Coupon System – Should you Build or Buy?
Did you know that over 50% of customers spend around two hours each week looking for coupons? Or that email messages that include a coupon have a 34% higher click-through rate? The best discounts aren't about mindlessly slashing prices. Coupons are about how customers perceive numbers, products, and what they expect from your brand specifically. As your business continues to grow, you will soon be faced with a far-reaching choice – should I build or buy a coupon system? Finding the right answer to this dilemma can effectively make or break your company's growth.
With this in mind, we have put together a practical guide to coupon systems that should help you make a crucial business decision for years to come in terms of coupon systems.
Note: Are you in the procurement process for a coupon software? Check out our Promotion Engine RFP templates to discover ideas for requirements and use cases.
What is a coupon system?
You don't need anything other than a piece of paper and a pen to create a simple coupon. You can think of a dozen random strings of characters (e.g., ABC786), write them on cards and give them to customers or publish the code on social media, asking your audience to use it to get a discount. In practice, however, there are thousands of customers, multiple dependencies, and tight budget limits. In other words, you need a reliable tool to generate, send out, and monitor coupon codes.
Coupon systems allow businesses to create, distribute, and track digital coupons. Such a system can also help your company analyze customers’ paths to purchase, track affiliate links, prevent coupon fraud, and build customer engagement and loyalty.
Before diving into the pros and cons of buying a coupon system, let’s first break down coupons into chunks to fully understand what are the must-have coupon features.
- Unique or fixed (standalone) codes
A bulk of unique codes campaign will generate an X number of codes with a unique pattern. Each code will then be assigned to a singular customer profile. Bu using unique codes, you can see who, when, and how redeemed your codes.
In the case of a standalone code, your coupon system will generate one code shared with customers on multiple channels. Here, the process of assigning codes to customer profiles is not necessary. Instead, to protect your margins, it is recommended to set an overall redemption limit or limit redemptions per customer.
- Type and value
These are the most critical parameters of your coupon code. The proper combination of these two will decide whether customers use or ignore your offer. There are four types of coupons that you can use:
- Unit (e.g., a free lipstick added to the order)
- Free shipping
- Fixed order & product price
- Start and expiration dates
Predefined coupon activity windows help you run and maintain multiple campaigns across channels. They also give you the possibility to evoke urgency – your coupon campaign’s second most impactful factor.
- Redemption limits
Coupon redemption limits control the lifecycle of your coupon. By choosing one of three options (single redemption, X redemptions possible, unlimited redemptions), you can change the way customers interact with your coupons.
- Coupon code pattern
You should have the possibility to precisely define the code pattern. This way, your team can track and manage codes when the campaign is live.
- Usage limits
With a badly-planned coupon strategy, you run a risk of losing revenue – a coupon code going viral is a real nightmare for most marketing and sales staff. Luckily, you can protect your budget better with coupon usage limits, such as limiting coupon redemption to customers from predefined segments or orders with a minimum total worth.
Building a coupon system: pros and cons
Time is money, especially in the context of software development. If you decide to build a coupon system from scratch, you need to have a concept, precise requirements, and a development team with a lot of free time on their hands. If you have never had any experience with coupon systems, you can anticipate plenty of unexpected development work and showstoppers ahead. However, in-house coupon systems also offer unique benefits.
Advantages of building a coupon system:
- You get full control over how your coupons will play out.
- Your developers will make sure that the new coupon system is fully compatible with your current infrastructure and marketing stack.
- You get to decide about the development timeline and sprint planning.
- You can address highly business-specific use cases that are not fully covered by pre-built coupon systems.
Disadvantages of building a coupon system:
- You need to divert attention and developmental resources from building your core product.
- Your team may not have enough technical expertise and resources, causing you to lose time and money on solutions that won’t scale.
- You will pay a high price for maintenance, QA testing, and monitoring the new coupon system.
- You will need to continuously develop the product if you want the system to be always able to cover your use cases.
- You will need to build custom integrations from scratch if you want the coupon system to operate smoothly in your ever-evolving technological stack.
If you decide to build a new coupon system from scratch, you essentially get a brand-new product to develop and manage. Such an approach makes sense only if you have a qualified tech team at hand and enough resources to spare. Our experience at Voucherify clearly shows that building an internal solution is more expensive and resource-consuming than investing in a ready-to-go coupon system.
Buying a coupon system: pros and cons
Even the most straightforward coupon campaign requires some must-have systems to generate, distribute, validate, and track coupon codes. Considering the modern e-commerce landscape, it also needs a coupon system flexible enough to connect with external apps.
Here lies the crux of the matter – you can spend time, money, and resources on building an in-house solution that is sure to cover your use cases or save money and time with a market-ready coupon system that may or may not cover all of your requirements.
Advantages of buying a coupon system:
- You can save time and money on development and turn all your focus on improving your core offer.
- You don’t have to worry about maintenance, QA, or documentation.
- You can introduce coupons much faster than in the case of in-house coupon systems.
- You can enjoy a much higher ROI and business value.
- You get to take on a client’s role indulged by a service provider with round-the-clock support and new functionalities development.
Disadvantages of buying a coupon system:
- You may not have all the needed building blocks to create your dream coupon campaign right from the start.
- You may encounter problems with integrating a market-ready coupon software with your current technology stack.
- The coupon system of your choice may not scale or operate the way you would like it to.
To conclude, both approaches entail different benefits and potential risks. However, by purchasing a coupon solution from a trusted organization, you can use their expertise on how the coupon system should work. You also can get to market much quicker, and fully commit your team to improve the core product and not get distracted by a separate tool to develop and maintain.
Before selecting a coupon system, there are a few questions that you need to ask yourself:
Does the coupon system scale with you?
The usage-based pricing plan allows you to start small and gradually estimate the long-term strategy launch cost.
Does it encourage automation and A/B testing?
Marketing automation helps you get closer to customers than ever before. The coupon system of your choice should:
- Let you send personalized messages with coupon codes either via built-in messaging or 3rd party integrations.
- Create dynamic customer segments based on plenty of custom attributes.
- Roll out multiple coupon campaigns with clearly defined redemption rules.
Is it developer-friendly?
If you are not a developer yourself, you are likely to overlook this point entirely. That’s a mistake that you should avoid at all costs. You should look for solutions that offer:
- Well-documented API.
- SDKs for the most popular programming languages.
- Technical support.
Does it help you achieve your marketing goals?
You shouldn’t roll out a marketing campaign with no apparent purpose in mind. Without a staged strategy, you won’t be able to select a coupon vendor that will fully cover your needs. Remember to base the coupon system on your use cases, not vice versa.
Does it allow for custom redemption rules?
If you want to keep your coupons safe, which I am sure you do, you will need a system that allows you to limit coupon eligibility to selected customers, orders, products, and other attributes.
Does it track your performance?
Nobody likes staying in the dark. To be successful with your coupons, you need a coupon system that allows you to measure redemption data and build better campaigns in the future based on the collected data.
Voucherify is an all-in-one coupon system that lets you generate, distribute, and track digital coupons. For Voucherify, the answer to all the above questions is a loud and proud ‘yes.’ Explore more functionalities of the Voucherify coupon system to reduce unnecessary spending, secure your offers, and boost promotional ROI.
Use market-ready coupon system and start a campaign today