Untrained marketers who say we need to do something always go the easy let’s discount way. It takes very little imagination and since everybody else does it, they assume it must work.
“The retail doc” lists 7 Reasons Coupons Shouldn’t be Used for your Marketing.
Agree? Disagree? Explain.
Yes, that’s right. I want you to add your opinion here.
(Usually, we use these Agree? Disagree? Explain. posts to discuss issues particular to the resale industry. If you’d like to see more and add your opinion, they are here.)
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Auntie Kate The Resale Expert 
Modifying consumer behavior is not easy, but if you look at life time value of a loyal customer it is worth the effort. I don’t see a problem with offering a discounted trial to get someone to alter their shopping habits and give your store a try.
You need to structure the offer so that customers can only redeem an introductory offer once–I read that 70% of Groupon customers were already customers of the business. And once you have a new customer it is critical to give them great service and open a communication channel to reach them after they leave the store. As you build your customer list there are many valid business reasons to offer them loyalty discounts–overstock, slow days, seasonal, special events, up-sell etc.
Consumers have different price sensitivities and smart discounting is a way to maximize revenue. There is a reason couponing has been around forever and the biggest brands use them. Ideally you send the customer a discount offer when they are away from your store which promotes repeat visit and also introduces enough friction to price discriminate buyers.
Good thoughts, but I personally am really PO’d when I see an offer for a shop/restaurant/etc where I’m loyal… for “new customers only”. Makes me feel undervalued and insulted. So I most definitely would NEVER advise that any offer carry such a stipulation.
Probably the thing that is done the least, and that would have the most lasting value, is a FOLLOW-UP on the coupon. Email, phone call, maybe even if the coupon were a biggie, a personal handwritten note… thanking them, asking what they thought of your business, how you can be of further assistance… heck, even that recipe for chocolate mousse you two were chatting about.
Just tossing dollars in the air for the vultures to grab won’t do it. If a coupon is an invitation to give your store a try, be the hostess with the mostest when they do!
Thanks, Lauren, for your thoughts. And what does “introduces enough friction to price discriminate buyers” mean? Can you tell us more?
I understand the intro offer could PO loyal customers. One thing we do is target new customer offers so that existing customers do not see them. We also give everyone one bite at the apple, by letting them claim one intro offer. Once they claim the offer using their email, they can get ongoing loyalty offers. I think customers can understand they are ‘new’ only once and will not begrudge an owner trying to get new customers in the shop.
By “friction” I mean make it difficult enough to claim the offer that those willing and able to pay full price will not bother. Sure the supermarket could slap their ‘$1 Off’ coupon on the product shelf making it easier for all, but it is more profitable for them to advertise that coupon, make people clip it and then process redemption. For retail shop this means not putting discount sign in window, but reaching customers and consumers away from the store with the discount.
Agree that “Follow-up” is critical. I have purchased a few Groupons in past year and not one of those businesses made any effort to reach out to me. One technique is to give them a card that directs them to new customer survey. And also give them incentive to complete the survey. You get great feedback and a return customer.
I have used coupons for years with success. We send them in postcard form to our mailing list every 6 to 8 weeks. Most of our coupons are not for that much of a discount and our most popular one (the one with the best return) is for double punches on their Frequent Shopper’s card. We run that one only in February when sales are normally slow. The postcard works well as it is a reminder to our customers. We are spacing them further apart now, though, since we are gaining a bigger presence on facebook.
The main advantage of a coupon in a published ad vs another ad form (especially in newspapers) is that you can see the direct result in sales of your ad. I love being able to track how well an ad is doing in sales.
I would never do a groupon style coupon as it gives too much away.
1. Coupons are looked at as an ongoing effort. In effect, they become the whole marketing plan.
Coupons play a small, but important, role in our marketing and promotions plans. We use them to help bring in new customers as well as to reward those “first timers” who found us without a coupon.
2. By the time you factor in your time in creating them, printing them, distributing them and factoring in the actual discounting itself, you have a very expensive promotion.
There is no time factor for us. Our vendor creates, prints and distributes the coupons for us. We simply review and approve. Of course we factor in the discount. Our coupons are based on a minimum purchase to protect our profit margins.
3. You have taught the customer that your product is not worth what you priced it at. In fact, you may have given the illusion you are raking in the big bucks on their backs.
