Promo code abuse is detrimental to the success of a promotional campaign. It can reduce your marketing ROI, dampen customer experiences, and lose valuable sales.
And despite the fact that 81% of coupon abuse attempts are from serial offenders, it is still all too common within the eCommerce industry.1
In this article, we’ll explore what promo code abuse is and how it can be avoided. We consider how a Promotion Experience Platform like Uniqodo can be used not only to prevent code misuse, but also to create memorable buying experiences that encourage loyal customers.
Suggested reading: Read our free eBook, ‘Do You Need a Promotion Engine?’, to find out whether a promotion engine could be the tool you need to boost your promotions.
Understanding promo code abuse
‘Promo code abuse’ occurs when unscrupulous parties try to use a brand’s coupon codes several times. Some common forms of this include:
Creating multiple fake accounts to get generic sign-up bonuses
Cracking referral codes for reuse
Taking advantage of loyalty programs and bonuses
Often, the people misusing codes will crack large numbers of promo codes and leak them in bulk on third-party sites — opening them up for use by anyone. This has a number of negative effects:
Reduced profit margins: When too many people use your coupon code or referral bonuses, your profit margins are at risk. You may need to cancel the code altogether, which would hurt genuine customers.
Reduced customer satisfaction: Your loyal customers, who likely appreciated the offers as part of their brand experience with you, may feel dissatisfied and will be less likely to convert.
Measuring campaign effectiveness: When codes get leaked, you can’t track who’s using them anymore. This makes it hard to see how effective your promo code campaign was, and by extension, whether subsequent campaigns would be worth it.
Even if promo code misuse hasn’t occurred, releasing codes in wholesale — such as through social ads — makes it harder to say where a customer is coming from. To create a truly personal online customer experience, brands need to look beyond the generic coupon deal.
The impact on business and customers
Losing control of promotions is not uncommon, with 42% of businesses admitting that it has happened to them.2 However, continually letting promotions run unregulated will almost certainly cost you revenue and sales.
It could also attract negative press about your brand, suggesting that you aren’t taking adequate security measures to safeguard your campaigns. Uber, for example, suffered a significant episode of code misuse in 2014, which cost them $50,000 and led to numerous news stories on the topic.3 This will decrease shopper trust and could make your returning customers feel they are not being rewarded for their loyalty.
There’s also the risk that buyers might get used to shopping with leaked promo codes if they are easily available. If you then cancel the codes, they might be unwilling to come back and pay full price for your products or services.
Being clear in what promotions you are running, where they are running and how they are delivered is crucial to ensuring that stakeholders and customers trust your brand. Doing this early on in your promotional marketing journey is the best way to avoid the damaging effects of code misuse.
Preventing promo code abuse in eCommerce
There are numerous steps you can take to prevent promo abuse in eCommerce. Below, we’ve listed three of our top tips that will help you stop your promotional codes leaking online.
Tip 1: Utilise single-use coupon codes
Single-use codes are for one-time use only. Each individual user gets their own coupon code in their inbox after they create a new account, sign up for a pre-order, or otherwise fulfil a qualifying action.
And single-use codes aren’t just a solution to promo abuse fraud. They’re also a powerful tool for:
Increasing eCommerce personalisation: Modern software makes it easy to generate as many single-use codes as you need, whenever you need them. You can use a customer’s personal information and purchase data to tailor those codes to what they might enjoy, such as a discount on something they wishlisted earlier.
Optimising customer experiences: With single-use codes, the customer feels special. If they get a limited-time offer on a product they had previously liked, or a buy-one-get-one promo code for something they buy often, they’re much likelier to take the step of redeeming that code.
Increasing engagement: When you offer single-use codes as a reward for an action, like sharing a post with friends or ‘spinning the wheel’, it keeps the customer engaged and involved in your brand’s message. This then makes it likelier that they’ll recommend your brand to friends, family and their social media network.
Pro tip: Read our article, ‘How To Create Unique Coupons That Speak To Shoppers’, to learn more about implementing and using single-use codes.
How BT used single-use codes to boost their promotion
Challenge: BT wanted to build exclusive offers for its affiliate partner networks without cannibalising its sales on other marketing channels.
Solution: With Uniqodo’s help, BT launched secure, single-use codes exclusive to each affiliate partner’s user base. These codes were accessible through a content gate on a bespoke system — which was designed so that BT could set up or turn off new campaigns whenever they wanted within a few days.
