Coupon Operation Guide: One coupon to attract new customers, promote activation, conversion, and recall

Coupons can play a good role in attracting new and activating users, so they are favored by many merchants. Users have gradually developed the consumption habit of collecting coupons before placing orders.

Before shopping on Taobao, check if there are any coupons available

When ordering food on Meituan, you will first receive a red envelope with a discount

After shopping in the physical store, you will get a coupon for secondary consumption

You can apply for membership cards in the store, and you can get discounts every time you consume.

Even some p2p lending platforms have interest rate reduction coupons

…

Coupons play an important role not only in B2B/B2C, O2O and other e-commerce platforms, but also in many scenarios.

Coupons, as an important means of promotion, have continued to evolve and develop, and now almost every online platform that can conduct transactions has coupons.

(Coupon Process)

For operators, launching coupons is an important operational strategy. For event operations, coupons are a powerful tool for converting orders and increasing average order value; for user operations, coupons are an important means of maintaining and even recalling users.

So, today I will talk about how operators can make good use of coupons.

01

The essence of coupons

Before designing and producing coupons, operators must first understand that, in essence, coupons are a "price discrimination" strategy.

Price discrimination belongs to the category of microeconomics. It refers to the price differentiation carried out by merchants in response to different consumer demands. It neither infringes on consumers' equal rights nor violates the principle of fair trade. It is a reasonable pricing behavior of merchants in pursuit of profit maximization.

For example:

Although the reality may not be that simple. From an economic perspective, as long as the selling price is higher than my marginal cost, I will earn more money by buying one more.

Through price discrimination, we can screen out price-sensitive and price-insensitive customers. We give price discounts to price-sensitive customers, while those who are not price-sensitive are still sold at the original price, thus maximizing benefits.

Of course, different operators must have different understandings after reading this example:

• From the perspective of event operations , we can at least see the impact of coupon strength and pricing on conversions;
• From the perspective of user operations , we can at least see the importance of coupons in maintaining stratified users.

For users, coupons are a psychological issue: what users need is not necessarily to get a bargain, but the feeling of getting a bargain.

If the price is reduced directly, sales will indeed increase in a short period of time. But after a long time, when users become familiar with the price, this stimulating effect will no longer work. When you raise the price back to the original price, sales will actually decrease.

The essence of business is to make money. Coupons may seem like a bargain for users, but for merchants, launching coupons is itself a pursuit of maximizing profits.

The use of coupons takes advantage of a contrast effect , which makes users feel like they are getting a bargain and creates an urge to take advantage of a bargain, leading users to go from not buying to buying, and from buying to buying more.

Contrast effect, also known as "sensory contrast". The phenomenon that the same stimulus produces different sensations due to different backgrounds. Just like a color looks brighter when placed on a darker background, and darker when placed on a lighter background.

Presenting two different things simultaneously or sequentially leads to better learning than presenting them separately. The reason is that the two things produce mutual induction in the cerebral cortex, which deepens the impression through contrast, while things that appear alone in the cerebral cortex have no induction effect, appear bland and difficult to remember.

For example, when I go to a restaurant to eat, the restaurant gives me a coupon after paying the bill. A few days later, I'd be eating there and remember I had their coupon, and I'd go eat there again.

Recharge rebate, for example, recharge 200 and get 200 back, the incentive is huge, the user himself can get the discount, from the merchant's perspective the money has been collected, and it is easy to guide users to consume frequently. The accumulation of points can also stimulate users' consumption behavior.

There are many similar activities. In fact, we can find that coupons themselves are a kind of funds and wealth for users. They can guide users' consumption choices and remind users of behaviors that can give them a bargain. If I feel the price is too high, the coupon can also lower the threshold for my choice. Coupons, as exclusive to stores, can also deepen the brand awareness in users' minds.

In summary: coupons and vouchers can not only stimulate user consumption, but also bring more profits to merchants. Summarize:

• Remind users to strengthen brand impression
• Lower the consumption threshold and increase the number of consumers
• Stimulate user consumption frequency, etc.

Having said so much, the original intention of coupons or discount cards is to seemingly allow users to get a bargain, but in fact, merchants are the biggest beneficiaries.

