Scavengers Pecking At Your Business? The Perils Of The "couponing Culture" And How To Avoid Them

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There was a memorable advertisement in an automotive dealer trade journal

, circa 1997. Two Seattle-style grungy kids were sitting on top of the hood of a new car, smiling and eating hot dogs. A sales person watched them with dismay. The subtitle was along the lines of, "Customers who come out for the free hot dogs probably aren't the customers you want."

The point was clear. Any sort of giveaway is an invitation to consumer behaviors, behaviors which may be beneficial, neutral or negative. Coupons are excellent marketing tools, but need to be done the right way. Done the right way, coupons benefit both the business and the consumer.

Let's review what sort of behaviors are encouraged by coupons:

Behavior 1 (Good): Consumers learn of your business for the first time. Obviously, if your coupon on your website, this doesn't happen. The prospective customer was already on your website.

Behavior 2 (Good): Consumers may or may not have heard of your business before, but in either case now have a call-to-action, with an enticing discount.

Behavior 3 (Good): Existing customers learn of your discount and buy more goods and services, now that a lower price is available. Your margin goes down but total gross profit goes up.

Behavior 4 (Bad): Existing customers just pay less for what they were going to buy anyway. (Who goes to your website? Existing customers? Then adding your coupon to your own website probably accomplishes Behavior 4.)

Behavior 5 (Mixed/Neutral): Vultures who are solely interested in rock bottom deals learn of your discount and swoop in. These people may use your coupon, then never show up again, unless another coupon becomes available. Vultures can be profitable (don't create a coupon that negates your entire profit!), but likely only marginally so.

So, how do you write coupons that encourage the good behaviors and not the bad? Here are some ideas:

* Find an external website to place your coupon. A coupon on your own website may serve as a nice call-to-action for prospective customers who are not convinced, but you're also going to end up with a lot of existing customers paying less. Post your offer where new people will learn of your business.

* Primarily use your website to sell your products/services on merits other than price. But, to provide that final enticement, place a link somewhere towards the bottom of your "pitch", to the external site where visitors can find your coupons.

Existing customers are probably going to your site to find the your Contact Info, Hours, Current Events, or Applications, such as calculators or games you may have provided. If you want to make certain that existing customers don't use your coupons, don't put the coupon link on these locations. Put the link where the new prospects would be looking. The bottom of the home page is probably a good place: It's old news to existing customers but the place where new prospects are looking, to check you out.

* Once you have an external location for your coupon, make certain that you're able to limit the number of prints, if you're concerned about over-use. Can you track prints of a coupon on your website? Even if you can, do you want to spend time doing that? Find a site where you put your print limit information into auto-pilot.

* Paying money to distribute a coupon just reduces your margin even more. Use a site where it's 100%, permanently free to post coupons.

* Bundled coupons: Combine complementary items, maintaining the standard margin on the first item and giving away the second at wholesale prices, i.e. "Buy a pencil and get a novelty eraser for 10 cents." Write a coupon like this, and it doesn't matter if existing customers or vultures use it: You still made the profitable, primary sale, and you're none the poorer for the second item. Existing clients will love the coupon, and likely become even more loyal.

* Write coupons with the vultures in mind: Channel potential one-time customers into sales where you still retain some margin, move excess inventory, or fill in slow times. For example, a restaurant could release a coupon for the 3:00 to 5:00 pm slot. This would fill in a slow time of the day with lower margin deals, but there's still some profit where there would otherwise be none. Or, write a coupon specifically for items that you expect to put on clearance, even if that means you just break even.

There's no reason to particularly resent the vultures. As long as you have consumer traffic, you have opportunity. You have no idea when you may get a referral or repeat business, but the more warm bodies you're doing business with, the more likely that's to be sooner and not later. It's a numbers game. As long as you're not actively losing money on the deep bargain shoppers, you're doing OK.

* Create coupons that reward loyalty. A buy 3 oil changes, get the 4th one free is an example of a coupon that's great for locking in a customer's business. Sure, you may have been able to get the 4th oil change at full price. A loyalty based coupon such as this insurance. Plus, it's a way to encourage better, more profitable and more enjoyable relationships with customers.

* Tie coupons into a charity. Instead of saving $1 off a combo meal, why not a coupon that states you'll donate $1 to breast cancer research when the coupon is presented for a combo meal? The emotional power of charity drives can work where small consumer savings won't. Not only that, but you'll put more polish on your community outreach efforts. Additionally, you then receive a tax benefit, after the donations are made.

Coupons should be a win-win for consumers and businesses. When a business releases a coupon that isn't a win for them, then they're not likely do it again, which doesn't benefit the consumer. A good measurement of success, truly, is the benefit on both sides.

by: Rebecca Tyler

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