Image by CheyI want to ask you a question to which I don’t yet know the answer: If you have an online store, when should you display a coupon box on your checkout page?

Before you answer that, consider another question: Has this ever happened to you? You Google something that you want to buy, for example, “Adirondack Chair.” You see a promising link in the first few search results and click on it: “Voila!” you arrive at a site that offers exactly what you’re looking for, and at a fair price. You click “Add to cart” followed by “Checkout.”

Three cheers for online shopping! You are now just a few keystrokes away from cheerfully and efficiently completing your purchase. Then it happens [cue dramatic clash of cymbals]. Suddenly something troubling materializes before your very eyes: A box labeled Coupon Code. How do you react? Think carefully about your answer because it could be the clue to a whole bunch of lost revenue.

Personally, my first thought is this: “If I had a coupon code then that “fair price” could be even fairer.” Two other thoughts then fight for second place: “Is someone else–someone who has a coupon code–getting a better deal on this chair than me?” versus “Where do I get a coupon code?”

And if I act on either of those two thoughts, you can pretty much bet I will be leaving the checkout page, either to open a new browser window and search for a code, or to navigate back to the home page of the site to see if I missed something about a coupon.

Now, if you’ve been selling stuff online for any length of time you know this: You do not want people leaving the checkout page for any reason (except maybe to grab their credit card). Here’s why: …two thirds of the people who leave the checkout page to look for a coupon don’t come back. How do I know this? Well first of all, we’ve been running some campaigns for clients where we cover up the coupon box for certain traffic segments and the results are decisively positive, that is, more sales are completed when the box is hidden than when the box is exposed.

Abandoned shopping cartSecond, this exact statistic appeared in the results of a recent survey conducted by PayPal and comScore. This is the same survey that found 45 percent of online shoppers had abandoned shopping carts multiple times in just three weeks.

When asked the reasons for abandoning their carts, 27 percent of respondents cited: “Wanted to look for a coupon.” Of those shoppers, only one in three later returned to the same site to buy.

Given that the average cost of abandoned goods in those shopping carts was over $10, this is a problem to be taken seriously; and given what I’ve observed in my random survey of online stores over the past few weeks, it’s a problem that is widespread. A lot of stores present the shopper with a place to insert a coupon even if the shopper arrives at the checkout page from a direct “search-to-cart” buying path like the one I described above, with no pre-existing thought of using a coupon.

So, to repeat my original question: If you have an online store, when should you display a coupon box on your checkout page? Although I said I don’t know the answer, I think I’ll take a stab at it, but feel free to let me know if you think I’ve got it wrong:

“When there is a high probability that the shopper already has, or can easily access, a coupon applicable to what he or she is purchasing.”

To put that a different way:

IF (P > 0.8, ShowBox, NoBox)

where P = probability that shopper has or can easily access a coupon applicable to one or more items being purchased. Does this make sense? And if so, how hard would it be to implement in your online store? Calculating P could be tricky and we can’t overlook another scenario that explains why coupon boxes exist on some checkout pages: They are hard coded into the shopping cart software. I will tackle these rather tricky issues in a separate post and end this post with a fairly conclusive answer to the following question: Can coupon boxes cost you money?

A: Yes they can.