02

Coupon design

Coupons come in various forms, including discount coupons, gift coupons, discount coupons, vouchers... etc. Although they all allow users to deduct certain fees when using them to achieve the purpose of promotion or increasing the average order value, the deduction methods are different. There are two main categories:

• Directly deduct fixed amount of expenses, such as discount coupons and vouchers, etc., and the face value of the coupon will be reduced or exempted when the usage conditions are met;
• Apply discounts on the order price, such as discount coupons.

To sum up the coupons briefly, they are as follows:

For general coupons, I think they should include at least 5 necessary factors, and the rest are configurable factors, which can be added appropriately according to the needs of each event.

One thing that needs to be explained is that the amount/discount of the coupon directly affects the conversion. If the discount is too large, the profit will be thinner, while if the discount is too small, users will not be sensitive and the usage rate will be low.

The perfect situation is that we have the ability to read every buyer's mind, know the highest price the user is willing to pay, and sell it to him at this price.

The problem is that no user will come to you and say how much they are willing to pay. This requires us to consider and formulate preferential policies based on actual conditions and resource inputs.

• In order to clear goods or boost sales, discounts can be as large as possible without losing money, to stimulate users to buy.
• In order to increase the average order value, you need to first find out the current average order value. If the current average order value is 20 yuan, you can set up a coupon for a discount of X yuan for purchases over 30 yuan. In order to enjoy the discount, users will naturally buy more.
• In order to maintain users, user operations can issue coupons of different strengths to users of different levels based on the user model to achieve the purpose of promoting activation.
• In order to win back users, coupons with higher value than those for active users are issued to potential churned users. For example, the takeaway red envelopes we often use. Generally, users who have not used the APP for more than a week will receive red envelopes with higher value than active users. This is a means to prevent user churn.

The above briefly lists several situations that operations often encounter when designing and producing coupons. Of course, there are more problems that require us to analyze specific issues in actual work.

03

Distribution of coupons

Having coupons is the basis. As an operator, how to send the coupons to target users is also the key to the problem.

The choice of distribution channels directly affects how much you can send out. Everyone knows the existence of conversion funnels. Naturally, the more you send out, the more conversions you can bring.

If you want to convert a specific group, you need to consider the targeted distribution channels. A discount that everyone gets is not a discount. You need to maintain the sense of identity of this specific group.

The main routines for issuing coupons:

(1) Share coupons

If users want to get discounts, they need to share them before they can receive them. A common way is to send red envelopes as invitations.

The red envelopes given by Didi, Meituan and Ele.me after completing an order have the triple functions of giving back to the ordering users, activating old users and attracting new users, thus achieving three goals with one stone.

(2) Actively issuing coupons

Merchants proactively send coupons to users, such as new customer gift packs and special user welfare activities, and users can receive them by entering their account number.

(3) Redeem points for coupons

As part of the user system, an appropriate points redemption system can not only consume a large amount of the points pool, but also stimulate users to obtain more points for redemption, thereby promoting user activity.

(4) Consumption coupons

Issue coupons to users after they make purchases to increase buyers’ repurchase rate.

(5) Task-based coupon issuance

Users need to meet certain conditions to obtain coupons, such as signing in for tasks, returning coupons through evaluations, and receiving coupons through sharing.

For example, in order to quickly attract new users, old users are required to attract X new users to obtain the reward; in order to increase the PV of a certain channel, users are required to enter the channel to obtain the reward. There is often a specific purpose of operation hidden behind this, which drives the improvement of relevant target data in a short period of time.

By interacting with users, we maintain user activity and enhance relationships with users. More importantly, we invisibly increase users' sunk costs. Naturally, the usage rate of coupons obtained in this way is also considerable.

But remember, the value of this preferential benefit must be slightly higher, otherwise it will be difficult to motivate users and their trust will also decrease.

(6) Coupon issuance through cross-industry cooperation

Choose to cooperate with platforms that have overlapping target users to achieve the goal of attracting new users. Issue coupons on this platform to divert users of this platform to your own platform, thereby achieving exchange volume and attracting new users.

04

Use of coupons

Once the coupons are issued, the initiative is in the hands of the users. From the time the user obtains the coupon to the time the coupon expires, what the operator needs to do is to remind the user not to forget to use it.

If it is a voice reminder, mobile phone text messages and in-site messages can both come in handy, with reminder text + link. If it is a silent reminder, display the products or services that the coupon is applicable to the user as much as possible.

