Using coupons and discounts to incentivize purchases is the cornerstone of retail and e-commerce.
Today’s email automation platforms (Klaviyo, Listrak, and many others) make it easier than ever to send coupons to consumers at different points in their journey. A simple example is the classic “10% off your first order” when a visitor subscribes to a mailing list.
Other examples target unavailable customers, abandoning cart shoppers, and upsells based on previous purchases.
Bargain hunters
Consumers’ love of bargains can unfortunately result in illicit attempts to hoard as many discounts and coupons as possible.
Additionally, browser extensions – Honey, Fetch, Capital One Shopping and many others – automatically apply coupons to an order, thereby reducing the price. A merchant may have created a coupon for first-time purchases, but extensions can allow repeat shoppers to use it.
Sometimes shoppers collaborate to discover and share coupons. This is a tiny fraction of customers, but the impact affects everyone.
My own e-commerce business has been dealing with coupon abuse for years. We develop and sell music software directly to consumers. Although our margins are high, this behavior requires us to take many precautions when deploying coupon-based promotions.
Coupons
Merchants often create a unique code for an entire segment of customers. “WELCOME10” could be a coupon for first-time buyers. But these generic codes virtually guarantee widespread discovery and use, likely including the browser extensions discussed above.
Some merchants create codes with random characters that seem specific to the customer, such as “WELCOME10GH76BND.” The hope is that the buyer who receives the code thinks it is for them only and will not share it. In my experience, consumers are far too savvy and will learn and share quickly.
Therefore, our only reasonable option is to create unique coupons distributed individually and never on a public page. There are many tools and platforms that can help you. Omnisend, for example, offers unique coupons for WooCommerce and Shopify. Klaviyo offers it natively with Shopify and extended with WooCommerce.
Bodyguard
However, single-use, person-specific coupons will not prevent abuse. Experienced shoppers can learn the coupon generation method (e.g. add an item to cart and wait two days) and use it.
We are therefore adding “guardrails” for the use and generation of coupons. A basic precaution is to prevent the same type of coupons from being stacked. For example, multiple cart abandonment coupons cannot be used in a single payment. Or limit coupon usage globally to one per order.
Always add parameters to a coupon, such as an expiration date and time, as well as internal notes on how and why it was created. These notes will help identify the origin if the coupon appears in an unexpected place.
Limit coupon generation by adding filters to automated email flows. All modern email service providers allow restrictions on how often a visitor can access a feed, such as once a day, weekly, monthly or monthly. Never.
Firewall
Incredibly, even with all of the tactics above, we encountered malicious behavior, such as the same user creating multiple accounts under different email addresses to get the same coupons. At this point, we move on to general security measures that prevent deceptive or illegal activities.
Cloudflare, the content delivery network, offers a free “web application firewall” with “rules” that detect and restrict suspicious activity. The general idea is to limit how often users from the same IP address can access the same page.
For example, a user accessing an account creation page several times an hour could be blocked for 24 hours. Same for password reset pages.
The downside of these measures is sometimes that they trap innocent customers. It is therefore essential to adjust the number of attempts and duration.
Beyond coupons
In addition to abuse issues, coupons can degrade the shopping experience. Some shoppers will leave a checkout containing a coupon field to search for a code. Others are frustrated at missing a deal. Either way, the result is an abandoned cart.
The answer for my business is to abandon coupons almost entirely and automatically apply individual discounts and promotions when customers log in and shop as usual. It has the double advantage of being the most secure for my business and the most pleasant for our customers.
This seems to be the ideal scenario. although this requires development and testing.
Essential questions
Coupon abuse follows the success of e-commerce. When launching a coupon, especially to a segment of buyers, ask yourself the following questions:
- What happens if all Do customers access this promotion?
- Should the promotion be combined with other coupons? If not, have you taken steps to prevent it?
- Is the coupon reserved for individuals? It will probably be shared elsewhere.
- Have you placed coupon guardrails to prevent stacking, hoarding and overuse?
Entire swathes of consumers wanting to buy your products is a good problem. Spending time and money protecting against coupon abuse is painful but necessary.