Consumers love discount codes. They love to use codes so much that 75% of people search their inboxes to look for relevant discounts before purchasing a product.
For brands, discount codes are a conversion rate tool to move shoppers to purchase–That’s why brands use them! In fact, 93% of shoppers use a promotional code throughout the year. As a brand, giving a discount doesn’t always mean taking a hit to your profit margins. Customers who use discount codes actually spend 24% more than those who don’t use them, helping to reduce cart abandonment.
Promo codes are a win-win marketing strategy. Brands whose customers use them spend more, and customers love purchasing with discounts.
But… There is a problem.
The social media and ecommerce boom has meant more customers want to share special offers with each other. As they began to share discount codes, sites decided to monetize it. Coupon-sharing tools and sites like Honey, RetailMeNot, or Coupon Birds were born. These meant that a shopper could get a number of discount codes at any one time just by scraping the available information on the internet.
Even if customers use one unexpected discount code in the shopping cart, it can affect online retailer’s margins. If you ran into an error like Abercrombie did, where customers could stack discount codes on the checkout page, it can completely ruin your business. Abercrombie is a great case study for coupon leaks gone wrong.
“Coupon codes are one of the most popular ways to track referral sales and offer an incentive to new customers. When these codes leak to coupon sites like Honey, it messes up the affiliate program’s attribution and can ruin a brand’s margins” -Noah Tucker, CEO of Social Snowball
In this article, we’ll cover what coupon fraud is, how you can prevent it, and most importantly, how you can stop leaked discount codes from affecting your business.
What is Coupon Fraud?
Coupon fraud is when an individual takes advantage of a promotion and shares the coupon, against the coupon policy. Someone taking part in coupon fraud may benefit from redeeming a coupon if it includes a referral bonus, or simply seek to provide value to coupon hunting sites or services.
Coupon code has become more prevalent with more direct-to-consumer websites and more promotional marketing run by brands like sales, affiliate marketing, and more.
How do you stop discount code abuse?
Although it’s painstaking, keeping tabs on what coupons exist are an easy way to deactivate or change promo codes you have live on your site.
You also have the ability to share discount codes with various coupon-leaking sites in an attempt to always provide a small promotional discount and limit the amount of losses you take through leaked codes. Larger companies like Amazon or Macy’s establish partnerships with leaked coupon sites to mitigate their leaked codes.
Setting expiry limits and single-use
When creating codes, add expiry limits so promotions can only be used for a limited time. Make sure you can’t stack discount codes at check-out if you’re running multiple promotions. As well, making codes single-use voucher codes are a great way to mitigate code leakage.
For example, referral codes that are generated for each consumer provide an exclusivity benefit and promote word of mouth among influencers.
Planning for code misuse
No matter what, you’ll likely run into some leaked coupon codes. When running various promotions, plan for code misuse.
You can also set-up alternatives promotions that don’t use codes, such as store credit or gift cards.
How do you prevent your special discount codes from leaking to sites like Honey, RetailMeNot etc?
Billion dollar companies like Honey or RetailMeNot, and Capital One have been built on one mission–To help consumers find leaked discount codes and allow them to purchase products from ecommerce brands at a reduced cost.
Although consumers benefit from hidden discounts, it’s a major challenge for ecommerce brands who are operating with higher-than-ever costs to acquire and many offering standing welcome discounts of 10% or more.
We created the Leaked Discount Code Center: Where brands can detect affiliate and referral discount codes that leak on sites like Honey and most importantly, take action.
The Leaked Discount Code Center is an extremely powerful tool for any brand running a referral or affiliate program with discount codes, and can save thousands in gross merchandise value lost to leaked discount codes.
Why was this built?
Social Snowball is a word-of-mouth marketing platform for ecommerce. We help thousands of brands run referral and affiliate programs. With these programs, brands can incentivize referrals and, oftentimes, this includes unique codes for each customer. That’s when we noticed that unique discount codes kept leaking to different coupon leak sites and added functionality to reduce the amount
The problem is bigger than you think, “almost all brands running a referral or affiliate program with discount codes will see a leak,“ Noah said.
“Discount codes are critical on Black Friday and Cyber Monday, and so are the power of referral and affiliate programs. With each new purchase, a customer who joins a referral or affiliate program can share their discount code with a friend. If each person already knows they can use a discount code scraper, the need for sharing word-of-mouth is lessened,” Noah said.
How Does the Leaked Discount Code Center Work?
When a leaked code is detected (it doesn’t even have to be used), Social Snowball will Notify the brand and tag referrals that came from coupon sites. You’ll also be able to see any sales that were made with the code that leaked.
Once you know the code that leaked and the affiliate it’s associated with, you can then ignore the code leak, change the affiliate’s code, or if suspicious of intentional fraud, ban the affiliate altogether. It’s really that easy!
How to stop your promo codes from leaking on websites
This is game changing for brands who run referral and affiliate programs who see leaked discount codes appear. When brands are creating thousands of discount codes through a referral and affiliate program, even a few code leaks can impact your margins. Having an automation-focused tool that catches the leaked codes in the same place where you manage your referral and affiliate programs keeps everything in one place.
Try Social Snowball free for 30 days to create referral programs with unique codes and try the Leaked Discount Code Center. If you’re a brand not on Shopify Plus, we’re working to unroll this feature as soon as possible to all brands.