How to Calculate ROI from Digital Coupon Promotions
This post will teach you:
- Which metrics are important to measure in discount marketing.
- How to efficiently test different discount variations.
- How to build coupon ROI measuring infrastructure.
In the previous two articles, we talked about assembling a solid coupon infrastructure; the first showed you how to run and manage three different coupon campaigns without spending too much on coupon software; the second provided a few useful tips on how to solve the most common coupon code box issues. So, having covered the basic infrastructure, we’ve reached a crucial point in coupon processing – calculating the return on investment (ROI).
Let’s face it, you can’t build advanced coupon campaigns without measuring the contribution that a given promotion has on your revenue and profits. Why? Because not all deals will work for your business.
It’s no small task to embrace and compare the myriad different coupon types and features. If you want to scale your coupon offering, you have to make sure your marketers put more time and resources into what’s working and improve the tactics that aren’t delivering real value.
The good news is that coupon performance can be quantified provided that you employ the right infrastructure.
In this guide, we’ll show you how to create an environment in which to perform data-driven experiments (or A/B tests) on coupons. You’ll learn how to measure coupon conversion rate like one of the top e-commerce players who invested heavily in their infrastructure.
Voucherify is a coupon infrastructure delivered through API that provides a quicker way to build coupon generation, distribution, and tracking; and it provides a user-friendly interface for creating and managing coupon campaigns.
How to measure coupon redemptions?
Let’s start off with an easy one; You want to push out a public, fixed-code code to promote your brand. Something that can be shared on Groupon or ad banners, e.g. “voucherify-black-friday”. You can create it in minutes with the Voucherify manager. Just to remind you, Voucherify supports five types of discounts:
- Amount (e.g. $10 off),
- Percentage (e.g. 20% off),
- Unit (e.g. 2 free piano classes).
- Free shipping
- Fixed amount
Once the coupon is created, the tracking becomes super simple. In this case, you just watch the number of redemptions.
So, now there’s nothing blocking you from launching next campaigns with different discounts to see how they convert. If you’ve achieved your goal or you noticed that the code is being misused, you can disable it with a single click and any further redemption trials will fail.
And that’s how you can perform your first coupon A/B tests while keeping campaigns under control. All of this is at your fingertips in a simple user interface and no developer has to be involved!
How to test various discount limits?
Now that we have the basic campaign designed, let’s start testing the various scenarios. Supposing your campaign isn’t performing well, what can we do to increase the coupon redemption rates and in result boost the campaign ROI? One of the most common tricks to push customers to quicker redemptions is to put a limit on your coupon code. With Voucherify, you can achieve this in several ways:
- Limiting the number of redemptions.
- Setting the expiry date.
- Defining recurring time periods when codes are active.
- Making coupons active only in particular days of a week.
The campaign manager gives you an easy way to set a timeframe for when the coupon is valid (note: you can define the start date too). You can also limit the maximum number of redemptions to help create the sense of urgency. This also comes in handy when you want to set the maximum number of redemptions, so you’re safe when a campaign becomes unexpectedly popular.
Now, you can seamlessly introduce another factor to your coupon experiments and incentivize customers with promotions like “Today only!” or “Get one before September ends!”.
Where to see the coupon campaign ROI?
To calculate the effectiveness of each campaign you need to be equipped with respective stats and metrics. Different expiration dates or discount type may distinguish promotions that hit right in the tastes of your audience. In the Voucherify dashboard, you can see each campaign with its details and current metrics updated in real-time.
Moreover, a general Campaigns view enables you to compare which campaign performs better in terms of redemption rates and overall ROI.
What are the best marketing channels for coupons?
Alright, so now we’ve built a fairly complex engine to monitor our coupons. But here comes another nice thing about it; with no extra effort, you can prove if all of your marketing channels deliver a return on investment. The idea is straightforward: assign different coupons to separate channels. Voucherify will help you organize the codes into categories so you can filter them out quickly.
Want to explore attribution in-depth? That’s possible too; just let your software developers know what data you want to collect and they can feed Voucherify with details when the redemption is made. With our software libraries, it’s a 15-minute job and, in the end, you’ll be able to see the information right in the metadata section.
So far, you’ve hopefully learned how to run coupon campaigns with a data-driven approach in mind. In an ideal world, this should be enough to calculate the ROI of public coupons and to figure out what discount types yield the best results. Unfortunately, it’s often the case that some redemptions can appear as fraudulent or can simply be made by mistake. This will distort your numbers and can ultimately lead to gaining inaccurate insights.
To overcome this, Voucherify comes with rollback functionality, allowing you to revert any redemption. You can also easily integrate it with your e-commerce system so, whenever an order is canceled the rollback is run automatically.
While talking about marketing channels we need to mention the tracking again. Whether you use emails, SMS or another channel; it’s crucial to control promo messages all the way long. Firstly, you need to know how many of them left the dashboard. Secondly, to properly asses discount performance you need to be sure that every code got to the customers’ mailbox. Voucherify makes it easy by the reports presented in detailed distribution view.
Redemption tracking and measuring coupon ROI would be a real headache without the right infrastructure in place. Voucherify helps you build an infrastructure much faster than if your developers had to do it from scratch. This means you can launch your public coupon campaigns and verify their effectiveness in no time at all.
Increase your coupon campaign ROI with Voucherify