Result: BT enjoyed considerable success with its first Groupon deal, which was half price BT Sport for Sky TV subscribers. Subsequently, BT added several new affiliate partners and trialled other exclusive promo deals for its Broadband and Mobile products.
Tip 2: Rethink how promotions are delivered
Some eCommerce sites decide to change their online promotional strategy altogether in order to prevent code abuse. They might do this by:
Adding expiry windows
Reducing the discount per offer
Limiting the number of users who see the promotion
These approaches are obviously not ideal, as it will mean your genuine customers receive a less valuable discount and your promotion will have a reduced reach.
Rethinking the way in which a promotion is delivered, however, is often just as effective — and it won’t impact your eCommerce profit margins. Try changing up your promotion delivery by adding engaging gamified elements to your website, which get shoppers involved in the promotion and deter unscrupulous parties. Alternatively, deliver single-use codes that enable early or limited access to a special product webpage.
Make use of browsing data such as your shoppers’ IP address, mobile network, and device location, to deliver promotions that are more personal to them. In line with international regulations, it’s essential that you clearly state what information you are gathering in the website terms and conditions.
How Beauty Bay developed their strategic early-access campaign
Challenge: Beauty Bay wanted to reward existing customers and promote brand loyalty by providing their customers with early access to a new eye shadow palette. They aimed to create a personalised promotional journey that got users engaged with their brand.
Solution: Beauty Bay used Uniqodo to email unique, single-use codes to those who had signed up for early access. Everyone who received a code was engaged with the brand and had intentionally signed up to receive access.
Result: Beauty Bay received 87,000 new customer sign-ups and a 23% revenue uplift in promotion-related sales. This allowed them to both boost customer loyalty and grow their customer base globally.
Tip 3: Create promotional experiences
Single-use codes and gated code delivery will certainly help to cut down promo code misues and give genuine shoppers the benefits they deserve.
But are they truly enough to keep your customers coming back?
To make sure that buyers actually engage with your promotion, you need to create an experience that centres them from step one. A Promotion Experience Platform can craft tailored promos for every stage of the customer lifecycle, enabling you to reduce cart abandonments, drive user engagement, and improve retention rates.
Promotion Experience Platforms provide:
Code alerts: You get alerts if the customer has entered an invalid code or if a code has expired, allowing you to send them an alternate code so they can keep shopping.
Criteria alerts: If customers haven't met the criteria for unlocking the code (such as not verifying their email addresses), the platform can recognise this and send reminders. This helps to increase the number of people engaging with the promotion.
Upon-visit customisation: Your website landing page is customised automatically depending on which promo code your customer is visiting your page with. Promotions don’t sit ‘on top of’ your site — they are an integral part of the eCommerce customer journey.
Post-redemption experience: The customer experience doesn’t end with code redemption. From thank-you messages to targeted upsells, the Promotion Experience Platform makes sure your customers keep coming back.
Case study: OVO Energy
Challenge: OVO didn’t have any promotional code capabilities, and wanted to run a promotion that would not only attract new customers, but give their existing customers a great on-site experience.
Solution: Uniqodo’s eCommerce promotion engine functionality was added to OVO’s site, and single-use coupon codes were distributed according to URL. That meant customers would receive a more tailored experience, depending on where they were visiting the site from. Discounts or freebies were added at the checkout stage to ensure the whole customer journey was streamlined.
Result: OVO was able to quickly add promotional capabilities to their site, and used this to run a successful promotional campaign.
Preventing promo code abuse and boosting conversions in 2023
Controlling your promotions through the use of single-use codes and promotional delivery strategies is just the first step towards optimising your campaign. To recap, our top tips for preventing code abuse are
Utilise single-use codes
Rethink how promotions are delivered
Create promotional experiences
However, if you want your brand to truly stand out, every promotion should be its own experience. This has never been more true than in 2023, when increasing numbers of shoppers expect to receive a personalised shopping experience.
With a Promotion Experience Platform, you can turn customer insights into authentic, tailored promotions that speak to customer needs. Done right, your promo codes will become part of the broader canvas of customer experience, effortlessly boosting conversions and eCommerce customer acquisition while also preventing code misuse.
To learn more about Uniqodo’s Promotion Experience Platform and promotional capabilities, book a discovery call with one of our experts today.