Logan Tod today warns website owners that consumers are selling promotional discount codes on eBay, which is leading to reduced profitability and a decline in customer loyalty.

Matthew Tod, CEO of Logan Tod, says: “Through web analytics we have identified an increasing number of site visitors who are actively searching out and using promotional codes.

“These codes entitle customers to product discounts at retailers such as Tesco, and although they are meant to be for selective consumers they are being readily sold on eBay. This is altering website conversion rates and ultimately affects potential revenue generation.”

Logan Tod works to improve conversion rates for e-commerce sites such as Littlewoods, I Want One Of Those (IWOOT), and Mothercare. Tod says: “We are advising our clients to put in place tighter controls on their promotional codes and to ensure that they are non-transferable.”

Affiliate websites have also jumped on the discount code bandwagon. Sites like www.promotional-code.co.uk are collecting promotional codes and are using them to generate sales from retailers such as Dixons and Argos. This means that retailers have to pay the affiliate and allow the discount for orders generated through these sites.

One possible alternative to offering lower prices to selected customers, is to adjust prices based upon consumer behaviour. This means that a first-time visitor to a site, for example, may be offered a lower price. However, as has happened in the US recently, this practice of “price customisation” has led some to very unhappy customers.

Tod is aware of the controversy this has caused in the US, saying: “Price customisation is behavioural targeting gone bad and it is not something I would advise our clients to do to counter the discount code issue.

“Shopping habits are changing and loyalty is in decline. Consumers shop around more, using tools such as Froogle. If price customisation was to become widespread in this country it would drive the decline of loyalty even faster.”

The reason e-tailers are using price customisation in the US is to retain loyal customers who generate the highest sales, whilst discouraging bargain hunters who are less profitable. However, in some cases those who buy the same brand on a regular basis, without looking at alternative products on the site, can be charged a higher price.

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Editor’s notes

About Logan Tod & Co
Logan Tod & Co is an independent web agency, focused on helping companies achieve better results from e-business. The company ensures online activity creates more sales leads, sells more, saves money and improves ROI. The Logan Tod team does this by analysing data, managing the conversion process and developing techniques to maximise the effectiveness and efficiency of a website.

Logan Tod works closely with its clients, ensuring their site development is more business results driven and customer centric. Clients include Renault, Mothercare, Sharpes Bedrooms, Littlewoods, Adept Scientific and Yes Car.

www.logantod.com

For further information, please contact:

Matthew Leach
immediate future Ltd
0845 408 2031
pressoffice@immediatefuture.co.uk

Published on: 12:00AM on 12th July 2005