You see, all our coupons are always published written in all uppercase, e.g. “CLZTWEETZ”, “GETORGANIZED”, “GOOGLER”, etc… But our order tracking system stores the coupons exactly as entered. And scrolling through this list, I found that for most coupons, users enter them in all lowercase (e.g. as “clztweetz”), indicating that they typed them manually (as opposed to copying/pasting from our emails).

With one exception: the coupon we give to all our trial users: ITRYB4IBUY

(“I try before I buy”, get it?). This one always shows up in all UPPERCASE, never like “itryb4ibuy”. Users are obviously copying/pasting this one.

What’s the problem here? Is it that my users just don’t “get” this coupon? Or is it too hard to enter manually, making them revert to the old Ctrl-C / Ctrl-V (or Cmd-C / Cmd-V for us Mac users). But isn’t copy/pasting always easier and quicker, even for the simple coupons like CLZTWEETZ or GETORGANIZED? I would think so.

So now I am wondering, could it be that many of my users simply don’t know how to copy/paste? Or maybe they’re not proficient enough with it and thus are more likely to opt for manual entry for short codes like this? And could it be that they are they trying to manually enter my ITRYB4IBUY code and failing to get it work? Scary…

Whatever the reason, I am changing my ITRYB4IBUY coupon to CLZTRIAL today.

We have been using urgency with our offers for quite a while, but last week we tried adding some scarcity.

Creating urgency using offer end-dates and reminder emails

All our offers are temporary and we clearly mention the end date in the emails. Giving the offer an expiry date results in urgency, a reason for customers to act now. They will be less inclined to postpone their purchase, which will reduce the risk that they forget about it entirely.

Reminder emails
To increase the urgency, we always send out at least two short reminder emails about the expiry date getting closer, e.g. 5 days before the end date and a final “24 hours left” email. It’s amazing how many extra sales you can pull in with that “24 hours left” reminder. We have seen cases where we sold more on that final day than on the first day.
Worried about annoying your customers with those reminders? I can understand, I had the same fears when we started doing this. But this doesn’t seem to be a problem at all. Just keep your reminder emails short and to the point. Repeat the offer, state how many days are left, then give em the buy link again.

Increasing the urgency by adding scarcity

Last week we tried something different. We were able to buy a large quantity (850 units) of laser barcode scanners from Opticon, at a very good price. We decided to offer them to our existing customers at a discount. For this specific offer stock was limited, so I tried to use that scarcity to our advantage.

I created a special page about the promotion on our website. In the top right corner of the page, I added a live counter, showing how many scanners we still had in stock (or to be more precise, showing 850 minus the number of units sold).

Then last Thursday, on October 22, I sent out the following email to existing customers:

Subject: Get Your OPR-3201 Laser Scanner Before Stock Runs Out

Hi ~Contact.FirstName~,

Alwin here, with a special, and temporary(!) barcode scanner deal:

*********************************************************************
The high quality, super robust Opticon OPR-3201 laser scanner.
Retail price: $114.95, Collectorz.com price: $99.95, NOW ONLY : $79.95
This offer ends November 15, 23:59 or when stock runs out (835 left)
http://www.collectorz.com/opr3201-offer.php
*********************************************************************

Here’s what happened:

A few weeks ago, my friend Margaret from Opticon called me and asked if I
was in any way interested in buying 850 OPR-3201 laser barcode scanners at
an extremely low price. But I had to decide quickly because this batch had
to go before the end of September (something with the end of the fiscal
year, crazy Americans…).

I quickly ordered a sample unit to check it out… And we all love it!
This pistol-grip scanner feels great in your hands and it scans very well.

After some negotiation, we decided to buy the entire batch of 850 scanners.
They’re in our warehouse in Portland now, ready to be shipped out to you.

The OPR-3201 scanner has been available in the Collectorz.com shop for a
couple of days, and we have already sold 15 (for $99.95).
Of course we can just continue to sell them for that amount and make some
extra money, but I figured it would be nice to offer it for an even lower
price to our loyal customers. (I want everyone to experience the joy of
cataloging stuff by scanning barcodes.)

So here’s the deal:
For the next 25 days, up until November 15 – 23:59, I will let you buy this
scanner for only $79.95. This is a ridiculously low price for this
professional barcode scanner, which means that there’s a good chance we
will run out of stock before that date.

To take advantage of this temporary offer, secure your OPR-3201 scanner here:

http://www.collectorz.com/opr3201-offer.php

This robust laser scanner can only be purchased for the $79.95 price
through the link above, it will not be available on our regular website.
Please don’t give the above link to anyone else, it is for YOU only!

Again, don’t miss this opportunity, because when these 850 units are sold
out, the OPR-3201 scanner will never again be available for this price.

