For online retailer Lamps Plus, sending out coupons is a double-edged sword. The online retailer, which plans to send out a holiday e-mail coupon offer for Black Friday and Cyber Monday, has found that distributing coupons too often is not good for revenue.
This holiday season, Lamps Plus is offering a coupon for $30 off of a $200 purchase to attract new customers. As this holiday season approaches, consumers are looking for better deals, and many retailers are turning to coupons to attract spending.
“My concern is that we train users to look for coupons when they are ready to look for products,” said Angela Hsu, VP of Internet business and marketing at Lamps Plus. “From a company’s perspective, it is not necessarily good, because we are giving money away.”
Still, Lamps Plus has seen positive customer acquisition by offering coupons, so it has not done away with them completely. It is more careful about its approach and tests the offers that it sends and the value of sales that the offers drive.
“We look at the total revenue drive for the offer and how it performs across channels,” said Hsu.
According to a study by Experian CheetahMail, LampsPlus’ e-mail marketing provider, consumers are more likely to make a purchase when offered a coupon via e-mail.
“There is hesitation [by marketers] with coupons because retailers are concerned about profitability,” said Sara Ezrin, senior strategy consultant for strategic services at Experian CheetahMail. “Retailers have to look at what their competitors are doing and what their customers are doing to decide if running a coupon is important or if it is hurting revenues.”
The study found that 80% of online coupon mailings resulted in higher transaction-to-click rates and transaction rates than the non-coupon campaigns. Of this group, 78% also had higher revenue per e-mail. The study also found that e-mails sent with coupon offers see a 34% average increase in open rates of other e-mails. In addition, e-mails that had an in-store redemption offer had an even greater increase with a 51% open rate.
“We are seeing an increase in the use of coupons and deeper discounts, as consumers are looking for as many discounts as possible going into the holiday season, because of the economy,” said Ezrin.
