Salutations, commerce buffs, and welcome to this week’s dispatch of the commerce newsletter. I’m AdExchanger Senior Editor Hana Yoo, and I’ll have the tiller of the commerce media newsletter again this week.
Today, we’re exploring why the Canadian DTC performance sock brand Outway Socks chose affiliate marketing startup Social Snowball – a Shopify-exclusive ecommerce platform – to remedy its coupon code leakage problem.
It started with a grievance against the popular shopping-based browser extension Honey.
“Honey is a great consumer tool, but it’s a death sentence for a brand,” said Outway Founder and CEO Rob Fraser.
Honey monitors the coupon or promo field as consumers add items to a cart and check out. Then it repurposes codes to offer across its user base, according to Social Snowball Founder and CEO Noah Tucker.
When coupon codes leak, or can be distributed at scale by a third-party platform, a seemingly small drip can turn into a downpour – or what Tucker calls “a domino effect of disasters.”
If a brand doesn’t catch the discount leak straightaway, daily sales take a hit, losses compound over time and accurate attribution goes out the window. For instance, a coupon distributor or affiliate net might generate sales, but by reducing or erasing the profit margin, since so many sales are at a discount.
Marketers must also adjust calculations for new customers via coupon platforms. A first-time buyer who finds a brand through consumer research, search engines or social media is worth more than a first-time shopper from a coupon aggregator, since those shoppers are more loyal to the deals than the products.
“There’s a huge mess of affiliate attribution,” Tucker said.
Leaky influencers
Influencer marketing combined with coupon leakage throws another wrench into the attribution problem.
If Honey spots a nifty code that was shared by an influencer and worked for one customer, the browser plug-in starts auto-discounting the item for all users and sending recommendations or alerts for interested buyers. It would look to analytics like the influencer who shared a custom coupon code is a sales machine. When, really, Honey is increasing sales at an even worse profit margin (now there’s the influencer commission and the commission on sales the influencer never referred).
Fraser also said customers sometimes are willing to pay full price, but Honey still redeems a 20% discount auto-generated from some other shopper. “That’s draining the brand of resources and money,” he said. “It’s the salary of an employee you could have hired to help build the brand. That’s the longtail kind of damage these leaks can have.”
Promo code leakage is a bigger issue for small businesses, which tend not to have strategies and attribution in place specifically for coupon aggregation services. But bigger brands aren’t immune.
“When a code leaks, it could lead to six figures of inaccurate attribution within a few days because of the type of volume [a big brand is] doing,” Tucker said.
Plugging the leak
Outway started working with Social Snowball about a year ago, and, in the past month, it began beta testing Snowball’s new tech, which plugs into Shopify to create single-use discount codes for every customer referral. Social influencers could still use their own customer discount codes, but an aggregator like Honey couldn’t spread the deal far and wide, because it would be a one-time coupon on the Shopify backend.
Safelinks, the new Social Snowball product, rolled out to every Social Snowball client last week. Safelinks personalizes each link so when someone clicks on it, a pop-up appears featuring their name and the person who referred the discount. Snowball plans to allow further customization of these pop-ups, according to Tucker.
“The real benefit is you don’t have to change the code,” Fraser said. “I can’t stress how annoying the old way was when a code got leaked.”
