Words: Ben Smye, Head of Marketing at Global Savings Group
Are coupon sites a valuable affiliate channel or do they simply cost margin by driving sales from customers that would have bought anyway? This question has been asked for as long as coupon sites have existed. Behind it, lies a core question marketers are constantly trying to answer – which channels drive incremental sales and are worth investing in?
We decided to look into the data and see if, and how, coupon sites generate added value for advertisers. In this article, I’ll summarise the main findings. If you’d like to see the full insights, you can read the white paper Global Savings Group (GSG) released on this topic, The Counter-Intuitive Impact Coupon Sites Can Have on Contribution Margin.
Reframing Common Assumptions
A commonly-held belief is that coupon sites offer a mixed blessing for retailers, providing access to a wider audience but potentially undercutting profits. This view assumes a uniform behaviour among consumers, with those coming from coupon sites being detrimental to margins (because they might apply a coupon code and could cost commission).
This perspective suggests coupon sites might exacerbate the challenge of maintaining profitability. However, insights derived from extensive online purchase data (millions of transactions, in fact) across various sectors reveal a nuanced reality. The data reveals that coupon site users often spend more than the average buyer, and the additional advantages offered by coupon sites can counterbalance the perceived negative impact on profit margins. Let’s see how.
Coupon Sites Surprising Impact on Spend
One of the most striking findings in the white paper is the strong relationship between coupon sites, and higher Average Order Values (AOVs). Contrary to what we might expect, customers who use coupons often end up spending more, not less.
We (Global Savings Group) looked at 938,424 purchases made at three different retailers in the fashion, travel, and furniture industries and found that coupon site users spend up to 122% more than the average shopper at the same retailer. On average, the AOV was almost 93% higher across the three retailers:
Awin data also backed up this finding. Their data showed that purchases with a coupon were, on average, 54% higher than those without. And this was based on a very robust dataset – millions of transactions over three years in 59 different verticals.
How Does Higher Spend Affect Margins?
We decided to go a step further and model the potential impact of higher AOVs on contribution margin (i.e. profitability after taking into account variable costs). For each of the retailers above (in the fashion, travel, and furniture verticals), we calculated the contribution margin per purchase by layering in their average margin, the GSG average commission per sale, and the average discount used by GSG buyers at each retailer. Even with these additional costs taken into account, the contribution margin per purchase is 51% higher for coupon site users than it is for the average buyer:
Do Coupon Sites Affect Conversion Rates?
Improving conversion rates can have a major impact in ecommerce. For example, a site with 100,000 visitors per month, an AOV of €50, and an average conversion rate of 2% could generate an extra €50,000 in sales each month by increasing the conversion rate to 3%. That, though, would be no mean feat – it would mean improving the conversion rate by a whopping 50%.
Yet affiliate industry data shows that coupon sites can have a pretty significant positive effect on conversion rate. CJ did a study comparing purchase journeys that did and didn’t include a coupon site, and the data showed that journeys that included a coupon site converted at 152.4% higher than those that didn’t.
GSG data backed up these findings. We ran a test with a fashion retailer that combined an exclusive coupon code (published on our coupon sites) with some targeted traffic acquisition. The test delivered a conversion rate lift of 180% compared to the normal conversion rate.
In Conclusion…
The data here should go some way to demonstrating the potential value of coupon sites as a marketing channel. As with any channel, each retailer will likely see different results. However, when used strategically, coupon sites can be a powerful tool to increase AOVs and lift conversion rates.
A key point I’d also like to highlight is that it can be dangerous to rely on assumptions and conventional wisdom, especially in marketing. Whether you believe that coupon sites are a valuable channel or not, until you have real data that can back-up your beliefs, they are nothing more than that.
If you’d like to learn more and get a comprehensive understanding of the insights behind this article, the full white paper is an essential read.
Ben is responsible for B2B marketing at Global Savings Group, where he helps to share insights and information about affiliate marketing. He has more than 10 years’ marketing experience.
This content has been produced for Affiverse by a contributor and expresses their own views, in their own words. If you would like to feature as a contributor on Affiverse platforms, please email [email protected] with your article suggestion.
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