Tip: At the top right of the offer page you will find a live stock counter.
Keep an eye on it so you don’t miss out. Hit Refresh in your browser to update.

Currently there are 835 units left …

http://www.collectorz.com/opr3201-offer.php

Alwin
Collectorz.com

The results

We have done a similar scanner offer last year in August and in that month we sold almost 500 units (at $114.95). So I was expecting to sell roughly the same amount now.
(BTW: that August 2008 scanner promotion is a story in itself, now known as the “Cable Crisis”. I will tell you the full story later )

This time, with more urgency and a bit of scarcity, we sold 341 units on the first day. Today, 5 days after the offer announcement email, stock is down to 231 scanners, over six hundred sold.

Of course, I couldn’t resist using the increased scarcity to generate some more urgency. So in today’s October issue of the Collectorz.com newsletter, I started with the following news item:

** Get your OPR-3201 laser scanner for only $79.95 **

I was able to buy 850 units of this high-quality and super robust scanner,
for a very low price. And because I want all of you to experience the joys
of cataloging stuff by scanning barcodes, I will let you buy this scanner
for only $79.95 (regular retail price is $114.95).

This offer ends on November 15 – 23:59 or when stock runs out,
whichever comes first.

HOWEVER: since announcing this offer last Thursday, we have already sold
over SIX HUNDRED units. Currently, there’s only 231 scanners left.

So… if you want one too, you will have to act NOW. Go here, fast:

http://www.collectorz.com/opr3201-offer.php

At the time of writing, we’re down to 196 scanners left. So it’s likely that stock will run out before time does

Quick tips for using urgency and scarcity

• Always have an expiry date on your special offers
• Be clear about the expiry date in your emails and promotional pages.
• Stick to the end date. Resist the temptation to keep the promotion running and catch some more sales. Your customers will learn that you are serious about your end-dates, which will increase the urgency next time.
• Send out reminders. At least 2 or 3, maybe more if the promotion is running for a longer time.
• Don’t forget the “24 hours left” reminder, as it can pull in a lot of sales.
• Use scarcity to add urgency. Use fake scarcity if you have to (I know most of you are not selling stuff for which you may have limited inventory). Just tell your customers you will end the offer after 200 copies sold.
• If you can do it, display a live “items left” counter on your promotion page. This will not only increase the urgency, but it will also give your offer some credibility, as it shows that other customers are taking advantage of it already.

UPDATE (October 30, 17:42)

They’re all gone. 850 OPR-3201 laser barcode scanners sold in 8 days

Well, in short, RebateDelivery is a new system for offering Mail-In Rebates for online software purchases. Let’s look at the details of how it works and how to use it to improve sales. Oh, and of course I am running a new A/B split test to find out if it indeed helps to sell more software

What is RebateDelivery?

Well, here’s a quote from their FAQ:

RebateDelivery is a patent-pending service enabling software, game, and e-commerce firms to offer real mail-in rebates to consumers purchasing software and games online.

In case you’re not familiar with the concept of a mail-in rebate: A Mail-In Rebate gives the customer part of their money back, after the purchase. They pay the regular price for the product first. Then after the purchase, they can send in a card or form by regular mail to get the rebate amount back, either by check or bank transfer.

Of course, the idea is to increase conversion rates, to get more people to buy. If in the end the extra profits outweigh the amount of paid out rebates, we make more money. According to the RebateDelivery FAQ, less than 40% of customers actually claim their rebate, which increases the chances of increasing profit margins.

Mail-In Rebates are heavily used in retail, especially in the US, but not online. The RebateDelivery system now lets vendors offer rebates to their customers for online purchases. Here’s how that works:

After their purchase, customers receive a link to the GetMyRebate website. On that website they can print a form, fill it out and mail it in to an address near them. RebateDelivery then handles the pay-out of the rebate amount.

Plus, RebateDelivery has added to the mail-in rebate concept by allowing vendors to provide several “alternative offers”. With these alternative offers in place, people coming to the GetMyRebate website are offered one or more alternative ways to claim their rebate, e.g. by opting for a free software product (usually having a value higher than the rebate amount). This helps to further reduce the percentage of rebates that are actually paid out.

How to use Mail-In Rebates for software sales?

Having listened to Jason and Steven explain the system, it took me a while to really understand how I would be able to apply this to my business. I mean, is this an alternative or replacement for using discount coupons? What’s the difference exactly? Or should this be used in a completely different way?

Rebates vs Discount Coupons

First, some “technical” differences:

Of course, the obvious difference is that when using a coupon, the discount is immediate, that is, the customer only pays the discounted amount. Whereas with a rebate he pays full price and *can* get the rebate amount back later.

