I appreciate the additional points you offered, too – great post!

Sales definitely pick up as we head towards the holiday season and so will total search count for terms for coupons and deals.

There are a few things one needs to think about when putting such coupon on their site:

1. How “elastic” is the coupon? In other words, how likely is it for me to make more sales if I have the coupon on the site and will the volume of additional sales cause me to make more net profit than the net loss of revenue resulting from the price reduction of the product? Typically I will need a LOT of incremental sales to make up the shortfall.

2. Obviously, analytics is very important here and anyone not doing a good job analysing their sales may end up losing money as a result of the coupon offer. Analytics only gets you part way since it will analyze anything that already happened, not predicting future sales.

3. One of the factors to effectively determine future elasticity is analyzing whether putting a coupon on your site will cause more net new customers to shop there. Obviously, if someone searches for “Coupon” and finds your site and clicks, that consumer is a good candidate for buying your product solely due to you having a coupon on your site. BUT… that means your site needs to be findable under that search term. If your site is not up their on the Google search results, people searching for “coupon” won’t find you.

4. So, if your site is not in the top result set of the Google search, it is likely that the only consumers who will see the coupon are the ones who are already coming to your site, possibly in search of your product. And those consumers are likely to purchase your products at the non-discounted prices.

Which brings me back to point #2. Analytics is very important and anything you can do to analyse sales with vs. without the coupon is important to your overall revenue stream and profitability.

Lynn — I’m enjoying your blog — keep it up.

Gene Kavner