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Coupons are enjoying a renaissance that’s defying all preconceptions. Once relegated to the thrifty-by-necessity crowd, they are now being used by nearly every demographic – even those with incomes over $150K, according to one study. Clearly consumers across the board are looking for value, and coupons are leading the way.
Has your business responded to the growing trend towards couponing? Here are some things to consider as you decide.
Pros and Cons
If you want to stir up traffic, coupons are the best thing going. Consumers will beat a path to your door for even a small savings. It’s why new businesses use them to build their customer base and why established ones use them to keep customers coming back.
What coupons can’t do, however, is build relationships with customers on factors other than cost savings. If a competitor offers a better coupon, what’s to stop your customer from using it? If you stopped offering coupons – to increase profits, for example – would customers stop coming? If the answer is “yes,” then what?
Part of an Integrated Strategy
Think of a coupon program as one component of a comprehensive marketing strategy that builds long-term customer relationships. If a coupon brings a customer in, requesting an email address as a term of redemption gives you the opportunity to stay in touch – with updates or newsletters that build brand awareness and loyalty.
Is your business subject to drop-offs or seasonal fluctuations? Give slow periods a needed boost with timely coupon offers. When business is brisk, pull back. The key is to use coupons strategically so that even though they may cut into your profits at times, they’re helping create long-term, lucrative customers.
Variety is Key
Consumers respond differently when it comes to offers. Try a variety to learn which work best for your business. Some popular options include:
• Percentage discount off price or total purchase amount
• Buy one, get one free (called BOGO), or buy one get one at a reduced cost
• Volume discount
• Free item if purchase total exceeds set amount (such as $50 or $100)
• Buy one, get a different item free (great for moving slow-selling items)
• Free shipping with purchase
While consumers barely have to look beyond their mailboxes or email to access hundreds of dollars in coupon savings each week, what works best for your business depends on several factors. Are your customers tech savvy? Then online coupons may be your best bet. Do you have an older customer base that prefers traditional inserts? Then Sunday newspaper fliers are probably a given.
You may have to trial-and-error your way to find the offers and tactics that work best. But while you may sacrifice a few dollars on the learning curve, the trade-off of gaining long-term customers more than makes up for it.
Group Coupon Services
Services that provide consumers with discount offers, such as Groupon and LivingSocial, allow businesses to reach more consumers than ever before. This can be problematic for smaller businesses that are unprepared to tackle fulfillment. Will you be ready if hundreds of consumers redeem just days before the expiration date? Can you absorb the discounts if this is the case? Think carefully about your ability to deliver and the impact group discounts might have on your bottom line. While these concerns are legitimate, they can be dealt with by properly planning.
A Fact Of Life
Whether your business gets into the coupon game or not, know that you’re going to have to answer to consumers who expect them. How you manage these expectations should not be discounted.