Do Coupons Work?

Do coupons work? For some they seem to but I believe discount coupons are an ill-conceived approach to marketing. Your customers are mostly coming for the wrong reasons – deep discounts. Here are three distinct types of customers who use coupons:

1. The first type only comes in to use the coupon. “Discount” is their mantra. They’re never to return until the next coupon comes their way. This is not the type of loyal, repeat customer you want and certainly not good for your business.

2. The second type of user is your exiting customer who may come more often with coupons in hand. However, in the end all you’ve really done is lower your profit and gain nothing. These customers are already loyal followers. In fact, after a while they may wonder why they ever pay full price and may convert into coupon only customers and that is a real loss.

3. The third type of user is a first-time customer who has a positive experience, enjoys your store or restaurant and comes back as a now loyal follower. This is the purpose for the coupon and it is a success when this happens but it happens too infrequently to compensate for the losses experienced from the first two types.

Buying your share of market creates no beneficial long-term results unless you are a discount house. (And in that case, that is all you are selling and you had better have the lowest price of all.) Earning your share of market is the only way to go. Added value, perceived value, service, quality, entertainment, guarantee… whatever it is that you can provide to offer a competitive advantage and a positive experience is the way to market. This is the advantage small stores have over the Internet and the large stores – service, personal attention, added value and perceived value. This works and will beat any coupon program a competitor will offer as price is only one factor in making a purchase decision and, in most cases, it’s not the most important.

Ignore your competitors’ use of coupons. Be smarter. Important benefits and word-of-mouth, social networking, excellent service, etc. will carry you further than coupons ever will.