Why Discount Vouchers Will Destroy Affiliate Marketing


Want to lose friends and alienate people in affiliate marketing?

Simply tell your peers that discount vouchers – the bedrock of monster affiliate sites, like My Voucher Codes – are BAD FOR BUSINESS.

Advertising guru David Ogilvy summed up why I think discounting to win business is a mistake:

A steady diet of price-off promotions lowers the esteem in which the consumer holds the product: can anything which is always sold at a discount be desirable?

Confessions of an Advertising ManOgilvy’s Confessions of An Advertising Man – essential reading for any marketer – was published in 1963. But in an age when consumers can price compare any product in real time, I believe it is more true now than ever before.

People search for vouchers or cashback deals at the point of sale. Not while researching retailers: while they are a heartbeat away from entering their credit card details.

Question: Why discount goods that consumers are about to pay full whack for?

Voucher codes mean slashing margins to appease fickle, unfaithful consumers. The same shoppers who’ll likely buy elsewhere in future. Or return voucher-in-hand if they do come back.

“I cut prices harder and for longer!” sounds like a rather desperate customer acquisition strategy.

Discounting is a race to the bottom, just like cashback sites (witness GreasyPalm vs Quidco) and newspaper price wars. Sell at the market price and be done with it.

If you want proof, spend a little time reading the extraordinarily popular Money Saving Expert forums. The site can send a metric tonne of traffic, and presumably sales to match. But the clue is in the strapline: “consumer revenge”.

Skip the war stories like “the time I saved 50p on dented tinned goods”. Instead, read carefully what MSE users have to say about discount vouchers and how they use them. Here are some quotes from the first few threads I checked:

  • “Good timing. Need to spend a couple of hunded pound there [at Homebase].”
  • “Going [to a comedy club] for a couple of birthdays on 21/2/09 trying to find cheaper tickets….”
  • “I know…I put 145.00 worth of stuff in my basket [at ASOS], expecting free delivery…not a sausage and then I tried about 4 different codes”

These don’t sound like incremental sales to me.

(Incidentally, MSE is what Arthur Daley would call a ‘nice little earner’. It’s seldom discussed – although disclosed on the site – that MSE is an affiliate and earns generous commissions on many finance products).

So why do so many retailers offer discount codes? For some, voucher codes work. But for the rest:

1. “Everyone else is doing it”. A weak justification for everything from teenage delinquicy to fascism. Next!

2. “Consumers love them”. I, too, am fond of free money. Vouchers make goods punters are about to buy anyway cost less.

3. Voucher sites earn a fortune for the industry. Big voucher sites earn millions of pounds a year in affiliate commission. The affiliate networks earn 30% override, the management agencies get their taste too. Could their loyalties possibly lie with their pocketbooks?

Retailers: Price competitively, cut out voucher affiliates who add no value and add 10-15% to your bottom line on these sales. You can thank me later.

The sorry state of credit crunch Britain (© Daily Mail) has already made some major retailers rethink their policy on voucher codes.

DRL Ltd – who operate kitchen appliance sites for the likes of Sainsburys, Boots and Next – have canned vouchers. Comet are testing a three month pause.

Expect more to follow suit.

After all this, I have a confession to make. Yes, dear reader, in spite of my distaste for voucher codes, I still promote them on a couple of sites.

The justification is simple: because my competitors do. How can I compete if rival affiliates swipe commission last second using ‘click to reveal‘ at checkout?

At the risk of sounding like the odious Richard Littlejohn: am I merely saying what everyone else is thinking? Your thoughts, please, in the comments. Hate mail to the usual address.

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