ZiXXo for Advertisers
Coupons: More than
Just a Discount!
Most people think of coupons as merely a
discount vendors offer consumers in order to increase sales at the
expense of profits. This perception misses the core value of coupons,
which is the ability to use a special incentive to drive favorable
consumer behavior.
Probably the best method of illustrating this point it through examples.
Coffee shops have large fixed costs in terms of staffing, equipment and
rent. They have very low variable costs attributable to coffee and cups.
One local coffee shop found that they were extremely busy during the
morning and evening hours, but the place was dead during the middle of
the day. With a high fixed cost structure, any additional business
during these slow times would go almost directly to the bottom line.
So the savvy coffee shop owner offered a coupon that deeply discounted
coffee from 10am – 3pm. This offer caused traffic to increase during
this time by 25%. In this case, the coupon achieved the objective of
modifying consumer behavior in a manner that was very favorable for the
business, without impacting the profitable business during their busy
times.
Here’s another example of the power of coupons. Amazon found that their
average transaction was under $10. So they instituted “FREE Super Saver
Shipping” for orders over a certain minimum. The actual threshold has
been dropped from $99 to $49 to $25. When was the last time you went to
Amazon to buy one book and were tempted to buy one or two more to get
free shipping? They get me every time! This offer drives favorable
consumer behavior. It increases the average order size from sub $10 to
well over $25, and the incremental profit more than pays for the
shipping. It also makes consumers feel good about shopping online since
they don’t have to pay for shipping.
Amazon has recently taken this one step further by offering free
shipping for a year for a flat $79. Once the consumer pre-pays their
shipping, they are mentally locked into buying from Amazon for a year.
Wouldn’t you feel silly paying for shipping from a competitor when
you’ve pre-paid for Amazon? And when comparing prices, Amazon now has
lower prices, because you don’t have to pay shipping there. Frequent
buyers might feel good about this bargain, but Amazon may be selling the
sleeves from their vest, because of the broad use of free shipping on
the Internet.
A coupon’s value, whether it involves a coupon code or a printed coupon,
is whether it drives consumer behavior that achieves the advertising
company’s business objectives. Let me offer a quick list of business
objectives and the offers that achieve them:
Grow your customer base by attracting new customers:
This is especially common with new businesses and those that have excess
capacity.
• 15% Off of Your First Order
• Sign-up Now and Get 3 Months Free
• Free Introductory Lesson
Drive repeat business and increase customer loyalty:
• Your 5th Sandwich is Free
• Your Second Session is ½ Price
• Every 5th order is 50% off
Sell specific items or services:
This is used to introduce new products/services, increase sales of
high-profit items, sell excess inventory, etc.
• 15% Off All Dive Computers
• 10% Off Our Gold Package
• 2006 Snowboards 70% Off (while they last)
• 50% Off Previously Viewed DVDs
• 15% Off Our New Line of Sports Wear
Increase business during slow times:
• 33% Off Midweek Rentals
• $.50 off any Coffee Drink Weekdays 10AM – 3PM
• $3 Off Haircuts Weekdays 10AM – 3PM
• Early Bird Special 15% Off All Entrees Before 5PM
Capitalize on seasonal or special events:
• Bare Root Fruit Trees $10
• Monday Night Football: $8 Large Pizza
• $1 Beers on Fight Night
• Prepare Your Pool for Summer $75
Increase your average transaction size:
This is very popular. Think “Meal deal” and “Supersize” at fast food
restaurants. Maximizing revenue per customer is a proven winner!
• Free Delivery on Purchases Over $200
• Take $20 Off Purchases of $150 or More
• Buy one Entrée, get the 2nd Entrée 50% Off
• Free Cup of Coffee with Purchase of a Bagel
• Take $50 Off Any Complete Ski Package
• $50 Off MS Office When Purchased With an HP PC
Simplify your business process with regular specials:
This is particularly relevant to restaurants because they can simplify
their kitchen prep time by offering daily specials.
• Take $1 Off Our Daily Lunch Specials
• Daily Dinner Special Only $8.99
Capitalize on customer traffic from nearby events:
• Rockets Pre-Game Special $2 Beers
• Show Your Movie Ticket Get $1 Single Scoop
• Giants Lunch Box Special $4.99
Generate customer referrals:
A great way to grow your business is through customer referrals. And a
great way to stimulate customer referrals is through coupons.
• Bring a friend and get 25% off your order (one
discount per pair)
• Refer a friend and get a 15% rebate
• 1 month free when you refer a friend
There are an endless collection of offers that encourage favorable
consumer behavior. Best of all, consumers who receive these special
deals feel special. Using coupons makes people feel like smart
consumers. It also creates an appreciation for the business that is
offering the discount, because they really appreciate your business. And
people love telling their friends about bargains, so coupons can fuel
positive word of mouth: “We had a wonderful meal at Mike’s Bistro on
Harbor, and we saved $20 on the tab, you really should try it!”
Coupons also offer businesses a unique advantage over every other form
of advertising. Shopkeeper John Wanamaker was famously quoted saying:
“Half the money I spend on advertising is wasted; the trouble is I don't
know which half.” With coupons, redemption makes it very clear what
works and what doesn’t. No other form of advertising provides this level
of transparency and accountability.
Obviously, coupons can be much more than a simple discount. When done
properly, coupons are a powerful tool in any business’ marketing
arsenal. One of the more popular uses of coupons is to introduce
consumers to your business. It is important to note that coupons can be
used to create customers, but it is up to you to turn those customers
into fans.
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