Also, a coupon that can impress people must give users a reason to place an order.

• Maximize full discount

After consumers receive coupons, a very important task is to maximize the use of the coupons. By using different product categories and price settings, merchants can get consumers to buy more products and services and use coupons with relish. Many people, when using discount coupons, will consume more goods in order to maximize the value of the coupons.

• Coupon traffic

Let consumers choose other related products and complementary products to drive traffic to the products, thus maximizing profits.

• Scarcity Value

Everything that is scarce is considered valuable. Restrictions on the use of coupons can actually increase user favorability. Limit usage time, crowds, regions, and channels to make consumers want to place an order.

Consumers are also on the sidelines when it comes to placing orders. Only by shortening the validity period of coupons will users feel a sense of urgency. The restrictions on population, region and channels give merchants more room to manipulate their product prices and businesses.

So how do we enable different customers to obtain coupons?

Think from the perspective of new customers and old customers:

①New customers

If you are targeting new customers, it will be difficult to impress them unless the discount is very large, even free use. When dealing with new customers, merchants often use coupons + gifts, coupons + free trials.

The supermarket's promotional coupons are more effective: potential customers need to spend 20 yuan to buy a supermarket coupon worth 300 yuan. After consumption on site, there will be a lucky draw and you will be given yogurt worth 30 yuan.

Buying a voucher for 20 yuan = a 300 yuan coupon + a lucky draw gift + yogurt worth 30 yuan. When facing new customers, a single coupon is not enough to impress them. Gifts and experience-related supporting measures must be provided.

②Old customers

A common traffic-generating strategy used by many businesses is to add WeChat friends and give out red envelopes or coupons, thereby directing users into their own circles and increasing their own traffic.

By adding WeChat friends, establishing WeChat groups, following WeChat public accounts, official websites, apps and other means, you can keep users in your hands and maximize the exposure of coupon benefits to consumers.

There are a few things to note about using coupons:

• There is no need to offer discounts to everyone. Offering discounts to everyone is equivalent to no discount, and it fails to reflect the value that the coupons bring to people.
• Not all products require coupons to stimulate consumption, such as consumption of high-end products and services.
• People will not cherish coupons that are too easy to get. Coupons obtained through gamification, task-based, and scarcity are used more frequently.

05

Data Statistical Analysis

After coupons are distributed, corresponding data statistics should also be kept after the end. Because data is an important criterion for measuring work.

If you want to check the effectiveness of the activity by issuing coupons. The main data we monitor are the number of orders, the number of activities initiated, and the number of coupons .

More detailed sharing rate, collection rate, usage rate, and new user acquisition rate can be obtained through calculation:

• Sharing rate = number of activities/number of orders* 100%;
• Collection rate = number of coupons / (number of activities * number of participants in each activity) * 100% The number of participants in each activity means how many users are allowed to collect coupons in each activity;
• Utilization rate = number of coupons used / (number of coupons – number of coupons returned) If the coupon can be returned, the number of returned coupons will generally be deducted, but sometimes not, depending on business needs;
• Number of new users = the number of users who have received coupons and are marked as new users

Coupons follow this basic funnel model:

• The conversion from channel promotion volume to user collection volume indicates the effectiveness of the channel and whether there are problems with the coupon collection page, and also shows how attractive the coupon is to users.
• The conversion from user receipt to actual usage shows the attractiveness of the coupon and whether the operation reminder is effective.
• The actual usage represents the final conversion, which measures whether the coupon is successful.

In addition, we should also conduct targeted data summary and analysis based on the purpose of distribution.

For example, the number of new users, user activity improvement index, number of lost users recalled, sales improvement index, etc., form a complete coupon data analysis to provide reference and improvement direction for future operational plans using coupons.

06

Summarize

A seemingly simple coupon is not only an economic issue, but also a consumer psychology issue, and it is also an important operational strategy that operators need to master.

Another very important point is that the operator's job is not only to formulate a coupon usage strategy (clear purpose, good planning, and good rules), but also to fully communicate with product and development colleagues to ensure that the front-end and back-end functions such as issuance, verification, and statistics are complete. Only in this way can the coupon operation strategy launched achieve the desired goal.

Source: Operation Xiaokaxiu