Another important difference is that with coupons you can give a specific discount to specific parts of your audience. For example, at Collectorz.com we give $5 coupons to everyone who signs up for the free trial, and $10 coupons to existing customers. Also the coupon system is built into your regular checkout process: Everyone who has a coupon enters it into the special box and gets the discount. Everyone who doesn’t have one pays full price.
With a rebate this is more difficult. There is no built-in way to give the rebate to specific customers. You just sent out the “get my rebate” link to everyone who completes a transaction. The only way to give the rebate to specific customers would be to create specific check-out pages.

Rebates are for all customers, especially *new* customers

The above two differences mean that rebates should be used in a way that is completely different from how you would normally use discount coupons.

First, if you have one shopping cart / check-out page, the rebate is given to everyone who buys. So rebates are more suited to do promotions to all your customers, as a way to increase your overall conversion rate. Then, the fact that is not an immediate discount means that is less suitable for special offers to specific customers anyway, especially if they are existing, loyal customers. IMO, it’s not a good idea to make your loyal users jump through the hoops of printing a form and sending it in by regular mail, just to make use of your special offer.

So rebates should be given to all customers, especially new customers who are buying their first product from you. And if we are going to give the rebate to everyone, we might as well make sure everyone knows about it, and as early as possible, preferably on the landing page. This way we can maximize the positive effects on the conversion rate.

Technical Implementation

What does it take to implement RebateDelivery for your site and shopping cart? Basically, there’s five parts to that:

• Setting up your rebates and alternative offers: Use the RebateDelivery vendor system to define your rebates and your alternative offers, including descriptions, amounts, etc…
• Displaying the rebate: You won’t get a positive effect on conversions if your visitors don’t know about the rebate. So you should display the rebate on your website and during checkout.
• Notifiying RebateDelivery of orders: The RebateDelivery system has to know about all orders that are processed successfully, so that they can handle the claiming of rebates. You can notify them using a SOAP interface or a simple HTTP POST.
• Giving your customers the GetMyRebate link: You can give them their personal link (including a unique transaction id) on your “thank you” page or in their order confirmation email (or both).
• Handling alternative offers: When a user opts for one of your alternative offers, you have to make sure they actually get it. RebateDelivery can notify you by email or using an HTTP POST (or both).

Testing RebateDelivery on Collectorz.com

Giving rebates to everyone sounds scary, doesn’t it? Ok sure, not every customer will claim their rebate, but a lot of them will, costing you money. Will your conversion rate increase enough to pay for those rebates and, preferably, result in some extra profits?

Well, there’s only one way to find out… just test it and track the results. So that’s what I am doing at the moment. I am currently running an A/B split test, where all B-visitors get the rebates and all A-visitors don’t.

For that B-group, I have defined three different rebates:

• A $10 rebate for everyone who buys a Pro edition of our software.
• A $15 rebate for customers buying a Pro edition plus a CueCat barcode scanner.
• A $20 rebate for people who opt for Pro software with the expensive Opticon barcode scanner.

The rebates are displayed prominently on my landing pages, in the “buying choices” panel on the right, like so:

During check-out, the shopping cart uses similar “Price after Rebate” terminology:

In both places I added a little question mark thingie, that when clicked shows the following explanation in a pop-up window:

What is a Mail-In Rebate?
A Mail-In Rebate gives you part of your money back, after the purchase.

You pay full price for the products you buy, but as soon as you have completed your purchase, you will receive a link to our “Get My Rebate” website.

On this website, you can print your personal rebate form. Return that form by regular mail to receive the rebate amount back, either by check or bank transfer.

Currently I am not allowing coupons to be used in combination with a rebate. When a customer uses a discount coupon, the rebate automatically disappears. I am not sure if that is the best way to do it. Maybe I should do a further split test later, to find out.

Generally speaking, I expect that it will take some experimentation to optimize results, maybe even to just get it to work at all. I saw the same when I started using TrialPay and also with McAfeeSecure. This is not something you can just implement and be done. It’ll take time to find the best ways to use it, to optimize the rebate amounts, the alternative offers, the presentation on your website, etc…

Coming soon: the results of the A/B split test

I started my RebateDelivery A/B split test on September 4, so it has been running for 10 days now.
I am planning to let it run for at least 14 days, maybe longer. The full results of this test will be posted here later. For now, I can tell you that preliminary results are promising

To answer these questions, let’s first go back a more basic question:

Why discount coupons?

Do you give a discount to a specific user because he is such a nice guy? Or maybe because you are such a nice guy?
Or because he is “entitled” to the get the discount?

None of the above.

We give a discount to pull in the sale, *now*.
The only goal of discount coupons is to increase conversions, to convince users to buy, especially users who wouldn’t have purchased otherwise.
Remember that by giving a discount, you are making less money on the sale, so you have to compensate for that loss by making extra sales.

