You and Your Money
SMALL BUSINESS FINANCE: When and How to Use Coupons to Promote Your Business
There’s no doubt about it we are a nation of coupon-clipping consumers and let’s face it, who doesn’t like a bargain?
From print coupons to online coupon codes, and now with the staggering growth of social coupons – consumers are literally bombarded with special offers.
But how do you make coupons work for your business without underselling your value and compromising your bottom line?
Here are some considerations and tips for determining whether “couponing” is right for your business and how to market your discounts and special offers correctly.
Are Coupons a Good Fit for Your Business?
Before you jump on the social coupon bandwagon, or even use more traditional outlets to promote your latest coupon-based special, step back and consider whether coupons are the right marketing tactic for your business. Here are some points to consider:
* Coupons are really another form of marketing; in themselves they are not money-spinners. Concentrate on using them to build awareness of your business among new markets and to new customers. From here you can hope to up-sell and generate repeat custom.
* Coupons tend to work best for location-based, product-oriented businesses where local customers can realize quick and easy savings.
* Can you business scale to meet the potential demand that the coupons may trigger? Whether you operate online or are a location-based business be sure that your staff are trained and your operations can scale quickly and seamlessly to deal with the new foot traffic.
* Make sure you can afford the discount for the duration of its validity. Weigh up your long term goals and how coupons can benefit these. Do you have enough profitable business coming from other product lines or time periods to supplement the cost of offering a discount or special offer? This is a top consideration, especially if you are exploring social or group-buying coupon sites, such as Groupon or RedPlum, who take 50% of the revenue you get from your advertised offer.
So What About Social / Group-Buying Coupon Sites?
Because coupons or specials are blasted out to subscribers on a daily basis, social or group-buying sites are essentially coupons on steroids for the consumer and small business owner alike that, ill-managed, could inundate you with new customers and compromise your service.
* Who uses these sites? Studies show that group-purchasing sites are dominated by a lucrative market of young, educated, female, above-income consumers.
* What will it cost me? Social / group buying sites typically charge 50% of your special offer You can set a cap on how much you want to sell – the lower the better to prevent an onslaught of new customers. In reality, don’t expect your estimated take home to be much more than 25% of your normal retail price once you’ve deducted your discounted offer price and the group buying sites cut of the offer.
* Are social coupons right for your business? So it follows that if your business can scale to handle a flood of customers, your market is youthful, educated women and you can afford to offer a product or service at less than 25% of its retail price – then social or group-buying coupons may be right for you.
Building a Successful Coupon-Based Campaign
If coupons are right for your business, here are nine tips for using them successfully:
* Look at your numbers and decide on the level of discount you can handle. How long should it run for and what changes you need to implement to support it.
* Put limits around your offer to help you cope with demand. Consider limiting redemption to certain days of the week or times of day and be clear on exclusions (e.g. dine-in only and alcohol exclusions).
* Put in place a “one offer per customer” policy so that customers’ can’t share or re-use the same coupon.
* One-off coupons have a place but aim to promote repeat visits. For example, “buy X and get Y free on your next visit”.
* Focus on shifting excess inventory or promoting under-utilized services.
* If you can, focus on new customers, outside your current market or demographic. For example, a hair salon looking to attract more male customers, could offer a “sharpen up your business image” offer targeted at new male customers.
* Use coupons sparingly – you don’t want regular customers to think that they are being gouged when they see how much you are willing to discount to gain new customers. Another problem you may encounter by too frequent discounting is that customers will delay patronizing your business until the next deal comes out.
* Market your coupons can be through multiple channels including your Facebook, Yelp, or Google Places page; on your website homepage: in local newspapers, clipping magazines, and so on.
* Track ROI - Ask customers where they found your coupon and use web-analytics to track use of coupon codes and web banner click-throughs.