The “to coupon or not coupon” debate is an age old one in affiliate marketing that has no universally correct answer.   Coupons can be a great way to generate business with new or repeat customers and can also be a great tool to help you accomplish specific business goals.  The key though is to be strategic in your implementation of coupons and coupon codes.

Before you set up a promotion, ask yourself a few questions:

1. What goals am I looking to accomplish with this coupon?
2. What is my targeted cost of acquiring a customer?
3. Am I more concerned with improving conversion alone? Or am I more focused on achieving a specific value per sale from the promotion?
4. What is my competition offering?
5. What has the higher perceived value to my customer – free shipping or a percentage or flat rate off of the purchase?
6. What can my margins support?
7. What is the likelihood that new customers acquired will purchase from you a second time?

All of the questions above will give you some guidance as to how to structure your coupon promotion.

We’ve seen several instances where the questions above weren’t asked when coupon deals were formulated and it ended up costing the merchant in either a failed promotion or in terms of lost revenue because the offer was too generous.

Here’s an example – you want to have a quick sale to generate some extra revenue during a slow period – you have some healthy margin on your products so you decide to run a sale at 30% off or better.   So you set up a coupon for a flat 30% off with no “qualifier” and when the offer goes out, you see sales increase, but the average order falls through the floor.   Maybe that coupon should have been for 30% off all orders of $50 or more?   Also – if your cost of shipping was effectively 15-20% of cost, maybe you could have run an offer like “Free Shipping on orders of $60 or more” and actually been a bit more profitable.

Definitely also pay attention to your net margin  – especially if you are selling physical products and make sure that when you add up the affiliate commission, the network commission and the coupon that the offer still made sense from a profitability perspective.   You’re in business to make money right ?  The only exception to this would be if you know that you sell really effectively to existing clients and you were thinking “customer acquisition”  with future sales or cross sell/upsells in mind.  There are few things worse than running a promotion that you think generated dynamite results until you ran the numbers to find out that you actually lost money.

I’d also encourage you to work closely with some selected coupon affiliates to help in developing your offer.   They know their audience and they know what makes them tick and can give you the benefit of the experiences they’ve had with similar offers.