Coupon Codes!
Last week, I spent a bit of time on sales coupons for Giftify. Since I have no formal marketing education, I had to rely on common-sense and intuition. Please, feel free to give me feedback on this. I’m really interested to know what other people think of it.
The objective is to be able to sell at a discounted price to select individuals, groups of individuals, or everyone who carries a valid coupon code issued by the vendor. Sounds simple enough.
I thought of a couple of aspects of coupons:
Discount Logic
- Percentage coupon; e.g. 10% off the gift price
- Absolute amount coupon; e.g. $15 off the gift price
- Combinable with other promotions
Authorized User
This is who the coupon is meant for
- a specific user; e.g. A frequent customer, reviewer
- a group of people; this is similar to the individual user, but a little different in the database model
- general public; in this case you want to let anyone with a promosional coupon code to be able to benefit from the discount. e.g. GoDaddy promo codes.
Discounted Merchandise
This is more an implementation issue again.
- Authorize use of coupon on select gifts in the catalog
- Coupon is valid on every item in the catalog
Profit Safety Net
Is the objective of the coupon (promotion, appreciation, etc) worth losing money on certain orders from users with the coupons. For example, a person has a 15% discount coupon, but she wants to use it on a gift with a margin of 10%.
- Coupon allowed to override minimum gift price
- Coupon has a limit
As for implementation, I will give you a brief overview of my design. If there’s interest in seeing more details, please let me know and I will try to make a post. In summary, I used a Single Table Inheritance approach to model coupons in our database. That is, all various types of coupons (Percent/ Absolute/ Limitless/ Limited) are stored in a single table. I store coupon details, as well as the type in the table. In the controller code, when retrieving a coupon from the database, I look at the type first and use the correct code based on that.
That’s all. Please, let me know what you think of this post. Was it useful to you? Do you know of a better resource online which captures the information in this post and more?
btw, here’s a coupon code for Giftify to show my appreciation for reading this blog 
SOJOODIBLOG
Something I learned last year is that when you’re dealing with smaller amounts people tend to feel more value with an absolute dollar amount rather than a percentage. Otherwise combination gifts are good (essentially you’re trying to create value and make more by making people think they’re spending less. Did you think of doing a sliding scale (i.e. If you spend $100 you get 20% off, spend 75% 15% off, etc).
The only problem I find with coupon codes is the code itself doesn’t necessarily encourage people to spend if they were never planning to spend in the first place (does this make sense) so you’ve got to create the initial incentive to buy a gift through giftify.
Comment by Risa — November 25, 2007 @ 11:31 am
My suggestion would be to stick with percentage discounts because absolute $ amount discounts provide incentive for people to buy less expensive items. (try and get them for as little as possible)
UNLESS, you implement some logic that has thresholds for absolute $ discounts…
ie items under $20 receive $4 off
items between 20-50 receive $8 off
items over $50 receive $15 off
Of course when you do this, you want to make sure that none of your products are priced at (20-24, 50-57) … so the discount does provide incentive for a shopper to buy something more expensive and net you less $$.
As for your question about whether you should ever take a loss on a sale…. it completely depends on the market research and whether the type of service you offer has a high % of repeat customers or if you are constantly dealing with one-off customers.
Comment by Todd — November 25, 2007 @ 11:34 am
very interesting, but I don’t agree with you
Idetrorce
Comment by Idetrorce — December 15, 2007 @ 7:46 am
Hi Idetrorce, Not sure which you don’t agree with. Could you elaborate? Thanks
Comment by Sahand — December 19, 2007 @ 9:02 pm