As a Magento 2 store owner, you know that competition is part of the game, and finding ways to surpass it and lead the game is key to your shop’s success.
Most merchants rely on coupons as a proven strategy to drive traffic and multiply sales. But with a crowded online marketplace, simply producing coupons isn’t sufficient. Merchants must also gauge the impact of their digital coupon promotions.
In this blog post, we’ll explore seven metrics that can help you maximize the return on investment (ROI) of your digital coupon campaigns on Magento 2 and how you can track them.
We have provided a list of seven essential metrics that can help you evaluate the effectiveness of your coupon strategy. Each metric has its unique formula and requires different inputs. In all these seven metrics, for analyzing the results use Magento’s reporting system or additional tools like Google Analytics, Kissmetrics, or Mixpanel.
It is your responsibility to decide on the appropriate tools, plugins, or extensions that can leverage these metrics to achieve a 10X ROI.
The primary metric for measuring the effectiveness of a coupon campaign is the coupon redemption rate, which involves tracking the number of customers who have used the coupon. By monitoring this metric, it becomes possible to evaluate the campaign’s success and adjust the strategy to improve the ROI.
Steps:
1. Determine the time frame for analysis.
2. Calculate the total number of coupons distributed.
3. Calculate the total number of coupons redeemed.
4. Calculate the Coupon Redemption Rate by dividing the total number of coupons redeemed by the total number of coupons distributed.
5. Analyze the results and compare to different coupon campaigns or time periods
The customer acquisition cost (CAC) measures the cost of acquiring a new customer. This metric is important in determining the cost-effectiveness of digital coupon campaigns.
You can compare the CAC of customers with and without coupons to measure the effectiveness of digital coupons.
If the CAC decreases significantly with the use of coupons, then the campaign is considered successful.
2. Calculate the total cost of the coupon campaign.
3. Calculate the number of new customers acquired through the coupon campaign.
4. Calculate the CAC by dividing the total cost by the number of new customers.
5. Analyze the results and compare to customers who did not use the coupon code.
AOV tells you the average amount that customers are spending per order.
By tracking AOV for coupon users vs. non-coupon users, you can determine whether your coupons are helping to increase order value.
1. Define the time frame for analysis.
2. Calculate the total revenue generated by customers who used the coupon code.
3. Calculate the number of orders.
4. Calculate the AOV by dividing total revenue by the number of orders.
CLV calculates the total value of a customer over the course of their relationship with your business.
By tracking CLV for coupon users vs. non-coupon users, you can determine the long-term impact of your coupon campaigns on customer loyalty and revenue.
3. Determine the average order value as per the previous step.
4. Calculate the CLV by multiplying the average order value by the number of repeat purchases.
The coupon code distribution measures the channels through which coupons are distributed.
You can compare the distribution of coupons through different channels to measure the effectiveness of each channel.
If a particular channel generates a high redemption rate and ROI, then focus more on that channel.
1. Set up unique coupon codes for each distribution channel.
2. Monitor coupon code usage to determine effective distribution channels.
3. Analyze the data to determine the most effective channels.
4. Adjust distribution strategies based on the data collected.
Analyzing coupon expiration and usage timing can help you determine when customers are most likely to use your coupons and can inform future campaign timing and planning.
1. Set expiration dates for each coupon code.
2. Monitor the usage timing of each coupon code.
3. Analyze the data for expiration date and usage timing trends.
4. Identify trends and adjust coupon strategies accordingly.
The customer retention rate is the percentage of customers who return to make a purchase again.
By tracking the retention rate, you can determine whether your digital coupon campaign is encouraging customers to return and make repeat purchases.
1. Identify customers who redeemed the coupon using Magento reporting tools.
2. Calculate the retention rate by dividing the number of customers who made repeat purchases by the total number of customers who redeemed the coupon.
3. Compare the retention rate of coupon customers with the overall customer base to determine campaign success.
4. Monitor customer behavior, such as purchase history and frequency, to create targeted offers and incentives for repeat purchases. This helps increase customer loyalty and sales
Magento has built-in reporting tools that allow you to track coupon performance metrics such as coupon usage, coupon redemption rate, and coupon expiration rate. You can access these reports from the Magento dashboard by navigating to Reports > Sales > Coupons.
Once you’re in the Coupons report, you can filter the results by date range, coupon code, and coupon type. You can also export the data to a CSV file for further analysis.
Google Analytics is a powerful tool that allows you to track various metrics such as conversion rate, average order value, and customer acquisition cost. You can set up tracking for your Magento store by adding the Google Analytics tracking code to your website.
There are several third-party coupon management extensions available for Magento that can help you track coupon performance metrics such as mageplaza, aheadworks, amasty, etc.
These extensions provide additional features such as advanced reporting, automatic coupon generation, and multi-level coupon discounts.
You can create custom tracking codes for your coupons to track metrics such as conversion rate, customer acquisition cost, and customer lifetime value. These codes can be added to your coupon URLs or embedded in your coupon codes.
For example, you could create a custom tracking code that includes the coupon code, campaign source, and campaign medium.
Customer relationship management (CRM) software such as Salesforce or HubSpot can help you track and measure coupon performance metrics such as customer lifetime value, customer acquisition cost, and conversion rate.
These platforms allow you to create custom reports and dashboards that provide a holistic view of your coupon performance. Additionally, they integrate with Magento to provide real-time data syncing and automation.
As a bonus, we would like to share some tips to create digital coupons that can help you convert customers like a boss.
So that wraps up our seven metrics to help you gain escalate your ROI.
It’s important to note that these metrics are not the only key performance indicators that matter. Ultimately, the success of your coupon strategy will depend on your ability to deliver value to your customers and build long-term relationships with them.
By focusing on providing high-quality products and services, engaging with your customers through personalized communication, and continuously testing and refining your coupon strategy based on data and customer feedback, you can unlock the full potential of digital coupons on Magento and drive sustainable growth for your business.
