Online coupons were once important to the survival of eBags.com, but they rarely generate loyal, long-term customers, says Jon Nordmark, president of eBags. Users of online coupons represent 31% of sales, Nordmark said at last week’s Shop.org Annual Summit conference in New York, “but 87% make only one purchase, and they have the lowest lifetime value of all customers.”
By almost any measure, they are opportunity shoppers, he said. Customers with the highest lifetime value are worth 15 times more than coupon users. Coupon users are more likely than other customers to provide bogus e-mail addresses. They also are less likely than all others to opt into eBags’ e-mail newsletters and marketing campaigns. And only 11% provide product evaluations and ratings vs. 20% of all customers.
Nonetheless, Nordmark noted, online retailers can’t ignore online coupons and discounts. “Coupon users were important to our survival,” he said, because they generated sales and growth.
Another risk with online coupons is that when a retailer prompts for a coupon code, customers may leave the site in search of one, then never return. Prompting for a coupon code also generates calls to the customer service center from customers asking why they don’t have a coupon and where they can find one, Nordmark said.
Rather than offer coupons or discounts, eBags prefers to use free shipping as an incentive. It has the same effect as a discount and also generates goodwill, Nordmark said. “It creates a feel-good,” Nordmark said. “It makes the brand feel better to customers.”
Further, some brands forbid discounting, which creates other problems. “Lot of brands don’t allow discounting so it creates confusion when customers can’t use a discount on all brands,” he said. “But we can offer free shipping across all brands.” He said eBags did an A/B test offering one set of customers discounts and another set free shipping and learned that free shipping creates higher conversion rates than discounts.
Back...
