Duncan Jennings, the founder of VoucherCodes.co.uk, spoke at our recent Online Marketing Masterclasses about – you guessed it – the role of voucher codes in affiliate marketing.

I caught up with him to find out how voucher codes can be embraced by e-commerce companies to drive sales, and to figure out some best practices in this area.

Are vouchers becoming more important with the economic situation? What kind of consumer trends / uptake are you seeing on VoucherCodes.co.uk?

Definitely, voucher codes are becoming the must have money saving tool for credit crunched consumers. With the recession looming large consumers are still spending but they’re being more cautious with their purchases and turning to the web for help.

In fact, we recently conducted an independent poll with YouGov of which 42% of those surveyed said that voucher codes and other techniques for saving money online were more important to them this Christmas than they were last – a clear sign of the prevailing effects of the credit crunch.

Luckily that means more and more savvy shoppers are turning to sites like VoucherCodes.co.uk and we are seeing huge traffic growth on the back of this, not only voucher codes but also deals and the other money saving editorial content which we publish.

Are more retailers beginning to use vouchers as a tool for acquisition? What are the key benefits, and how do vouchers differ from traditional affiliate marketing schemes?

We are seeing a huge uptake from a broad range of companies. Retail is a large part of this of course with companies such as Dixons, Argos and Mothercare leading the way but we are also seeing some great voucher codes in the travel, food delivery, software, supermarket and DVD rental sectors.

These companies understand the importance of empathasing with their customers in difficult economic times, and are reaping the rewards through increased affiliate promotion and sales.

As an online retailer voucher codes offer a range of benefits. Firstly they are extremely flexible allowing you to restrict them by time, product, category and so on. They can be used in a variety of ways to meet your strategic objectives, such as:

•    Ramp up sales – “40% off!”
•    Increase basket values – “Save £5 when you spend over £75”
•    Clear distressed stock – “Get Water World for only £1”
•    Push higher margin products “10% off Caribbean Holidays”

One of the most underappreciated aspects of vouchers though is how much they will generally improve the promotion of the issuer. Voucher codes aren’t just promoted on voucher sites, they are being promoted on price comparison, blogs, content, cash back and even search affiliates are utilising them.

Voucher codes, particularly exclusive ones, give affiliates that extra nudge to give merchants greater exposure because they have something extra to offer their users and know it will improve conversion rates – it’s a win, win situation.

One of the unique things about voucher codes over say cashback is that the user gets the discount immediately; in fact they get to watch the price at the shopping basket drop right before their eyes. How compelling is that!

Are some merchants reluctant to offer vouchers for fear damage to brand reputation?

Inevitably, there are some merchants who are concerned about this along with being labeled a ‘discount retailer’. In the current economic climate it’s so important for merchants to empathise with their customers and offer them that extra incentive to buy.

I think this is just as important for premium brands as it is traditional discounters. In fact I’d argue that offering voucher codes is a far more desirable option for brand conscious merchants than running these never-ending sales which can end up looking desperate.

Interestingly, American Express has been offering offline voucher codes for premium brands to its card holders for years because they are happy with that brand association. As a voucher code site owner I think it’s important we work closely with brand conscious merchants to explain that they can issue online vouchers in a controlled, structured way by working with the right partners who will represent their brand well.

Voucher codes are an effective acquisition tool, but can they also play a part in customer retention?

Yes, and I think we’ll see more and more of this in future. It’s already very popular in retail and travel with flights companies emailing existing customers discount voucher codes for £5 off their next flight.

Again, it comes back to the flexibility of voucher codes as companies can offer them to existing customers as a one off or as part of an ongoing retention program. The code can be only for flights to Spain in August or it could be redeemable against any booking they make over the next year.

I can see the renewal focused mobile and broadband sectors using them increasingly as well to pre-empt the ‘I’m thinking of switching call’. Equally insurance would be very well suited to them for retention but I believe there may be some FSA issues surrounding that.

What are the key risks for merchants associated with voucher codes? How can they minimise any issues?

Invalid and expired codes are an important issue for merchants as they result in a bad experience for potential customers. VoucherCodes.co.uk clearly marks all vouchers as ‘expired’ and we have an advertiser management platform which allows merchants to add, edit and instantly suspend their vouchers.