To put it a little more blunt: If you are giving discounts to too many people that would have purchased for full price anyway, you are losing money.

(Of course, if you have multiple products and add-ons to sell, it may make sense to loose some money on the first sale. As long as you start making money on the back end).

Discount amounts

Consider the above when deciding on how much discount you give. The higher the discount is, the better it will persuade people to buy.
But of course, you will make less on each sale too, so you will need to make up for that in extra sales.

A small discount can be enough to get the desired effect of pulling in a sale.
For example a $5 discount is often sufficient for consumer type products that cost less than $50. Or ten dollars off for $99.95 products.
In general, a 10% discount seems to do well, especially for attracting new, first time customers.

If you want to give a discount to existing customers, to get them to buy more stuff from you, I would suggest a higher discount, up to 20%, anything less looks a bit cheap.

Fixed amount or percentage?

Judging from the above, you could conclude that it makes sense to use “10% off” or “20% off” coupons. But personally, I prefer using fixed amount coupons (like “$10 off”).

A “$10 coupon” is just more like “real money”. Not using the coupon almost feels like loosing 10 dollars. That effect is not as strong for a percentage coupon. A “10% off” coupon doesn’t represent any value until you actually use it.

Also, a fixed amount coupon gives me more control on the amount of money I “spend” to get the sale. A percentage discount can get ugly on large purchases (e.g. a 20% discount on a $199.95 purchase) and at the same time can feel tiny on small purchases (like a 10% discount on a $9.95 product).
Plus, if you sell hardware or other products that include a large cost factor, a percentage discount could eat away your entire margin. For example, we sell a $139.95 barcode scanner. I wouldn’t want to give a 20% discount on that one

How do buyers use their coupon?

This may seem obvious, just add a “Discount Coupon” entry box to your order page. But there’s more to it.

First, if you give away discount coupons, even if only to a very select part of your audience, then there must be a clear and obvious way to use it.
You won’t believe how often we get emails from people who feel scammed because they had a coupon and “there was no place to enter it”.
The entry box must be easy to find, no matter how people proceed through your checkout steps.

A while ago at Collectorz.com, in an attempt to shorten the checkout process, we decide to skip our regular “shop” page for the special bundle options we offer on our product home pages (in the panel on the right). Having them proceed to our “enter your name and address” page right away. Which was a good idea in itself, but we forgot that the coupon entry box was on the shop page only. Ouch…

In general, I think it is a good idea to let people apply their coupon as early as possible. Preferably while selecting the product they want to buy. It gives them immediate feedback on the total amount they will need to pay. Seeing the discount applied on that amount may even entice them to add an extra product, service or add-on to their order.

For example, take a look at our Collectorz.com “upsell interstitial page” here:

http://www.collectorz.com/shop/extras.php?moviepro=1

Try entering the coupon CLZAHBLOG and see what happens. It shows the coupon being applied, while staying on the upsell page.
Now try to resist adding the CueCat scanner to your order. You can’t, can you? Ok, go ahead and just add it. Now watch how the “recommended products” list changes.
(BTW: that is a real coupon, feel free to use it or give it to anyone who may be interested)

So far for the obvious part: people who have a coupon must be able to enter it easily.

But what about users who do not have a coupon? You just did your best making sure no one can miss the coupon box, so the empty coupon box is staring them right in the face.
And I don’t know about you, but if that happens to me I always feel like I am missing out on some deal. It makes me feel like I am paying too much.
If anything, it makes me hesitate for a moment. Sometimes I even try googling for a coupon. It happened to me last week when I purchased Camtasia, couldn’t find a coupon on Google, purchased it anyway. But the presence of the coupon box did postpone my purchase for a minute or two.

So is making the box super easy to find really the best way to go?
That depends on how many of your buyers actually have a coupon. If you only give out coupons to specific customers, it may be a good idea to hide the box a bit more and give those customers specific instructions on how to use the coupon. You could give the box a more generic name like “Referal Code”.
Or you could remove the box completely and allow the coupon to be passed to the url of your shop, like so:

http://www.collectorz.com/shop/extras.php?bookpro=1&coupon=CLZAHBLOG

For Collectorz.com, I have made the coupon box as easy to find as possible, placing it right beneath the “Your Shopping Cart” summary and total price. Plus, I try to make sure most buyers have a coupon, if only a small $5 coupon.

Everyone who signs up for our free trial edition gets a coupon. All existing customers have a coupon. Everyone who emails us asking for a discount or complaining about our pricing gets a coupon. We have specials coupons that happy customers get to send to their friends and family. The followers of my Collectorz.com Twitter account get a special coupon.
I even created a special Google ad with a coupon for people who try and search google for “collectorz coupon“.

And now, my AlwinHoogerdijk.com readers have their own special coupon too