Providing your customers with printed and digital offers to “sweeten” the opportunity to visit your location and/or buy something.
Coupons, when done properly, can be a great tool to create an incentive for existing and potential customers to visit your location and try your services.
We had great success opening new Starbucks Coffee locations in markets across the world by offering a complimentary latte either through a newspaper coupon or via a direct mail coupon “invitation.” We would communicate something along the lines of…
“Hello, we’re new to the neighborhood. Come and check us out… This first drink is on us!”
This was great. No risk for the customer. It was a coupon with retail value of $3.50 or so, but cost of goods was much less.
Offer value to your customers. If you offer something they don’t need, or want, or of low value, your coupon will not work.
Add Value vs. Discount
Instead of offering a discount, provide something of value. That is, instead of taking $25 off of a $150 product or service, give $25 instead.
When you sell something that is priced at $150 for $125, (save $25) the customer perceives the new worth of that product at $125. However, if you sell something priced at $150 and give them something worth $25 you keep the value of the $150 the same and the customer still gets $25 “for free.”
Set a date for your coupons to expire. Typically, the most effective coupon encourages a customer to visit more frequently than they otherwise would have. If your customer visits you once every two months, having a coupon that expires in a month (with a great offer) will encourage them to visit you sooner.
Be sure to have a code on your coupons to track where they came from. If you have a coupon that looks the same in various newspapers or direct mail offers to different neighborhoods – code them so you know which offer worked the best.
This brings up the topic…
Track Your Offers
You should be keeping count of how many coupons you gave out, and how many were redeemed. You should calculate a basic redemption percentage to track coupon usage.
Number of Coupons Redeemed ÷ Number of Coupons Distributed = Percent Redeemed
250 coupons redeemed ÷ 1000 coupons handed out = 25% redemption
While the redemption rate for FSI [newspaper] fell to 0.51%, from 0.58% in 2011, the redemption rate for Internet print-at-home coupons increased to 7.72% in 2011, vs. 6.21% in 2010. Internet print-at-home coupons accounted for 4.6% of total coupon redemption volume, up from 2.8% in 2010. Internet print-at-home coupon redemption grew 73.5%, to 161 million coupons.
Program Your Cash Registers
Make tracking easier by creating a code on your register that allows automated tracking of coupon usage. At Starbucks we created “discount codes.” At the bottom of a coupon it would say “Barista, please ring up as CODE 423.” This would allow us to easily pull-up a report of all the usage of this coupon in all of our stores.
Cost of Discounting
You should be tracking coupons to measure how much money you’ve given away in discounts. Your sales will be lower when you have coupons.
A Coupon Really Isn’t About Giving Something Away
The true purpose of coupons is NOT to give a discount or give something away, but to create excuses for your customers and potential customers to visit your location. It is a way to generate traffic. It is a way to drive trial.
Take Advantage of the Traffic
Knowing that the purpose of coupons is to drive traffic, you should be putting other programs in place to make your store welcome and inviting to the people that are coming in. Your staff should be on special alert to be as nice as possible since there will be “newbie” customers coming in who may not understand how your business works. Roll out the red carpet to these (and all) customers.
Photo Source: flickr.com/photos/86530412@N02/8187121312