Secret Online Discount Codes Target “Select” Customers

Discussion
Dec 21, 2007

By Bernice Hurst, Managing Director, Fine Food Network

Retailers know how much customers appreciate a bargain and use a wide variety of means to offer discounts. Some find subtle ways to reach consumers who would like to feel special but may not yet be their customers.

In another twist out of cyberspace, discounts as high as 20 percent at some of the biggest retailers are accessible “simply by typing in codes that can be found on internet forums and specialist sites,” according to The Guardian. Some retailers themselves use websites devoted to circulating codes that access discounts, planting them carefully for consumers to find and wield in triumph.

Guardian Money revealed some of the most valuable codes along with a warning that they “can expire quickly” and advise that bargain-hunters should “keep a constant eye out for new discounts.”

Nick Beeny, founder of sendmediscounts.co.uk, which lists only codes sent by retailers, says stores increasingly see discount codes as an extension of their marketing activity without having to provide discounts to everybody.

“They don’t want to have a general sale for everyone – they want to keep the mystique of a secret sale,” he says. “Through us they know they are reaching dedicated shoppers.”

But he also notes that some retailers object to sharing and points to one who withdrew a discount after realizing an offer intended for a small number of customers had been picked up online and used by thousands.

Myvouchercodes.co.uk lists codes sent by stores alongside those sent in by consumers. Owner Mark Pearson believes it’s a clever marketing method that gets other people doing their work for them, spending far less than they would on a more traditional campaign. It also means that only determined shoppers get the bargains, cutting out those who haven’t been looking to save money and are willing to pay full price. Mr. Pearson is one of those who believes in rewarding shoppers’ efforts.

“If you have the code, you feel like you have earned it – you feel special. And feeling like you are getting one over on a big store may just encourage you to spend more.”

Discussion questions: What do you think of the marketing and traffic-driving potential of secret online discount codes? Is the excitement of finding a discount code likely to increase customer spend?

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8 Comments on "Secret Online Discount Codes Target “Select” Customers"


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Dan Desmarais
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Dan Desmarais
14 years 5 months ago

I, for one, have searched for, found, and used a secret code for a few distinct online purchases. In most cases I had already decided “what” and “when” I was going to buy. The search was for “how much” and “from whom.”

Yes, I felt a little privileged for finding an online discount code. Was I the intended user of this code? Probably not. The result was still the same–the retailer providing the code got my money.

Some companies would do well to use the power of the social networks on the internet is disseminate their codes to people ready to spend money, and not just people who have spent money in the past. This means seeding these sites with your codes, and setting up your systems to enforce time-limited offers.

To execute targeted promotions to one specific consumer your systems need to simply check that the code matches the users’s email.

Andrew Gaffney
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Andrew Gaffney
14 years 5 months ago

As retailers get more sophisticated in evaluating the profitability of different customers, I expect you will see more targeted promotions and discounts offered to their best customers.

Special sales and secret codes can also be an interesting tactic to promote cross channel shopping, as Wal-Mart showed this holiday season. Sending an email with a coupon customers can use in-store is a proven way to increase visits and provides an opportunity to up-sell, cross-sell once the customer is engaged.

While the broad “secret code” may be a viable strategy to acquire new customers, it is probably not sustainable as it only attracts discount-minded shoppers and doesn’t foster any sustainable loyalty.

Peter N. Schaeffer
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Peter N. Schaeffer
14 years 5 months ago
The discussion is actually larger than secret discount codes. Online retailers as well as brick and mortar retailers with online presence are acutely aware of the pressure to promote their online business. From paying for links and online advertising to free shipping, free gift cards, online discounts and secret discount codes, online retailers are beginning to experience the margin erosion of traditional retail. In the early days of the Internet consumers were only interested in discounts. As the quality of the online stores improved, ease of shopping and competitive pricing became the mantra of the consumer. But now, with retail sales disappointing on almost all levels, retailers are moving onto the web with discounting comparable to their traditional venues. The secret discount code was developed to “reward” repeat shoppers with a limited time discount or free delivery code. As the consumer realized that the code was not specific to them they began to share the codes and sites were developed to enable all consumers to participate in the discounts. However, as the retailers realized the… Read more »
Jeff Weitzman
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Jeff Weitzman
14 years 5 months ago

Promo codes are fine, but the tactics described above miss the mark. Creating static promo codes and distributing them via sites that aggregate such codes is fine, but don’t think you’re rewarding loyal customers, you’re rewarding bargain hunters and in most cases, buyers who are going to buy the product or visit the store anyway. Further, the “secrecy” idea is silly–price incentives should be used deliberately, not as Easter Eggs. Use one to drive incremental sales from price-sensitive customers through proper targeting; use one to encourage brand/store switching to entice shoppers away from other retailers; truly reward loyal customers by sending them one-time use codes that only they can use, etc.

Mark Lilien
Guest
14 years 5 months ago

Dan’s suggestion is most telling: a retailer who really wants to restrict the secret discount code can do so without much trouble. Maybe pretending a discount code is secret can gain free publicity. The worst: your previous customers, if given no discount, may suspect they’d pay too much, so they postpone their purchases or look elsewhere.

Bill Kennedy
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Bill Kennedy
14 years 5 months ago

These codes probably help attract the extreme discount customer most. I frequent a forum who posts a well known retailer who sells movies among other things. I generally get 10 to 15% extra off new releases whenever I want–that is in addition to going through one of the sites who shares their affiliate money–which helps me stretch my entertainment dollars. In fact, I know how to go to the retailer’s site and find the coupons if they are not posted.

I am probably the customer retailers hate the most. I generally do not buy without a huge discount involved and I seek out the best deal.

Karin Miller
Guest
Karin Miller
14 years 5 months ago

Allowing these codes to be “found” by consumers could be a smart strategy for online retailers to lower their cost per order. Acquiring new customers through paid search is often more expensive than finding a way to reach the consumer directly with an incentive.

Odonna Mathews
Guest
Odonna Mathews
14 years 4 months ago

In some ways, this tactic reminds me of the “coupon queens” who spend hours collecting coupons to save large amounts of money in the supermarket. Of course, this is a small group of customers.

It seems to me that the most valuable coupons should go to those customers who shop at that particular retailer. It tends to make those loyal customers feel like they may have paid too much if they hear about online discount codes after the fact.

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