Discount codes - what’s the problem?

Monday, June 23rd, 2008 Affiliate Stuff, Debate

Well, it looks like there’s another great debate about discount codes with comments spilling out onto the blogosphere. As a merchant who will soon be distributing codes and as an owner of a discount code site, I obviously have some opinions on the matter. I have no answers, merely some more thoughts.

I think the biggest issue here is that there are so many issues surrounding discount sites.
Unethical practices

Probably the most prominent complaint is the ‘click to reveal’ dispute. Should code site owners be allowed to hide the codes until users put an affiliate cookie on their machine? Or rather, who else should be allowed to use ‘click to reveal’? Can a price comparison site tell users they must ‘click to reveal the cheapest price’? Should review sites have one paragraph, then a ‘click to reveal the rest of this review’?

It seems most affiliates agree this method is OK, as long as there is a valid, working and in date code behind the ‘click to reveal’. But the grey line appears again when the code happens to be a sale, a free delivery depending on spend offer or other offer that doesn’t require a code.

Savviness of customers

We have to face the fact that customers are getting more savvy. I’m sure, just like me, you have used a price comparison site to quickly find the lowest price for a particular product, used a cashback site to get money back / points and used a discount code site to get a discount. Thanks to the phenomenal expansion of the internet and it’s users, you’re guaranteed to be able to find a product in many different online stores and therefore there is a cheaper product somewhere.

Discount code functionality

It’s pretty clear that most discount code sites are catering for users who get to the basket, see a box saying “voucher code” and then decide to search Google for “brand + voucher code”. I’d hazard a guess that the vast majority of merchants who offer discount codes only do so by adding a box during the checkout process to enter a code, therefore enticing customers to go find one. After all, why spend 100% when there are other customers who are utilising this box?

So should this box be removed or used in a different way? For example, a cookie based solution where users must come from a particular code site in order to have that discount code activated, or maybe we should have less generic codes that take X% off the basket and more codes that are only for particular categories/products?

Merchant marketing

If merchants are going to put a box during the checkout process for a discount, surely they expect the vast majority of customers to go on the hunt for a code, so why not apply a blanket discount to all products, rather than giving out discounts?

Discount codes are a marketing tool, a psychological ‘trick’ for consumers to believe they’re getting a better deal, just like they price products at £9.99 rather than £10.

Last referrer wins

And here’s one of the core issues at the heart of the debate - are voucher code sites overwriting cookies previously set by affiliates? The content affiliate persuades a customer to buy a TV, they’re at the checkout and ready to buy, see a code box, go to a discount site, click to reveal and buy the TV. The code site owner gets the commission. Should the code site get the commission for what was effectively the content owners’ sale?

Perhaps, but then if we rewarded everybody for the sale, there would barely be any commission to go around. There are so many points in the marketing chain, how do we know who really made the sale? I sees a videogame on a TV programme, then watch a TV advert of merchant selling the videogame, go on Google and click PPC advert which is just an Adsense site about the videogame, click on a link to a content site, I chat to someone else about the site, read a review in a magazine, do a price comparison, get a discount code then get some cashback… who sold the videogame? Which point in the chain was the point that truly persuaded me to buy the game from the merchant I bought it from?

Finally

And on a final note, it seems a shame that despite all the whinging and debate, that this post on the forums was overlooked.