How Shopify Plus Merchants Can Block Coupon Code Extensions Like Honey
Since the launch of Honey in 2012, the simple but effective coupon browser extension has become an important part of millions of customers' online shopping experiences.
But for the countless happy shoppers earning surprise discounts, there are tens of thousands of reeling ecommerce store owners suffering from the impacts of Honey’s coupon code injections. Especially those doing millions in annual sales, like Shopify Plus Merchants.
Coupon code leaks have become a major source of frustration for online retailers, resulting in millions of dollars in lost revenue, and a great deal of wasted time and resources. In many cases, the effects of code leaks stretch far beyond the initial money lost, devaluing brand perception, decreasing customer loyalty, and shrinking marketing budgets.
In 2022, a coupon for $100 off all StockX orders found its way into the public domain. Within 24 hours, the error generated over 50,000 orders to the tune of $5 million in unauthorized discounts.
Of course, customers and sellers were not pleased.
And as coupon-code scrapers like Capital One Shopping and Eureka gain traction, stories like this will only become more common.
But to better understand the seriousness of the problem at hand, let’s start with a definition.
What is a Coupon Code Leak and How Do Coupon Extensions Like Honey Work?
A coupon code leak occurs when a discount or affiliate code intended for a limited number of people (e.g., first-time customers, VIPs, etc.) gets shared with a larger audience usually by way of third-party coupon extensions like Honey.
Honey acts as an aggregation and automatic code injection extension tool, scraping thousands of checkout pages and amassing a publicly available database of previously used, legitimate coupon codes.
Anytime a Honey user enters a discount code at checkout, this code is added to the database.
From there, whenever future Honey users visit an ecommerce site, the app will automatically apply any active and applicable codes at checkout, regardless of whether the customer qualifies for them.
In addition to the third party-injections, leaked codes will often find their way onto aggregators like RetailMeNot and Slickdeals, spreading the discounts even farther into the e-commerce ether.
Simply put, it’s a f**cking mess.
How Can Coupon Code Leaks Hurt Shopify Plus Merchants?
At the surface level, most ecommerce founders can understand why giving customers unintended discounts is such a big problem.
Of course, less money made per order = hurts profit margins.
But in our current e-commerce environment, the impact of coupon leaks stretches far beyond the missed revenue.
The second-order consequences of these leaks can have a harmful impact across all areas of an ecommerce business from brand perception to operations and customer loyalty.
Let’s break each down a bit further.
Eroding AOV and Profit Margins
Whereas traditional coupon books and online discount codes frequently serve as a top-of-funnel awareness strategy, code leaks reward discounts to customers with strong full-price purchasing intent. Auto-applying a code at checkout means the customer got through the entire marketing funnel, before even knowing the coupon code was even available.
In other words, there is a strong chance they would have converted at full price, without the code. Instead, the resulting discount shrinks profit margins and average order value.
But more problematic is the long-term impact of this constrained cash flow.
Less money in the bank reduces the ability to invest in marketing, inventory, employees, or other initiatives to grow your business. This also may limit the types of discounts and promotions your company can offer in the future.
Leaks can become particularly troublesome with employee and Friends & Family discount codes which often offer significant discounts and can remain active long after an employee has been terminated.
Let’s say Honey picks up a 50% Friends & Family discount code. Orders are flying in at-half price, with no end in sight.
From a gross profit standpoint alone, fulfilling these orders may lose your company money.
So what do you do?
Do you honor and fulfill these orders, incurring additional pick, pack, and ship 3PL costs, and fall even further into the red?
Or do you sacrifice the customer experience, and potentially decrease customer lifetime value, by placing the orders on hold for further review?
How do you even tell which orders are from legitimate friends and family and which have been injected by a third-party extension?
As you can see, before the invention of Shopify apps like Vigilance, there was no right answer. The decision has always been a lose-lose.
Customer Loyalty and Brand Perception
Promotional periods are often carefully planned and designed for small subsets of users like VIP customers, first-time customers, or attendees of a specific event. While promotions are designed to engage customers and build emotional relationships with the brand, leaked codes can have an inverse effect. Customers, especially loyal repeat purchasers, want to feel special. Leaks downplay this intimacy and can sour the relationship between the brand and its customer.
Many premium and luxury brands pride themselves on offering few discounts if any at all. Coupon code leaks, especially those giving a significant price cut (like an employee code), can also taint the perception of a brand altogether.
As the creator economy continues to skyrocket, influencer and affiliate marketing have become a key growth channel for many Shopify Plus stores.
