Last Friday another affiliate-marketing-may-be-dead article has been published. Authored by Jamie Salvatori, founder and owner of Vat19.com (an online store selling unique “curiously awesome” gifts), this Practical eCommerce article started by calling coupon affiliate sites “parasites that should be eliminated from the web” and argued:
Coupon and deal websites provide zero value. Sorry, but broadcasting the free shipping offer that is already plastered across my website is of zero value. And posting a coupon code that a visitor could just as easily receive by signing up for a free email newsletter is not providing value. You are not sending new customers to me. You are hijacking my existing customers! [read full article here]
It isn’t the first I hear this kind of rhetoric when merchants are talking about coupon affiliates. In fact, having entered affiliate marketing a founder and owner for an online gift store myself (over a decade ago), I’ve been in Jamie’s shoes as a merchant; and I am now (nearly weekly) having similar conversations with merchants whose affiliate programs we manage or audit.
I know, some will be offended by Jamie’s words. But if we shift the focus from the form (in which the point was put across) to the substance (of his worry), many will agree that the concern is legit. Merchants want affiliates who bring them customers, not take the existing customer from them, getting paid for a sale which they did not refer, in the first place.
We often hear that coupon affiliates are seldomly adding value. What do you say in response to such statements? And if an affiliate website that’s distributing coupons and discounts can indeed add value, can you give us 3 ways how an affiliate manager can enhance this arrangement?
Here is how he replied:
Just like we can eat well or badly, a retailer can coupon well or poorly. Certain foods, like eggs and butter, often get a bad rap while the real problem is likely an out-of-balance lifestyle. The same can be true for coupons. Coupons can encourage higher order sizes or shrink them. Coupons can erode profits or expand them.
So what’s a retailer to do?
There are many options but here are three things that can make a significant difference:
Instead of banning coupon affiliates, I suggest retailers embrace them when possible: As long as coupons exist, coupon sites are not going away. If a retailer does not affiliate with a coupon site, that doesn’t mean their coupons won’t end up being posted there. Instead, it means that coupon site is not governed by any affiliate agreement so they can post anything – including unauthorized coupons and even bogus ones.
So, my suggestion is to embrace as many reputable coupon sites as possible to control or manage the space. A merchant’s affiliate agreement should clearly lay out the terms for coupon posting and, if they want to work with you and earn commission, the coupon site will have to follow your rules. It’s win-win that way.
Carefully plan your coupon strategy: Plan it just as customers carefully plan their shopping cart size to maximize coupon discounts and free shipping thresholds. You know your average order size so don’t coupon any minimum below that.
For example, if your average order size is $80 you might consider a $10 off $100 coupon. That means you and your customer both give up $10, but bottom line, you grow your average order size by $10, which, now $90, represents a 12.5% improvement. If you had discounted just $5 off $75 then you would likely end up with a lower order size than before. That would cannibalize your sales numbers and would be a poor coupon strategy. That would be a lose-lose strategy for you and your affiliates.
Make sure you can control the coupon box in your shopping cart: If possible, auto-populate the coupon code there and automate the discount displayed in the shopping cart when an affiliate link is clicked from a coupon site. If a coupon link wasn’t clicked, consider suppressing the coupon box altogether. If you cannot do that, then create a generic “placeholder” coupon and message it as your everyday low price or similar.
The goal is to discourage your customer from leaving the shopping cart to search for a coupon – you don’t even want them to think of that option. You also don’t want them to have any doubt in the back of their mind that they are getting a good buy or your best price. [read the full interview here]
To eliminate the problem of last minute coupon search I always recommend that merchants implement what I call “Macy’s solution.” You may read more about it here, but the essence of it is to discourage people from leaving your website (in search of coupons) by allowing them to “search for coupons” right within their shopping cart. I think every merchant should have something like this in place (especially, if you have an affiliate program).
Finally, a recent FeedFront article by Blair de Jong, affiliate manager for iStockphoto and Getty Images, has come to my mind too. It’s a good quick read on the subject of coupon affiliates, and whether they add value. It seems that iStockphoto/Getty Images is heavily relying on coupon affiliates, and does see value in the relationship. Of course, everyone’s business model is different, but Blair made some interesting observations in his article [read it in full here].
Love ’em or hate ’em, coupon affiliates aren’t going anywhere. If you have/run an affiliate program, you must learn to work in the ecosystem. I do believe that with the right approach, they can provide value. You just want to manage that affiliate program in a systematic (and firm) way, knowing exactly what you’re doing, and why you’re doing it.