bakedjake - 1:06 pm on Apr 27, 2011 (gmt 0)

How a company offers so much % off on its products?

I guess I approach this differently.

If I offer a $50 gift certificate at my store for $25, I get $12.50 cash (if I haven't negotiated the coupon site's take down, which you should do).

If my average order size of orders using those coupons is $100, then I've given them a 37.5% discount. ($62.50 cash in)

If my average order size of orders using those coupons is $200, then I've given them an 18.75% discount. ($162.50 cash in)

If my average order size of orders using those coupons is $300, then I've given them a 12.5% discount. ($262.50 cash in)

If the lifetime value of customer acquired through a coupon channel is 2x what it is from a PPC channel, would you be willing to pay 2x to acquire them?

Coupon sites aren't for everyone, but don't be so quick to dismiss them. We've found that lifetime value and AOS are higher from coupon sites than from Google PPC.

But you won't know until you test it. And start small - test it with 50 coupons. You wouldn't light up a PPC campaign with $10k in spend day one either. The great thing about these clone coupon sites is that there's lots of them that will do a deal with you for a small test (say 50 coupons) and you can negotiate their take down.

And there's an unexpected component to all of this - unredeemed. Our original models were built on a 10% unredeemed rate. We've found it's closer to 30%.

I have a strict "premium service but no discounts" policy.

We have a similar policy for customers that are in the "normal" marketing cycle. But we are willing to discount to acquire a customer (we see it as the same as paying a PPC channel or an affiliate to acquire a customer) or as an incentive in customer retention efforts after customers start passing pre-determined points in our expiration cycle.

Is it cos China made?

I don't see what the country of origin has to do with it, but if it makes you feel better, nothing of what we sell is made in China.

I assume you're trying to imply that the profit margins are higher or that we are dealing with low-value product and charging ridiculous amounts of money for it. In our case, we're in a higher end business, with rigidly enforced MAP pricing. We would not be in business either if we were out to lunch on pricing. We can't be too high because of the Amazon effect, and we can't be too low because our distributors would cut us off.