With only a week until the Black Friday kickoff of the holiday shopping season, e-commerce marketers have already started promoting their “sales,” “specials” and “unbeatable prices” in an effort to attract more customers.
Promo codes are a common e-commerce tool for competing on price, and one that we’ll see used widely over the next month and a half. But, interestingly, marketers have little data available to them about what types of results they can expect when running online incentive campaigns.
The effectiveness of a promo code varies depending on both the e-retailer’s industry, as well as the channel through which it is offered. We tracked promo code campaigns through the third quarter of 2016 for both post-abandonment emails and onsite prompts. We gathered digital coupon campaign data across 2,500 companies and over 25 sectors.
Our analysis features a number of insights that can help marketers make better informed decisions about how to best leverage promo codes, both in their 2016 end-of-year efforts as well as their 2017 campaigns.
There’s clear evidence for higher conversions with promo codes
When featuring a promo code in a post-abandonment email, the average conversion rate rose from 6.4% to 21.1%, or more than a 200% increase. Looking at onsite prompts with and without promo codes, conversion rates jumped from 1.2% to 7.8%, an increase of more than 500%.
It’s by no means shocking that adding a promo code results in an increase in the conversion rate. Still, there are a couple of interesting points to note:
First, for people who open an email that contains a promo code, the chance that they’ll convert (21.1%) is almost three times greater than if a promo code is presented in an onsite prompt (7.8%). Thus, marketers should consider emails as an effective channel for offering promo codes. On the other hand, marketers should also consider onsite prompts which immediately re-engage customers to entice them to complete the purchase as they are leaving the site.
Second, an onsite prompt has a low chance of converting (1.2%) unless it includes a promo code. Since onsite re-engagement is a key component of any remarketing strategy, marketers should include the use of promo codes to increase their effectiveness.
Many popular holiday items see big sales uplifts from promo codes
The good news for many e-commerce marketers is that promo codes are highly effective in driving the sale of popular consumer holiday items.
For instance, when looking at post-abandonment emails, jewelry and watches e-tailers saw a 54% conversion rate with a promo code (compared to a 6% without), for an uplift of 48%. For onsite prompts, mobile providers saw a 33% conversion uplift, and baby and infant e-tailers saw a 27% uplift.
Different industries see different results
Aggregate data can be useful for identifying trends in the relationship between promo codes and conversions, but it is by no means the whole story. When looking at the breakdown of promo code effectiveness by industry, it becomes clear that they are more effective in some and less in others.
Consider e-retailers of experience events like concerts and comedy shows, which saw a significant increase in conversion rate amongst opened emails when they included promo codes (81%, compared to 9% without a promo code). However, the uplift was not nearly as impressive in other industries. For the home furnishings and goods e-commerce sector, the average conversion uplift for adding promo codes to emails was less than 1%.
The takeaway for marketers is this: You’ll almost certainly see an increase in conversion rates when you add a promo code, but the degree of uplift will vary depending on the types of product you’re selling. That’s why it’s important to track your promo code conversion data, and weigh the benefits and costs of promo code campaigns.
Based in the United Kingdom, Ve Interactive is a provider of online marketing and advertising services.