Coupons… How Effective Are They?

 
The use of coupons has increased dramatically over the past year. Retailers are focused on attracting new customers and customers are focused on saving money. There are so many coupon sites and social discount sites, people expect to get a coupon for products and services and may not even purchase unless they have one.

According to research done by Harris Interactive, 34% of web consumers now will wait to make a purchase until they have a coupon. It is the tipping point for many consumers who don’t have much disposable income.

Everybody loves to get something extra and coupons seem to offer just that. In these tough economic times, consumers want to feel they are getting more for their money. But are coupons and discount codes really an effective way to market your business?

The answer is undoubtedly, yes. In almost every business model a coupon or coupon code will help attract both old and new customers.

After using a coupon the consumer is left with less buyers remorse and feels especially good about the purchase they’re making.  The company who developed the promotion is more likely to make the sale or even multiple sales.

Discounts and Coupons can be an be effective for a wide variety of reasons:

• Discounts like “buy one get one for $5 off” encourage additional purchases while offers like “20% off total purchase” will often encourage customers to buy in greater volume.

• They help to introduce and establish new customers who are then likely to become repeat customers.

• Coupons are an excellent way to reward your best customers and maintain an interactive beneficial relationship with them.

The only problem with discounts and coupons is that you’re giving away a portion of your profits before you even had a chance to make any.

You need to ask yourself two questions before creating a new coupon or discount promotion:

What is the average lifetime value of your customer?
Can you still be profitable after using a discount or coupon promotion to draw them in?

Once these questions are answered and profitability is evident, test some different variations and see which one works the best. Keep in mind it is always good to offer new types of coupons, just make sure the savings are closely related.

Keeping a continuous flow of time sensitive discounts can increase the dynamic feel of a business and entice the customers who are “on-the-fence” to finally contact you.  By using the right message, at the right time you can make sure those customers choose you now and in the future.