5 Huge Mistakes with Coupons for Affiliate Programs and Merchants

Coupon sites can be a great way to drive sales to your organization or store (here is my post on coupon sites not being your enemy), however many merchants are not working with them in a way that actually adds value to their company or bottom line.  The problem is that many companies put people just out of college or who do not understand what increases a bottom line and what steals from you is.  Other times they are too scared that removing high sales drivers because of adware theft or coupon theft will get them fired, even though they are actually increasing their companies bottom line.  Other times the new Affiliate Manager just doesn’t care or gets a bonus based on sales so they allow this.  One final problem for the people who don’t actually know is that they don’t have a resource to learn from on how to add value and drive incremental sales to their company with coupon sites.  That is why I wanted to write this post about 5 mistakes companies make when working with coupon sites.

1.  Allowing Bidding on your trademarks or URL + Coupons

This is one of the worst things you can do.  You are  giving away your current customers and giving away free commissions.  There is absolutely no work and no value from having Affiliates bid on your trademark or url with the words Coupon, Coupons, Deals, etc… after it.  These are people who already know about your store, know what they want and are ready to check out.  The keywords cost no money at all and it is an instant profit for the Affiliate and an instant loss for you.

If this is in your program, you are paying commissions for Affiliates poaching your current customers and you are losing money and your margin on coupon codes, commissions, network overrides, etc…  There is no reason on earth you should pay commissions on these types of sales.  Instead you should ban this behavior and remove the Affiliates who are bidding on these terms.  These Affiliates never actually send you a new customer and add zero value to your company in my opinion.  You may want to run a test and remove these Affiliates and watch the total sales for your company.  Watch and see if it decreases or if other channels rise by the amount that the Affiliate program declines.  You’ll be surprised at how much you were losing from this type of what I consider theft.

You could also lose a non commissioned current customer for life.  Now that your current customers know where to go for a coupon, even though the coupon site did not refer them to you, they may go right back to that site first.  This would make it appear that the coupon site is the original referrer, however the reality is that they are not.   You are the actual referral to them and losing money each time they have a sale.  You have now lost a full margin and profitable customer and turned them into one that will always cost you margin and money, unless you remove that Affiliate.  You are basically handing your customer list over to the coupon sites and letting them tag your customers so they can send them back to you and you have to pay them for this.  It makes no sense!

2.  Coupons that eat your margin on low margin items.

Another thing merchants do that isn’t good for them is offer coupons that do not add value and actually hurt your store.  20% off the entire store can be damaging if your margin on some or popular merchandise is 20%.  For each sale like this, you have now lost money because of network fees, commissions, etc…  If you pay a 5% commission and have a 20% off coupon, you are now in the hole on every sale for 25% + network fees.  Instead, offer coupons to upsell products, buy 2 of these and get this product at 10% off.

The product with the percentage off has a larger margin of 30% and is something you may not have sold without the coupon.  You can use this coupon to bring awareness that you have this product.  Impulse buys are another great option.  Buy two of this and get this for free or 50% off.  Another coupon is a free shipping coupon at a certain sales level.  If the person spends $75 or more, you will give them free shipping.  If you don’t normally have a price range for free shipping, this can help up your AOV.  Just make sure the coupon price is above your normal AOV and the cost of shipping is less than the loss of margin from commissions, packaging, shipping, etc…  You can also try coupons based on products, categories or on purchasing from multiple categories like buy any product from housewares and one product from accessories and get X% off.

3.  Allowing partners to post reveal or click here when no coupons or deals are available, or in general.

This is just a bad practice.  You’ll find many coupon sites saying click here to reveal a code.  Not only does this set the cookie, even if there are no coupons or deals available, but it guarantees you’ll have to pay a commission if they redirect the link through the click.  This happens even if the site didn’t refer the customer to you.  If your customers peel the codes or click on the image to remove the label and there are no coupons available or they are expired, you now have frustrated customers and you are losing money from the commission you have to pay.  You should require coupon sites to always show the coupons or deals without making the end user have to click to reveal a code.  You also need to watch for iframes that stuff cookies, windows that open when the coupon code is revealed or any other way that coupon sites may use to stuff cookies.

4.  Not requiring a no index tag on pages dedicated to your store.

I require coupon sites to have no index tags on any page dedicated to my clients if they want to participate in their programs.  The no index tags tell Google and some other search engines not to index that page.  This helps to keep them from showing up organically for your trademarks and trademarks + coupon codes, etc…  It also allows you to better optimize your own sites for these terms so you don’t lose money to coupon sites poaching your shopping cart from people seeing a coupon box then leaving to find a coupon and clicking an Affiliate link.  By having your own sites in the top ten results (mainly the top 5 results), you can still convert the sale with the coupon, you just won’t lose the margin on commissions, etc… since no Affiliate cookie is being set.

5.  Not measuring how many sales came as an original referral vs. your own customers off of trademarks.

This is key if you are working with coupon sites in your affiliate program.  There are numerous ways to do this.  The simplest, but easiest for coupon Affiliates to fake, is the referring url.  If they are all from a dedicated page to your store, and not from a category page, the homepage, a newsletter, etc… they are probably not value adding.  Especially if the page or site shows up for your trademarks or trademarks + coupons in the search engines.  Another thing you can do is to provide them with a banner or coupon code and link that is only allowed to be used on value adding pages, newsletter links, etc…  You do have to make sure that this code and link is never added and never exists on any page dedicated to you, screens that pop open, are hidden in the redirects, etc…  Those are very common ways that they can say the sale came from pages that didn’t show up for your trademarks.  Doing this helps you to measure what is poached from people leaving your site when they see a coupon code box and what is referred by the organic traffic on the Coupon Affiliate’s site.  It is important to measure incremental vs. poached customers and sales.

Coupon sites aren’t your enemy, however you will be taken advantage of if you do not pay attention to what is value adding and what is not.  If the amount of sales that they generate and are not poached from you with adware, trademark seo, trademark bidding, etc… is greater than organic, they are probably not adding value.  You also have to remember that if they are getting sales from people leaving your site, your Content, non trademark PPC Affiliates and other Affiliates who drive 90%+ new customers and sales will leave you because their conversion rates are lower and they are having their sales stolen.  That loss of 90%+ incremental sale Affiliates will hurt your company twice as bad since you no longer get the traffic you cannot reach on your own and second, because they will leave for your competitors.  The sites that show up for your trademarks are also getting people you paid to bring in from PPC, CSEs, SEO, etc… if they see the coupon code box and leave.  This means you are paying a second time for them and not properly attributing your sales so you will be losing money by spending on a channel that is driving less value instead of one that is actually sending new customers and sales.  If you do choose to work with coupon sites, do it in a smart way and remember to make sure you watch out for any theft, fraud and that your 90%+ incremental value Affiliates, and your own internal channels, get first click gets the sale tracking so that the coupon site doesn’t take credit for their and your own work and you keep your bottom line even more profitable.