Coupons: What Every Business Needs to Know
Coupons are a form of advertising that may be called offers, discounts, etc. With a clear goal in mind, a firm understanding of the brand, and a general understanding of the pros and cons of each element in the promotional mix, you can make some wise decisions. Add a little experimentation, and you can create a marketing program to meet your objectives, build customer loyalty and increase revenues.
Coupons, discounts, deals, will be referred to as “offers.” Offers can be used in all elements of the promotional mix (social media, email, print advertising, online, special events, and face-to-face distribution.)
Offering discounts can be a powerful weapon in your marketing arsenal. Remember, as a good business rule, your business should evaluate all elements of the promotional mix and select the right combination of marketing efforts that suit your business. Offers may be targeted at the trade or ultimate consumer; make use of a variety of formats (premiums, coupons, contests, etc.); attract attention through strong purchase incentives and dramatic offers to boost sagging sales; stimulate quick response; be short-lived; or effective at building long-term brand preferences.
Possible Coupon Pros:
- Easy and quick to implement
- Easy to track
- Increased customer acquisition/attracts attention
- Boost sagging sales
- Increased conversions
- Increased customer loyalty
- Depending on distribution method can reach consumers, businesses or trade groups, etc.
- Decreased margins and profitability
- Possible brand damage
- Decreased conversions outside of sale periods if you train visitors to wait for offers
- Tendency to attract non-loyal (price driven) shoppers
- Tendency to reduce average order size
- Risk of starting coupon war with a competitor
- Short-lived (i.e, expiration dates; Web-based may be exception)
Chamber offerings: The shop local program allows businesses to post offers for general consumers. The member-to-member program allows businesses to make offers exclusively to other Chamber businesses. Offers can be placed online, in the Chamber Relocation and Resource Guide or sent out via email or sms text message blasts.
Who Are Offers Right For?
Offers can be an effective tool not only for customer acquisition, but also for customer loyalty. However, it’s important to consider your overall brand strategy before you begin offering discounts.
If you want to position yourself as a higher-end brand, or if you have slimmer margins, you may want to consider sticking to customer loyalty type offers as oppose to weekly sales offers. On the other hand, if you have healthy margins deep discounting and daily/weekly sales might be better for hitting your goals.
Ultimately, you need to consider if offers and the type of offer is the right strategy for your brand. Regardless, choosing the appropriate elements in the marketing mix will generally involve a lot of experimentation to understand what works best. The best approach is to choose a goal for every campaign or offer, start small and measure the results.
Types of Offers
There are several overall types of discounts and offers you have at your disposal. Let’s take a look at the most common:
1. Percentage Based Discount - The most popular way to offer discounts is percentage based discounts. This can include small incentive percentages like 5 percent or 10 percent off, larger discount to really drive sales like 20 percent and 25 percent or large percentages like 50 percent+ to liquidate merchandise that isn’t moving or old.
2. Dollar Value Discount - Offers that are based on a dollar value can be positioned as a credit. This makes people feel as if they're wasting money if they don’t use it. In some studies, redemption of dollar based offers versus percentage based offers can be as much as 175 percent greater.
3. Free Gift - A free gift with a purchase can be a great way to provide additional value to customer. If used strategically, it can also be used to increase average order size and/or to get rid of product that isn’t moving.
When and How to Use Offers
There are hundreds of ways you can use sales, offers, discount and deals to drive customer acquisition and customer retention.
1. Daily/Weekly/Monthly Offers to Drive Sales and Meet Revenue Goals - These are traditional sales used to drive increased sales. Many times sales are used at the end of a month or quarter to increase revenues to meet projections and goals.
Example: Taco Tuesdays; buy one, get one free the first Monday of every month; shop local members receive free small coffee with any purchase.
2. Prelaunch Offers - If you're still in the prelaunch stage of your business or maybe even launching a new product or service, you can use prelaunch offers to help drive sales and peak interest.
