Do Coupon Codes INCREASE Checkout Abandonment?

couponsIt seems like a lot of my recent blog posts are coming out of the “Conversion Tips”, I’m posting to Twitter.

(Click here to follow me on Twitter.)

One of my recent Conversion Tips, that I received a ton of questions about was the following…

“Conversion Tip: Turn the “Coupon Code” field off in your checkout process. It usually INCREASES Cart abandonment.”

Many people asked me WHY having a coupon code field in their checkout process could actually increase shopping cart abandonment?

There are actually several reasons I recommend against having a coupon code field in your shopping cart.

The first reason comes out of observations I’ve made during usability testing. When I conduct usability tests for clients, we recruit actual people to navigate the client’s website and try and perform certain tasks to identify points of failure in the navigation process and user experience.

A behavior I’ve observed in multiple usability tests is website visitors who stumble across a “coupon code” field during checkout actually hitting the back button and searching the merchant’s site for a discount or coupon code.

Then, if they can’t find the code on the merchant’s site, they often leave the site entirely to search in Google for the coupon code.

And at Google, they often wind up on one of the affiliate based coupon code sharing sites where they are exposed to competitor’s coupon codes!

When a visitor spots your coupon or discount code field in the checkout process, it actually creates doubt for them if they are not shopping with a coupon. Just having the field in the shopping cart can make visitors feel like they’re leaving money on the table.

And once they wander off into cyberspace looking for the discount, odds are they are going to become distracted and not return.

My own split and multivariate test results back this up as well.

Here are the results of just one of many tests I’ve run over the years on coupon codes in the checkout process.

TEST: (Straight A/B test for an online retailer in the women’s clothing market)

Control: Coupon code on the first page of the checkout process.

Variation 1: Coupon code removed.

Results:

Control: 3.8% conversion rate. (967 sales / 25,489 unique visitors)

Variation 1: 5.1% conversion rate. (1,276 sales / 24,991 unique visitors)

Summary: This was a rather lengthy test because the client was highly resistant to removing the coupon code field. And when they saw the initial test results they were highly skeptical that just 1 small change had boosted conversions by so much.

So it took over 2,100 sales before they were finally convinced that the test results were valid!

But because their site was doing over $250,000 per month in average sales, the 34%+ boost in conversions added over $1,000,000 per year in an additional sales volume.

Not too bad for a single change…

Another one of my clients invested in a website evaluation in which one of my (many) recommendations was to remove the “discount code” field from their shopping cart.

Because this was a fairly fast and easy change to make, he did this immediately.

And, because of this single change he reported a 70%+ increase in sales over the previous month!

(Now, to be fair I did not verify that number personally, and from what I understand he did not run a spit test to 100% validate the increase in sales. But from what he told me this was the only change he made to the site, and sales the following month jumped by over 70%.)

And if you are not convinced yet that you need to test your coupon/discount code, take a look at the results of a checkout abandonment study done by PayPal and comScore.

When asked for the most common reasons they abandoned the checkout process, 27% responded that they “Wanted to look for a coupon”.

A couple additional things to consider when using coupon codes in your marketing are…

You may be attracting the WRONG customer type. Very often new customers who come into your sales funnel via couponing and discounts are “bargain hunters”, who have little if any brand loyalty. They will simply follow the “cheap train” wherever it goes.

Countless studies of offline consumer couponing behavior show that coupon users have startlingly low brand loyalty. They will simply jump from brand to brand following the merchant or brand that is willing to sink to accepting the lowest profit margins.

(And surprisingly, from my own experience, the bargain hunters and discount seekers are often they biggest headaches from a customer service standpoint as well.)

You also, may be actually training you visitors to NOT BUY unless there is a discount.

While I’ll save going deep into this topic for another blog post, as a marketer you need to be very careful how you “train” your visitors to behave and respond.

While discounts and coupons can add a nice, temporary surge of sales, they can also become a bad, profit crushing addiction.

Not only does regular discounting cut deep into your profit margins and markups, but your regular customers will often begin delaying purchase decisions until the next coupon or discount is offered.

This can create a highly negative cycle in your business where your sales volume actually becomes dependant on regularly offering margin-crushing discounts just to keep cash flowing through the business.

And finally, while people don’t want to pay any more than they have to for things, we’ve all been conditioned to equate price with quality. All things being equal, most people believe that higher price means higher quality or value.

So when you slash prices and regularly offer deep discounts (without giving a strong and believable reason WHY you are offering the discount) you run a great risk of cheapening and devaluing your brand or product in the eyes of your customers.

But what if you STILL want to offer coupons and discounts?

Some online retailers actually do get a decent amount of traffic based on their couponing strategy.

And when done properly, coupon or discount codes can be an effective way to track the ROI of your offline advertising.

So I have 3 ways around the problem if you still want to offer discounts or coupons.

First… Simply hard code the discount offer into the URL. If you have the technical ability with your shopping cart system, I highly recommend that you use a URL parameter that includes the promo code so the discount is automatically applied at checkout.

That way you can still offer the discount, track the response AND get rid of the conversion crushing field in checkout.

Second… If you absolutely MUST have a coupon or discount code field, then take great care (and testing) in what you NAME that filed.

Don’t name it “coupon code” or “discount code”.