I’d also say that merchants need to be aware of the quality of the sites they are being featured on and ensure they are happy with the way their brand is being presented and again that the user experience is in line with their expectations. Both of these issues have been tackled with the IAB Code of Best Practice which will come into effect on the 1st January 2009. I’d recommend merchants speak to their networks to ensure that all their voucher affiliates are IAB-compliant as an absolute minimum.

Merchants also need to ensure they align their voucher code strategy with their overall business strategy and margins to ensure they don’t make negative returns. It sounds basic but the best type of voucher code is one which offers a large enough discount to get consumers excited whilst still be financially and strategically viable.

How do you guard against codes going viral as with Threshers and Hamleys?

Preventing any type of killer voucher code from going viral is difficult. For offline printable vouchers the best possible situation is for merchants to issue vouchers with discounts that they are comfortable with even if they go viral. That way they stand to benefit from a huge upside if they do.

The first Threshers voucher became a nationwide phenomenon and was incredibly cleverly marketed with the discount large enough for people to genuinely think a) they were getting a super special staff discount b) that they better get in there and buy quick before Threshers cuts it. The reality is that Threshers had the margin to make the voucher work hence why they have issued another brilliant voucher this year. The benefit this is bringing them in terms of sales, free promotion and serious customer love is huge.
With online voucher codes there is more potential to ‘lock’ codes down. For example  a merchant who issues an exclusive code to a particular site/partner can, with the right technical integration, ensure that the code can only be applied if the user has been referred from the approved site. Similarly, they can also opt to only pay commission to the approved affiliate for that particular code. This would solve a lot of the current gripes affiliates have with their hard earned exclusive codes appearing on other sites.

How do you distinguish VoucherCodes.co.uk from other sites in what seems to be a crowded market?

When we launched VoucherCodes.co.uk we saw a real opportunity to improve the user experience both in terms of design and functionality. We saw that whilst there were lots of sites in the market most were cluttered, badly designed and made it difficult for the user to find what they are really looking for – great money-saving codes.

Our clean but fun design has proved hugely popular with our users, the press and our merchant partners. We make it easy to find codes and have a brand which merchants feel comfortable being associated with.

In terms of functionality we’ve launched an easy predictive search and a free alerts service which allows users to get free email code alerts for their favourite stores. With new codes being launched all the time it’s a great way to make sure they never miss a code. Our development team is hard at work on a range of new features which we’ll launch throughout 2009.

The breadth and quality of codes and deals we offer is another area we are distinguishing ourselves on through our focus on merchant relations. Historically there seems to have been a very combative relationship between voucher sites and their merchants. We are building long term, consultative partnerships with our merchants because ultimately our goal is to deliver to very best codes to our users.

For me it’s just common sense. By working closely with merchants to ensure they are happy and achieving their goals we ensure they continue issuing great money saving voucher codes which in turn keeps our users happy.

A good example of this focus is our Advertiser Management Platform which allows merchants to add, edit and instantly suspend codes themselves. We launched this based on merchant feedback and whilst giving them the comfort of control it has also resulted in us getting hundreds of extra vouchers for our users as they now get excited about uploading them directly.

Are voucher sites bad news for other types of affiliate because they are inherently more likely to get the last click before a sale?

When any new affiliate channel starts to gain traction this question always comes up. It happened with paid search, cash back and now vouchers. I think vouchers present a great opportunity for affiliates and a huge range of different affiliates are now embracing them – content, price comparison, search and email to name a few.

One of the most intelligent comments I’ve seen on the subject came from the A4U Forum where one member highlighted that this market is continually changing and to be successful as an affiliate you need to embrace  new opportunities. Essentially they were saying that if vouchers are becoming more popular – it’s user driven and so rather than complaining about them simply embrace them. Include them on your content site, improve your user experience and get the benefit too.

I would like to see more data released from merchants and networks regarding how the different types of affiliate activity fit into the purchase process.

Do you believe attributing commission fees across the full purchase journey is feasible, or is ‘last click wins’ going to be here for a while?

Affiliate marketing is still new to a lot of merchants and the industry itself is very young and has been built on the ‘last click wins’ model. I think there are some strong arguments for adapting this model to a more intelligent, attribution based one but if this is implemented badly or too quickly in our immature market I think the downside far outweigh the upside.

So I would say it is feasible in the same way that the UK moving away from petrol powered cars is, it  makes sense but it needs to be impeccably planned and executed and it will certainly take longer than you’d think


Chris Lake is editor in chief at E-consultancy and

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