NEW YORK (MainStreet) – When Brad Wilson founded BradsDeals.com in his dorm room a decade ago, he gained a quick following of family and friends eager to see what deals and coupon codes he could track down. But not everyone was thrilled with his efforts.
“I can’t tell you how many letters from New York lawyers I received,” he says. “It used to be something retailers wanted to stop, and that was the approach they took. They didn’t want [coupon codes] disseminated on the Internet.”
That Wilson has gone from fending off lawyers to negotiating discounts with the retailers themselves says a lot about how far online couponing has come in the past 10 years. Today virtually all online retailers have a field for entering a coupon code during the checkout process, and hundreds of deal sites seek out and publish the latest codes for thrifty consumers. How did online shoppers become so code-obsessed and how can you take advantage of savvy e-couponing?
The Learning Curve
By most accounts, coupon codes have been around since the earliest days of e-commerce, with most online retail experts placing their genesis around the millenium. But it hasn’t been an easy road, as the sales and marketing professionals involved in the creation of coupons and discounts had to adjust to the very different realities of Internet marketing.
Traditional coupons are, in essence, predictable. If the marketing arm of a retailer puts a coupon in the local paper, they have a pretty good idea – based on circulation numbers and past redemption rates – how many coupons are going to be redeemed. That kind of predictability is crucial for a retailer that wants to make sure inventory levels can sustain demand, and it’s especially important if they want to control the loss they expect to take on the discount.
But when you replace those clip-out coupons with codes that can spread like wildfire over the Web, any sort of predictability goes out the window.
“Some guy in direct marketing of big retailer ‘X’ would send out 100,000 postcards with a coupon on it, and somebody would send it in to BradsDeals,” recalls Wilson. “Then the guy gets upset because his metrics are shot … We would post it, and in six hours 20,000 people use it and screw up the whole thing.”
In other words, retailers had to go from a world where they could publish a finite number of coupons and estimate how many would be redeemed, to one where a code could get out in the wild and land in the hands of hundreds of thousands of potential users. They had to get smarter – both about the margins on the discounts and about how they limited its spread.
“They tend to control distribution through timing [of the expiration date],” says Loren Bendele, founder and CEO of deal site Savings.com. “Or they can do it in a more secure fashion, so it’s only accessible through an email.”
And rather than just using a single code that can be used an unlimited number of times, a retailer might automatically generate thousands of one-time-use-only codes that can only be accessed by jumping through a certain number of hoops. In February, for instance, Taco Bell offered a printable coupon redeemable for a free taco, but required users to install a special printer program that generated a different one-time-use code for each coupon. That was presumably intended to prevent taco lovers from printing out multiple coupons and clearing them out of tacos, but the same technology can be used to slow the spread of a code or image file beyond a retailer’s capabilities.
For the most part, though, online retailers have simply learned to adjust their expectations and warm up to the idea that letting their coupon spread far and wide is ultimately good for business – even if they lose a little money in the short term.
“The majority of the time, when a merchant is offering a deal, they’re ready for it to go as widely as possible,” says Bendele. “If it goes extraordinarily broad, the downside is that they lose a little on the margin, but they’re OK with losing that profit for the mass advertising.”
The Recession Bump
This mindset shift was integral to the development of the coupon code as a potent tool in retailers’ arsenals, but the recession is arguably the biggest reason they’ve become such an integral part of the online retail scene.
“You can probably graph [the codes’ popularity] in parallel to the overall economic climate since September 2008,” says Wilson. “Prior to that, coupons were really stuck in a niche of frugality ... Now it’s cool and popular to get a great deal.”
Bendele agrees, having observed a big increase in traffic on deal sites during the worst of the recession. Needless to say, this sudden surge in popularity was driven by basic economic realities.
“Retailers had a lot of inventory but people weren’t buying as much, so they started offering deals and discounts,” he recalls. “And at the same time, consumers are more money conscious.”
It’s no surprise, then, that the virtual equivalent of coupon clipping has become so popular in recent years. But that’s not to say that coupons and codes will fall out of vogue once the economy recovers – after all, even the rich have gotten in on the coupon game in recent years. The ubiquity of coupon codes – and the ease with which they can be found and applied – has made them an accepted and expected part of the e-commerce experience for many consumers.
“There are consumers who have been trained to look for codes before they even shop,” says Larry Joseloff, vice president of content for Shop.org, the online retail wing of the National Retail Federation. “It’s this feeling that I’m part of a secret club, I’m in the know because I’m a special person.” Adds Bendele: “Everybody likes feeling smart.”
How to Find Them
These days, coupon codes have become so in vogue that retailers will put them right on their websites. As of this writing, for instance, Gap is advertising the 25% off code GAPGET25 right at the top of its website. But for the most part you’ll have to do a little more legwork than that to get the code.
Sometimes it’s still fairly easy. You can sign up for your favorite retailers’ email lists through their websites, as many will send out regular newsletters with coupon codes to their subscribers. (With that said, you’ll get a lot of emails, so it might be worth opening up a dummy account, or setting up a filter to keep your inbox from getting overloaded.)
Social media has also become a popular avenue for retailers, who will put out coupon codes on their Facebook pages and Twitter feeds. If you don’t mind getting a bit of marketing spam on your social networks, you might consider “Liking” or “Following” your favorite retailer and then seeing what sort of codes appear.
Retailers are now happy to go through third-party sites like Savings.com and BradsDeals, and have thankfully changed their approach from filing legal threats to creating custom codes for the sites’ readers to use. There’s an obvious mutual benefit: The retailers get to promote their deals on popular sites, and the deal sites get to say that they have exclusive coupon codes.
“On a regular basis we’re reaching out to retailers we like … and negotiating on behalf of our audience,” says Wilson.
Of course, there’s another option available to shoppers who don’t know the code: guessing.
“There are some coupon codes that show up more often than others,” says Daniel de Grandpre, CEO and co-founder of dealnews.com. “For example, FREESHIPPING or FREESHIP is a frequent code. 10OFF is a frequent code for 10% percent off, or sometimes $10 off. Then there are codes that you see for holidays, like VALENTINES and BLACKFRIDAY.”
He also recommends inputting the name of the upcoming season (it can’t hurt to try ‘SPRING’ next time you’re prompted for a code), as well as ‘FACEBOOK’ and ‘TWITTER’ in case the retailer has created codes for users of those social networks.
Wilson, meanwhile, suggests trying variations on the codes you know and hoping that you’ll get lucky.
“If the coupon is COUPON25, type in COUPON30 and cross your fingers – it can’t hurt to try it,” he says.
Still, all of the deal experts we spoke to were skeptical that you could consistently guess coupon codes. Indeed, while the whole idea of a ‘code’ suggests that it’s a secret password created for a select group of employees or elite shoppers, the truth is that the majority of codes are created with the intention of distributing them, not keeping them secret. And even if that distribution isn’t widespread, chances are it will eventually sneak out onto social networks, deal sites and Twitter feeds that traffic in the codes.
As such, your time is better spent visiting sites that specialize in tracking down codes, rather than trying to crack it yourself.
“I wouldn’t put it at the security level of the CIA that it’s impossible to crack, but merchants aren’t stupid enough to do the same thing every single time,” says Bendele.
—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.