Voucher codes – friend or foe?
Voucher codes can be quite a divisive tool when it comes to online strategy. Depending on your experiences and research, you’ll see them as a fantastic conversion tool to help deliver increased sales, or a margin eater that means you have to work harder and harder to deliver the profit levels your forecast demands.
The affiliate channel, particularly, is associated with heavy use of voucher sites and this end-of-funnel activity costing retailers important margin when, in the opinion of some, the code and affiliate were not needed to make the sale.
With that in mind, we at Fuel Affiliate decided to review the sales of one of our client’s Quarter 4 sales from 2021. This client is one of our most ardent advocates of voucher codes and has them available year round – both on the website homepage and exclusively for affiliates. From this, the expected customer journey is that a voucher code will almost certainly be used in a sale – even more so when a sale comes from an affiliate partner.
We decided Quarter 4 would be a good time to review, with the huge spike in online shopping due to key dates like Black Friday/Cyber Monday and general Christmas gifting – peak shopping time! Our findings, after analysing over 2000 sales over the 3 month period, came back with some really interesting findings.
Firstly, for a brand with voucher codes always available and prominently displayed on the homepage, they still saw over 40% of their affiliate sales completed without a voucher code being used. So from a margin perspective, that means just below half of their sales from affiliates were full priced sales despite the expectation that they would be end-of-funnel contributors picking up sales by presenting a code to customers looking for deals.
Of those full priced sales, we also saw that actual voucher code sites contributed 20% of those sales. What we can deduce from this is that voucher code sites still delivered a healthy amount of full priced sales (1 in 5) despite the traditional thinking that these sites can only contribute sales by pushing voucher codes that eat into margin and piggy-backing on sales from other channels.
Interestingly, we also found that there was a benefit in order value when a code WAS used by customers. As a direct comparison, we saw an average order value of £104.31 when a code was used, whilst orders without a voucher code came in at £96.26. So, our research here clearly shows that having a discount available encourages customers to spend more on their order – helping our client to make more revenue from their customers by incentivising them to spend a little more money, or add an extra product, into their basket.
At Fuel Affiliate we completely understand that clients may not want to offer voucher codes regularly, or at all in some instances, but we would always encourage our customers to remain open minded to engaging them at the right times. The average order value benefits, as well as the increase in conversion rate you can enjoy from these incentives, can be hugely beneficial.
This analysis has also shown that voucher code sites do not just need to have voucher code offers to make an important revenue contribution to a programme. By showing the ability to deliver large numbers of full priced sales – or at least sales without using a code – it shows that these partners have their own audiences of shoppers that a brand can benefit from without necessarily having to offer that saving to get them to buy.
With all of this in mind, we at Fuel Affiliate have the tools and know-how to establish whether or not the voucher code model is something you should consider for your business. If it is, then contact us today – we cannot wait to get you started!