The premise is simple:
- Find a creator that aligns with your brand
- Provide them with a unique discount code to promote your product or service to their audience
- Pay the creator a fixed percentage of each sale their content drives
- Your brand makes money. The creator makes money. Everyone wins.
But while sound in theory, code leaks make accurate influencer marketing attribution tracking nearly impossible.
Code leaks can artificially boost an influencer’s performance, incorrectly attributing an influx of orders to their efforts, potentially taking a double-whammy to your bottom line.
Not only does this result in you paying a partner an unnecessary commission, but it also makes strategizing future marketing efforts so much harder. What may seem like a rockstar affiliate may be a dud. And without the ability to determine which codes were injected rather than typed in manually by a customer, there is simply no way to tell.
In some cases, greedy partners may submit the codes to coupon extensions outright, as a way to inflate their performance and earnings.
“We were giving discounts we didn’t need to give, AND paying on deserved affiliate commission ON TOP,” he writes. “We should have caught it, but didn’t. In total, we lost over $100,000 in unnecessary discounts and undeserved commissions.”
This revenue hit alone can be a devastating blow for scaling ecommerce stores. But the ensuing ramifications are far worse.
More money spent on false attribution results in less marketing spend for future efforts and less insight into which discount strategies really work. For companies frequently plagued by code leaks, these additional discounts may need to be factored into financial models when planning future promotional efforts. Occasionally, the promotions may need to be scrapped altogether.
To limit exposure to leaks and false attribution, ensure that all influencer and affiliate code cookie lengths are set to ~30 days. While this approach will require extra legwork in creating new codes and updating creative for long-term partnerships, the cost savings are likely worth it. Additionally, shorter promotional windows can also help drive traffic and conversion through scarcity.
Employee Productivity Time
Scaling an ecommerce business is no easy task. And with a never-ending list of things to do, managing code leaks can be a huge time suck for both founders and employees alike.
Whether it’s manually creating and swapping codes, sifting through attribution data, communicating with affiliates, or sending out apologetic customer service emails, there are hundreds more important things for you and your team to be working on.
How Can Shopify Plus Merchants Block Coupon Extensions Like Honey?
Single-Use Codes and Manually Swapping
Distributing single-use codes is a nearly fool-proof way to eliminate affiliate code leaks, but it comes at a price. Since each code is unique, running static ad campaigns like podcasts, newsletters, or video ads is out of the question.
The act of creating single-use codes is also incredibly labor-intensive and fairly unrealistic at scale.
Slightly more scalable but equally challenging is the method of continuously manually swapping codes so that when Honey gets a hold of it, it’s already expired.
Manually swapping involves the frequent creation and deactivation of codes, consistent updating of ad creative, and fluid communication with affiliate partners. For companies with large affiliate and influencer marketing programs, this could be a full-time role in itself.
Ask to Delist Codes
You may be wondering if you can simply ask Honey to remove your codes from their platform.
The short answer is, it depends.
While Honey has been somewhat cooperative in removing specific coupons, getting your store removed from the extension entirely is a long shot.
It’s worth a try, but don’t count on it. If you do try, take a page out of this Shopify plus merchant’s playbook, and get creative.
Closely Monitor Code Usage
While affiliate and influencer marketing codes are still fairly hard to track, activity-based codes (e.g sign up for our mailing list and receive 20% off) are easier to monitor. If there’s a large discrepancy between code usage and new newsletter subscribers, for example, chances are your code has been picked up by a coupon extension.
The same applies to discount codes intended for smaller customer segments like interest-based subscriber cohorts or repeat customers.
If your data shows that only 500 customers were eligible for the discount and the code has 2500 uses, it’s best to deactivate this code immediately.
Investing in a coupon extension blocking Shopify app is by far the most simple and cost-effective approach for Plus merchants to manage code leaks.
But until recently, there were no Shopify Plus add-ons capable of blocking the injection of automatic coupon codes at checkout.
That’s why we created Vigilance.
Vigilance is the first Shopify Plus app designed to block coupon code leaks and give merchants a clear view of their coupon code usage.
Our team has spent countless hours listening to the pain points of Shopify Plus merchants and building a robust add-on to automate the management and attribution of leaked coupon codes.
With Vigilance, merchants can identify orders where coupon codes were injected by a third-party extension like Honey. From there, all leaked codes can be blocked with a single click.
By giving merchants deeper insights into their brand’s coupon code usage, Shopify Plus companies can effectively protect their margins and increase average order value, saving them time, money, and countless headaches in the process.
Tired of coupon extensions like Honey hurting your business? Start protecting your store from coupon code leaks today with the Vigilance app.