to encourage locals to order from their establishment, rather than from other restaurants in the area. Their methods vary, from leaflet distribution to text messages and emails. Good examples of this are chain takeaways such as Domino’s, who have become known for including money off vouchers or discount codes with their food. Offers such as the ‘Mega Mix Deal’ and ‘Two for Tuesdays’ are always guaranteed to help customers save money. Once again however, these codes are usually offered on a limited-time-only basis.

What value do discount codes offer for businesses?

As previously mentioned, businesses typically use discount and voucher codes to attract customers to buy their products and gain an edge over their competitors in today’s crowded market. For competitive businesses, using such methods can be a good strategy; studies have shown that by offering a discount of only 10%, they can successfully increase sales, outperforming their competitors. Further research has shown that retailers that have an active discount code in circulation are up to eight times as likely to gain sales. 16% of total sales in 2016 were made up of transactions that had used a voucher or online discount code.

The online world is full of challenges for businesses, from customer retention to the acquisition of new customers – and this is particularly noticeable with social media campaigns. Voucher and discount codes have been proven to help companies increase their brand awareness, as they encourage consumers to follow the business on social media in order to access further discounts and benefits.

Whilst many industries have benefited from the advent of e-commerce, voucher codes also exist outside of the internet. Many companies offer physical vouchers with a discount code to their existing customers as a reward for staying with them, this in turn encourages those customers to continue to use the company for future purchases. Online fashion retailers such as ASOS and Pretty Little Thing regularly include physical vouchers in their deliveries to customers – this encourages them to make further purchases in the future, boosting customer retention.

Businesses typically manage their own voucher codes, distributing them as they see fit. Online voucher code sites such as Groupon however, have become one-stop shops for customers seeking the best discount deals.  According to reports, in the last quarter of 2017, Groupon has over 48.3 million unique customers using the site. It comes as no surprise that discount codes in all forms have become a must-have for consumers in 2018.

Can small businesses and start-ups benefit from offering discount codes?

SME’s stat-ups and small businesses can often see giving out discount codes as a daunting decision to make; owners have to consider whether they can make a profit after the initial loss. As evidenced however, these codes can be extremely useful when offered as introductory benefits, as they can encourage customers to make their first purchase, sign up to your newsletter or recommend you to a friend. The key decision for such businesses is deciding how much discount to offer and when to activate the discount code. If discount codes are used without thinking, they could cause a potential profit loss for companies. When used in the correct way however, they can boost customer retention rates, increase conversions and help businesses to attract new customers.

Sources

https://www.theguardian.com/money/2009/mar/26/discount-codes-online-shopping

http://www.acumendesign.co.uk/our-blog/view/advantages-and-disadvantages-to-digital-vouchers

http://mashable.com/2013/01/21/online-coupons-business/#3O4N2s88dqqP

https://medium.com/hi-kit/the-stats-dont-lie-discount-codes-and-free-shipping-increase-sales-3ae1baa5d936

https://www.statista.com/statistics/273245/cumulative-active-customers-of-groupon/

https://www.shopify.co.uk/blog/15514000-14-ways-to-use-offers-coupons-discounts-and-deals-to-drive-revenue-and-customer-loyalty

I am the founder of Startup Today. I am the main writer and have put in many hours of work into creating this blog. If you want to find out more about me then lets get in contact.

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