In my testing I’ve found that changing the name to “gift code”, “gift certificate” or “promotional code” can often reduce or eliminate the negative impact.

Amazon.com actually does a great job with how they describe this field.

azn-coupon

And Third… Even if you find a way to label of describe the field that minimizes checkout abandonment, you still want to move the field as deep into the checkout process as possible.

Don’t put it on the first page of your cart! By moving the field deeper into your checkout process you are allowing your visitor to become more invested in and committed to completing the checkout.

Feel free to add your thoughts, comments and experiences with online coupon codes during the checkout process in the comments below!

About the Author

Eric Graham is a serial entrepreneur, author, speaker, copywriter and consultant. Enter your name and email address below to get notified when new response boosting tips, tested conversion strategies, updates, articles and videos are posted.

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13 comments to Do Coupon Codes INCREASE Checkout Abandonment?

  • [...] This post was mentioned on Twitter by Liew Zhao Yao, Eric Graham. Eric Graham said: @JaLaDesigns @LiewZY @mainecopywriter @CopywriterMaven Just answered your Q's on my blog: Coupon Codes vs. Conversion: http://bit.ly/7zUkpp [...]

  • Dan Grubs

    WOW! Great post. This was very informative.

    I’ve never thought about it before, but I do exactly what you described.

    When I see a coupon code, I automatically hit the back button and begin searching the web for the code.

    Most of the time I either never find one, get distracted or wind up buying from a competitors site.

    But I never thought about removing the field from my cart.

    I don’t even use or offer coupons on my site, yet 1shoppingcart automatically puts it in the checkout.

    Do you know how I can remove it?

    Thanks for all the great stuff you post here!

    Dan

  • Dan,

    Thanks for your comments.

    Actually one of my coaching clients had the exact same question so I recorded this video:

    http://www.conversiondoctor.com/conversion-blog/how-to-boost-conversion-rates-at-1shoppingcart

    Enjoy!

    Eric

  • Thanks for this post, I’m not at all surprised that using coupons would attract the ‘wrong’ type of customer – the ones with extremely low brand loyalty.

  • Vonalda

    Hello Eric!

    This is great information. I have thought this very thing (as a customer) but certainly did not have the testing to prove it – but you do! As a customer, I really do not like to see the “coupon code” unless I have one, of course.
    It does make me feel that others are getting a “deal” but I am paying full price – and with that, a sense of being ripped off.

    I do not feel that it’s about low brand loyalty – it’s human nature to want some kind of a “deal” – and when used as a reward (for someone who took his/her time to come to a webinar, attend a seminar, having previously purchased from you, etc. – I think it’s perfectly acceptable to offer a discount. But it’s a mistake to shove that in the face of others.

    As marketers, I think we need to pay more attention to how we feel in the process as customers and actually apply what we learn – in other words don’t get so carried away with being a “marketer” that you forget what it’s like to be the customer.

  • This is an excellent post. You’ve won a new reader!

    I’m working on the checkout process of a new site and, in addition to your great tip on increasing opt-in rate, this is another excellent gem of advice. I’ve zapped the coupon code field and I’m changing my approach for our “happy customers” list.

    Keep up the great work,

    Jonathan Wold

  • Social comments and analytics for this post…

    This post was mentioned on Twitter by conversiondoc: @JaLaDesigns @LiewZY @mainecopywriter @CopywriterMaven Just answered your Q’s on my blog: Coupon Codes vs. Conversion: http://bit.ly/7zUkpp...

  • Hi Eric,

    Really enjoyed this post. Got here via Terry Dean’s newsletter, and it sounds like you two are on the same “test everything” mindset.

    I’ve argued FOR the promo codes, especially when they can integrated with an affiliate code. This is, of course, until I did some measuring of my own.

    An interesting slant to this is HostGator, who offers coupon codes for a new account signup… and a simple google search reveals TONS of available promo codes! So those who hesitate to buy until they have a code, don’t have to go far to get one.

    But not very feasible for the typical online marketer…

    Anyway, thanks for the read, and the great blog here!

    Dave

  • I’ve noticed a lot of sites now host a page with their own coupon codes. The codes are either very small or only applicable to certain products, etc. The page is typically not linked to (overtly) from the main site, but comes up in search results.

    If a site has strong enough “Google Juice” for their own brand, that page will be the first hit for “SITENAME coupon codes”.

    For example I see an Overstock.com page as the first result for “overstock coupon codes”.

    I wonder what you think of this practice. People will still leave the checkout temporarily, but they’ll be less likely to stumble across competitors. Perhaps finding the lowball discount code will make them more likely to checkout.

  • The idea of a completely separate URL for coupon code checkout is intriguing, as having a blank ‘Coupon Code’ field at checkout tells the customer that unless they have a coupon code, they’re paying too much.

    The well known online shopping sites that continuously promote coupon codes are somewhat immune to this, as a large percentage of their buyers use coupon codes, and they likely have that built in to their pricing.

  • As marketers, I think we need to pay more attention to how we feel in the process as customers and actually apply what we learn.

  • Hey Eric,
    I see myself trying to find a coupon code online, if I’m asked one at the checkout, so I completely agree with what you’ve said.
    However, what would be an intelligent way to give some people a discount without doing it manually?

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