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A recent survey from RetailMeNot found that deals, discounts or sales influence 56 percent of online purchasing decision in the US. According to BIA/Kelsey’s Local Business Monitor, SMBs estimate 17.7 percent of their total business over the next year will come from offers and promotions. Based solely on the bottom line, it is easy to understand why consumers love coupons, but why should your small business embrace this trend? The simple answer is — hormones.

The power and popularity of promo codes goes beyond saving a couple bucks. Research shows that coupons can actually affect brain chemistry. Online shoppers who received a $10 coupon had 38 percent higher oxytocin levels and were 11 percent happier than those who didn’t get a discount. “Getting a coupon, as hard as it is to believe, is physically shown to be more enjoyable than getting a gift,” said Paul J. Zak, Director of the Center for Neuroeconomics Studies at Claremont Graduate University.

That ability to trigger a surge in feel-good hormones means you can create a positive bond with your customers. And happy customers who are emotionally connected to your business will spend more money, leave positive reviews and come back again. So what are you waiting for? Let the chemistry experiment begin!

Start with the margins

When it comes to deciding on what discounts will work for you, crunching a couple numbers can go a long way. When you hear horror stories about daily deals gone awry, it is a safe bet that volume and margins were the culprits. Running your own coupon campaign gives you more control over volume, but you still need to calculate and understand your gross margins before jumping in. The basic equations you can start with are:

Revenue – Cost of Goods Sold = Gross Profit

Gross Profit/Revenue = Gross Margin

Let’s say you sell cowboy hats for $99 and the total cost of carrying those hats is $66. You have a 33 percent gross margin to work with. So, you could offer customers an enticing 30 percent off and still make a profit. Or maybe you could put out a smaller discount of 20 percent and invest in a PPC campaign promoting your coupon code. Try a couple safe offers and track the results before getting into riskier loss leaders. Just remember coupon codes are an acquisition cost that should align with the lifetime value of a new customer. How many hats does a cowboy really need?

Create, test, refine, repeat

Promos are the perfect opportunity for A/B testing, and copywriting is an easy place to start. Should the offer be “take 20% off” or “save 20% on” your purchase? I recently helped with an A/B test comparing “off” versus “on” for an email promo. In that instance, variations of “off” beat variations of “on” in click-through rates as well as conversions. And should you call your discount a coupon, an offer, a promo, a rebate, a voucher or just a code? Voucher is a common term in the UK but may confuse American customers, while a rebate has different associations than a coupon.

Other things to compare are percentage versus dollar discounts, the length of your promotion and even the code itself. Results can vary based on the target audience, the product, the competitive landscape and even the season. So brainstorm, test away and see what resonates with your customers.

Maximize the social love

Discounts help reduce the monetary cost to your customers and many of them will return the favor in social currency. According to Beyond, 60 percent of consumers are willing to post about a product on Facebook if they were offered a deal or discount. Since 46 percent of people consider “liking” a brand on Facebook a recommendation, even small actions on the platform can add value.

Consider trading a code for posts, likes or reviews to get an extra boost for your social marketing efforts. In addition to increasing your reach, it’s a great opportunity to turn those happy brain molecules into a tangible connection. You can extend the conversation with a satisfied customer and lay the foundation for repeat business. A recent Twitter study found 86 percent of users intend to make a future purchase from an SMB after they follow them on the platform.

Tools of the trade

Coupons come built in to the Bigcommerce product. Standard options include free shipping, a percentage off each item, a dollar amount off your entire order, a dollar amount off each item and a dollar amount off shipping. We also integrate with multiple apps, like Justuno, for advanced functionality like social coupons. Now go put this chemistry lesson into action!

Leave a Comment
  • Couponzpoint

    I really love this article. Thanks for sharing this and kindly visit us to get more offers, discounts and coupon codes on

  • That is a great point Emilian, when I worked at Offers we used a variety of cross-cultural words for discounts, definitely helps with search traffic. And yes, Living Social and Groupon can be interesting experiments, though I’d definitely do your research and proceed with caution.

  • Emilian Felecan

    Using the word “discount” would work in the US and across the pond. Another way to use coupons is through a LivingSocial / Groupon promotion which will drive traffic to a store and get customers to buy from you. Make sure that you can fulfill all those orders once they come in though!

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