What is the ROI of digital coupons and how do you track it?

Return on investment (ROI) is what keeps marketers up at night. It also helps business owners determine which methods of outreach are yielding the best results. Online store owners utilize the same calculation to identify the return on their coupon investments.

What is marketing return on investment?

On a fundamental level, return on the investment of a marketing campaign is the return minus the cost of the campaign. While the metrics of measurement may vary from business to business, calculating return from an ecommerce standpoint is about determining which method of outreach worked best for a company.

How is it calculated?

From a broad perspective, ROI is calculated as follows:

(Gross profit - marketing investment) / marketing investment

Businesses have different variables as what constitutes for cost and profit on both sides of the calculation. ROI is measured based on a business' gross profit, not just its gross revenue. An ecommerce company wants to know how much bottom-line revenue it's making from a particular method of outreach.

How is digital coupon ROI measured?

Coupons are an effective way for ecommerce stores to increase sales. They are also easy to track in terms of who's redeeming them and where they obtain the discount.

There are a handful of ways ecommerce businesses track digital coupons:

• Ask for customer information before making the coupon available

• Make certain coupons exclusive to certain channels

• Track which channel customers use to download coupons

• Place specific tracking codes on each coupon to better identify individual buying habits

• Control view limits and set dynamic expiration dates

Once a consumer makes a purchase on a platform's site, analytics provide a plethora of information to a business owner. An ecommerce company measures digital coupon ROI with the following calculation:

Coupon redemption rate (in percent) = number of coupons redeemed / number of coupons distributed

The combined effort of coupon software and point-of-sale systems lets businesses know how many promotions were distributed, how much it cost, how often the coupons were viewed, how many were redeemed and what the average checkout total was.

Analytics software is available for ecommerce companies to track their digitally based promotions, including coupon distribution. Companies measure digital coupon return through advanced tracking capabilities and cutting-edge software. Businesses gain better visibility into their operations by releasing and tracking digital coupons, if the ROI is measured correctly.