Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doc blog.
One of the things I typically do as a retail consultant when I take on a new client is to discontinue discount marketing programs. In fact, I often raise their prices to help them become profitable.
Untrained marketers who say we need to do something always go the easy, let's discount way. But just because people redeem them, doesn't prove coupons built your business. Yes, FSIs are getting higher redemption rates but that is because there are literally thousands of places to find them, from mommy blogs to cottage industry online coupon aggregators.
Here are seven reasons offering coupons to people who don't know you shouldn't be used for your marketing:
- Coupons are looked at as an ongoing effort. In effect, they become the marketing plan.
- By the time you account for the time spent creating them, printing them, distributing them, factoring in the actual discounting itself, potential confusion at the registers, etc, you may have a very expensive promotion. Unless a manufacturer is subsidizing it.
- You have taught the customer that your product is not worth what you priced it at. In fact, you may have given the impression you are overpriced.
- The customers who found you through coupons will wait for your next one.
- You are rewarding people who probably have no relationship to the success of your business.
- Your sales staff will keep a copy of the coupon to offer to their own customers or friends.
- If your regular customers who have supported you find out someone who's never been there is getting a better deal than they are, they just might not return.
That's precisely what happened at a local restaurant in Long Beach, CA where a group of us went for a birthday celebration.
When the couple at the table next to us paid their check with a 50 percent off coupon from an Entertainment Book, we overheard the owner tell them how he valued the coupon book because it brought in customers who had never tried the restaurant before.
The coupon bearers told him they were from Pacoima, an hour's drive away, and would never have come without the coupon. He smiled, wished them well and said he looked forward to seeing them again.
Our table was incensed!
We lived in the neighborhood. We'd gone there for years, paid top dollar and received no special recognition. We never went back.
What to do instead?
Reward those who buy from you 24/7, 365 days a year. Coupons or special discounts reward them for their loyalty.
Getting only the coupon users who shopped with you on your preferred list misses the point — they'll just wait for your next discount.