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Is coupon advertising relevant in the digital age?

Is coupon advertising relevant in the digital age?

By | 01.17.18
Is coupon advertising relevant in the digital age?

Think about the last couple of times you used coupons. Where were you? Were they print or digital? How did you receive the coupons? Why were they compelling? While many marketers have moved away from coupon advertising as an “outdated” marketing mechanism, others have embraced them as a still-relevant and an ever-evolving marketing tool.

So which is it…are they outdated? Or can they work for your business?

The Benefits of Coupon Advertising

The stats:

  • 60% of consumers actively search for coupons.
  • 95% of consumers look at coupons favorably.

Based on the numbers, we like coupons. And so should local business owners.

The beauty of coupon advertising is that with relatively small variations in format and copy, coupons can serve a wide variety of purposes for your business. Two coupons that share the same initial monetary investment and method of deployment, for example, could accomplish two very different goals for your business (without much extra effort).

Common goals of coupon advertising:

  • Increase brand awareness
  • Attract new and repeat business
  • Fight seasonality
  • Upsell and cross sell
Increase Brand Awareness

Coupons aren’t just transactional. A Harvard Business Review experiment revealed that as few as 1% of coupons received are actually used. That may seem discouraging, until you hear the good news. In the same study, consumers who received coupons but didn’t redeem them accounted for 60% of the sales lift delivered by the coupon.

How was this possible? Brand awareness. Though many consumers can be bad at keeping and remembering to use coupons, the study found that receiving the coupons in the first place improved their ability to recall the business and their likelihood of patronizing it.

Attract New and Repeat Business

Perhaps the most intuitive benefit of a coupon advertising program is its basic functionality – getting new and repeat customers to buy. If you can get a coupon in the hands of a potential customer, you have a chance of winning their business.

Common methods for coupon distribution:
  • Direct mail
  • Catalogs
  • Text and email
  • Coupon sites and mobile apps
  • Receipts
  • Box and bag stuffers
Fight Seasonality

The holiday season just passed. If you’re like my husband, many of you may have flocked to store clearance sections in search of deeply discounted holiday items like Christmas ornaments and 20-foot-tall, inflatable Santas for the front yard.

Clearance sales aren’t the only ways to benefit from seasonality.

If you run a business that falls victim to seasonal shifts in revenue, coupons could be your answer to fight those ups and downs. Let’s say you run an accounting and bookkeeping business, and you’re slammed during tax time but slow during the fourth quarter of each year. Consider using coupons to remind your customers of your services during slower times. Offer incentives to customers who book early before peak season as well.

Upsell and Cross Sell

Big box retailers are infamous for using coupons to promote a product at a ridiculously low price, then failing to deliver on their enticing offer once consumers try to redeem it. Classic bait and switch. Just as we wouldn’t pull a bait and switch on you, we hope you didn’t scroll to this section hoping to learn the best practices for employing that sneaky marketing tactic yourself.

A less sneaky, more effective version of the bait and switch is using coupons to upsell or cross sell complementary or interchangeable products or services.

Let’s say you’re a personal trainer or you run a fitness center. During peak season before the summer months, you may have limited availability for your popular “Summer Belly Fat Blast” group classes. You might consider creating a coupon promoting that session and noting its limited availability on the coupon itself. Then, if consumers contact you in reference to that class but it’s already booked up, they won’t be surprised if you offer alternative options.

Similarly, if you own a taco shop and a customer walks in with a coupon for your “Super Spicy Beany Beefy Burrito Bowl,” you’ve earned the opportunity to offer them a drink or some guacamole to accompany it.

The Pitfalls of Coupon Advertising

While we think coupons can do a lot of good for your business, you still need to be smart about using them.

Common coupon pitfalls:

  • Cutting into your margins
  • Interrupting quality of service
Cutting into Your Margins

Companies like Bed Bath & Beyond know all too well what can happen when coupons catch on. Famous for their high volume, oversized, “never-expiring” 20% off coupons, the retailer pigeonholed themselves into accepting coupons for the long haul. The Washington Post reported in 2015 that the chain saw its profit fall 10% in one quarter due to customer overuse and reliance on the coupon program. According to them, “…shopping with a coupon at Bed Bath & Beyond has begun to feel like a given instead of like a special treat, and that’s bad news for the chain’s bottom line.”

Want to avoid the same fate?
  • Make limitations of your coupon programs clear. While it’s important to honor any coupons brought in, it’s OK to reject ones that are expired or aren’t applicable, as long as the coupon made the restriction clear.
  • Watch how your campaigns are affecting profit margins. If you see a significant dip in revenue or another profitability issue, end the campaign early. Honor any coupons brought in, but stop distributing them before you lose any more money.
Interrupting Quality of Service

Another potential issue with coupon advertising programs is how they impact customer service. In its early years, Groupon got a bad rap by many retailers and restaurants for bringing in “bargain” shoppers. And because of its mobile device interface, some businesses experienced difficulty redeeming the coupons. This resulted in poor service for those attempting to redeem the coupons and long wait times for other customers.

Avoid a negative impact on customer service:
  • Over-train your staff on coupon redemption processes. Ensure they know exactly how to redeem coupons and any intricacies of doing so before you officially launch a campaign.
  • Don’t implement coupon promotions for products or services that are complicated or take longer to deliver. For example, if you own a restaurant, avoid distributing coupons for dishes that take longer than usual to prepare. That way, if you see an influx in order volume for these dishes, it won’t impact your ability to deliver great service.

Implementing a Coupon Advertising Program

Whether you choose to implement print coupons or use a digital coupon service is up to you. Take a look at your most loyal customers, and think about what best suits their demographic. Consider the ease at which you can deliver the coupon you decide to go with, and make sure it’s not overly difficult to implement.

Ready to use coupons, but not sure how to design or distribute them?

Thryv can help. Thryv Starter sets you up with 5 custom coupons right off the bat. Learn more.

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