Example: A retailer can offer free product in return for sharing their Facebook or website site prior to launch. Using this tactic and type of offer can get subscribers prior to even launching a product or service.
3. Holiday/Season Offers - Black Friday, Christmas and New Year's are the big ones, but the whole year is sprinkled with holidays that you can use to stretch revenues with offers.
Tip: Tip don’t limit yourself to just holidays, but use the seasons (spring sale, summer special, spring training deals).
4. Email/Newsletter Subscription Offer - As you probably already know, building a list (email, text, phone numbers, address file) is extremely important for some businesses. By providing an offer in exchange for visitors email, address, cellphone number, is a great way to build your own customer loyalty program. This provides you with the opportunity to market new products and offers to them in the future.
Example: An online manufacturer offers 10 percent off your purchase for signing up to their newsletter. They advertise this in their emails and sms text marketing campaign.
5. Offers for Liking, Following and Sharing On Social - One of the hardest parts of running a small business is getting the word out. Giving visitors and customers an incentive to share your on-store, Facebook page or webpage with their social circles can be an effective way to create some inexpensive word of mouth.
Example: One company uses a coupon pop to offer visitors 5 percent off their purchase in exchange for visitors liking or sharing their online store.
6. Referral Offers - People are much more likely to purchase from you if referred by a friend or family member. Use this to your advantage and use offers to encourage referrals. You can choose to give a deal to the person referring, the person being referred or both.
Example: One company provides an incentive for all happy customers to share their purchase with their friends, as well as offering those people referred a discount on their first purchase. For some small businesses having a quick and effective referral program is a must.
7. First Time Shopper Offer - Providing a first-timers offer could be just the nudge those first-time visitors need to be converted to a paying customer.
Example: A company provides all new visitors with a 10 percent off discount and free shipping.
8. Volume Size Offer - An offer based on the total value of a sale or shopping cart is an effective upselling tactic to encourage customers to spend more, which increases your average order size. A strategic way to incorporate this is to calculate your average order value for the previous few months and offer a discount or free shipping on all orders 10 percent-20 percent over your average order value.
Example: One popular retailer offers free home delivery on all orders over $75.
9. Exclusive Social Offers - Exclusive offers on your social networks can be a great way to build a strong relationship with those who follow you as well as provide a reason for new people to follow and subscribe to your social channels, which will allow you to market to them in the future.
Example: One beauty products company, will occasionally do social media network specific offers. They offered Facebook fans a free gift with any orders over $25.
10. Customer Loyalty Offers - Rewarding customer loyalty can help build an even stronger bond while also only providing discounts to customers who already spend money with you. It can be as simple as sending your best customers a personal email with a discount or credit, or using an automated email marketing app like Klaviyo of Dex to send out email offers. Implementing a customer loyalty program is a must for some companies.
Example: One company uses an app to reward their best customers with a point system that can then be redeemed for in-store credit.
11. Exit Intent Offer - Sometimes all it takes to convert a visitor to a customer is a last second offer before they leave. An exit intent offer will be offered to a visitor when they are about to leave your site (store or website), presenting them with a final offer to purchase.
Example: One company uses a popup to offer people about to leave their website a 10 percent off, in a last ditch effort to get visitors to convert.
What are some examples of coupon disclaimers?
The disclaimer that you include on your coupon should be a precise statement of your offer policy. It should be tailored to fit the role you want coupons to play in your business strategy. Most disclaimers are tailored to address concerns about expiration times, limitations, additional fees, taxes involved, limitations due to hours of operation or hours of redeemability, limitations on geographic scope, prevention of fraudulently copied coupons, and point out it is illegal to sell or transfer the coupon, that the coupon has no cash value, and that there is a limit on how many times the coupon can be used (to avoid having a single person clean your shelves), and a condition on availability.
You should have a comprehensive policy on coupons published on your website. It should include which coupons you do and do not accept, whether coupons are refunded on returned products, reservations of rights to refuse coupons, and other such details. It is easy to find examples of coupon policy, because most stores publish them conspicuously on their websites.