Cultivating brand potential

Advantages and disadvantages to digital vouchers

Posted by: Katie Lewin

Categories: Marketing, Digital,

Wed, 30 Nov 2016

When you think about vouchers, you tend to think about the paper kind that you find in local newspapers. But vouchers have transitioned very well for online use, and have even increased in availability and identity because of tools like social media. A great example of this is DODOcase. They are an online manufacturer of iPad cases, and they offer 10% off their customer’s purchase just for signing up to their newsletter, so it’s very accessible to use for potential customers. But before we continue, we first need to realise what we mean by the term voucher, as there are many other online discounts that may sound like they do the same, but actually are in a separate group of their own. Vouchers tend to have an expiry date and can give your customers a one-time discount against a product or service. They can also be used to gain free products or services. Coupons however, can be used a number of times on different products or services, until the coupons credits are used up. This can be either a given amount or based on a percentage of the cost and they also have expiry dates. Promotion codes are related to promotions, they are codes that businesses send or tell customers in order to get a percentage reduction off whatever they are buying. They can either be public, private or restricted, meaning that they have only one use per customer. With that out of the way, here are the advantages and disadvantages to using vouchers.

Advantages of using digital vouchers

1. Sells products or services – Vouchers obviously help sell products or services fast, but you can also change what pace your coupons are delivered, in order to earn yourself a steady stream of business.

2. Increases traffic to your website – If you promote your vouchers across all of your available online platforms (e.g. social media and email campaigns), they can travel across the Internet, which could result in more customers coming to your website.

3. Promotes customer loyalty – Vouchers targeted to both new and old customers increase the probability that those customers will keep visiting your store, making them part of your legitimate customer base.

4. Enhances your brand – Because your company name, address and other information are featured on these vouchers, it also acts to promote both the products and services you sell, while also your brand itself.

5. Maximises flexibility – You will have complete control over your vouchers creation, including the kind of security measures to use like codes in order to prevent abuse or unauthorized use.

6. Minimises your advertising costs – Digital vouchers cost much less to create than the paper kind that local businesses use, and are also easier to send out to customers.

Disadvantages of using digital vouchers

1. Customers may become undependable - Customers may get used to waiting for your deals, rather than paying the full price, decreasing your sales and ROI in the long run.

2. Customers may suddenly overload your website – Customers with discount vouchers may overload your website if you have a fixed amount of people who can visit, causing your website server to crash. You may lose valuable customers if this happens.

3. Quality could be sacrificed - You may end up limiting the quality of your services based on the decreased amount of the money you are getting from these vouchers.

4. Brand value could be damaged - This could lead to a negative impact on brand image, as you could make your brand look cheap, or customers could think that you are just trying to get rid of stock.

From the list above, it definitely shows that there are more advantages than disadvantages when it comes to digital vouchers. However, it doesn’t matter if you can’t keep up your customer acquisition or your customer retention. So here’s how you can do that when using digital vouchers.

How to overcome the two main problems of digital vouchers 

Customer Acquisition

This can be a problem to you, because when starting to use digital vouchers, you need to know what area to target in order for the vouchers to be as effective as possible. For customer acquisition, you can overcome the barriers by utilising social media effectively to engage with your customers and create an effective digital voucher for their needs. An example of this is how 90% of UK banks are using Twitter as a social media channel, with the majority also having Facebook pages and some even promoting YouTube channels. This helps them to engage and learn more about their customers in order to see what kind of vouchers they are looking for.

Customer Retention

This can be a problem when using digital vouchers, as for customer retention, you can overcome the barriers by personalising your digital vouchers, either by including their name or personalise the voucher to the items that they tend to buy. This way, the customer’s will feel wanted and you can keep up your customer retention. An example of this is how Tesco tends to send vouchers and coupons based on online purchase history, so they send more useful deals and keep customers happy and loyal.

The conclusion

Digital vouchers can definitely help your marketing strategy, and should drive a significant amount of business to your store or website (depending on if you sell products or services). However, you should refine how you use your vouchers, by setting expiry dates and add personalisation in order to make them more effective. And just to make sure that they are being effective to your business, you can measure their success by using analytics.