If you believe this then there is no reason to have a “sale” as well. Are you saying that having a sale teaches the customer that my products are overpriced and gives them the illusion that we’re ranking in the big bucks?
4. The people who found you through coupons will wait for your next one.
If they found me through a coupon then the coupon worked! That is one customer that may have never found me without the coupon. Our coupons are ONE PART of our marketing program. Once they find me then it’s my job to build customer loyalty with excellent customer service and loyalty programs like our Savvy Shopper Card. That way they will not be “waiting” for our next coupon. Remember, that hardest part of our business is to get them through the front door in the first place and coupons can help achieve that!
5. You are rewarding people who have no relationship to the success of your business.
Again, no one can have a “relationship to the success of our business” if they never visit us in the first place. What’s wrong with rewarding a first time customer. Remember, the coupon means nothing unless THEY BUY SOMETHING!
6. Your sales staff will keep a copy of the coupon to offer to their own customers or friends.
This have never been an issue for us. This is why coupons have expiration dates and are attached to the daily cash register receipts.
7. If your regular customers who have supported you find out someone who’s never been there is getting a better deal than they are, they just might not return.
So, every time I see someone use a coupon that I don’t have I’m never returning to that store? If I followed that logic I’d have no place to shop or eat! Do you think that someone that does not have a coupon might now LOOK for our coupon? Of course they will! And if they are looking for our coupon then that means that they’re thinking of us! We also take care of our regular customers with our loyalty programs.
Coupons will continue to be an important PART of our marketing program. Yes, price isn’t everything, but remember, we’re in the CONSIGNMENT business and the primary reason people shop consignment is to SAVE money!
Many thanks, Patti and others, for your thoughtful replies to this question. Couponing is something that really shows how varied we all are in our approaches to this marketing technique… and “coupons” mean many different things to consumers, as well.
And thanks, too, Patti, for your last sentence: “the primary reason people shop consignment is to SAVE money”… another big topic. One we’ll examine here at Auntie Kate soon, so everyone, start thinking: is that so?
My feeling is that offering a “dollar amount off” coupon works well. BUT–I think it must be the right offer. I have been tracking coupon usage in my store and here’s a few observations.
The average purchase amount in my store is around $32. If I put out a $10 off any purchase coupon, I get them redeemed, but the average purchase drops to about $28. I recently (this past August) put out a coupon in a book that parents buy thru their school as a fund raiser. My coupon is $10 off any $40 purchase. From August to the end of December, I had 52 redeemed,(about 2.5 per week) with the average purchase being just over $75. In looking at other coupons that I’ve done with the same parameters, ($10 off a $40 purch), I see that the average purchase is around $64. So even though I am “giving away” $10 to each person, I am getting them to spend about twice what an everyday average purchase is. And in reality, that $10 I’m giving away really is costing me $4 (the $4 being the amount I have to pay a consignor on a $10 item). Many of these coupons are offered thru emails I send out, but I also give them out at “parent related” events around town to draw in new customers.
If you offer a percentage off coupon, it really needs to be a high percentage to attract someone. It’s like Kohls–if I get the old 15% off coupon, I don’t usually go to, but if I get the 30% off one, I usually go and find something I want, and I usually pick something that is also already marked down. A coupon of $10 off a $40 purchase is just like 25% off–but they have to spend at least $40 which is the important part in my opinion. And–if they choose to spend $64, which is what many are doing since that’s the average sale, by offering a flat 25% off, I would have to give them $16.25 off their purchase instead of $10.
We do end of time period markdowns of 50% off also to clear out our racks. and occasionally we’ll put a specific category on sale–for example all book 40% off. But that doesn’t have the ability to draw in a new customer since it’s advertised on Facebook or thru email.
I feel that if you can get a new customer into the store, then with great customer service and high quality merchandise, you can turn them into a repeat customer.
I think it’s a mistake to lump ALL coupons into one group as the title to the original blog does not make any distinctions: Here are 7 Reasons Coupons Shouldn’t Be Used For Your Marketing.
There are different types of coupons and different ways to use them in a marketing plan. I do not think the deep discount Groupon type of coupons make business sense for a consignment store. They could end up being a very expensive promotion.
We have found that coupons are a profitable motivator to get new people to try our store. It’s that something extra that increases the motivation factor enough to result in action. Also, during these tough economic times we have had many customers new and old thanks us for helping them out with our coupons. They view it as a gift that is very much appreciated.
Also, you can use a coupon to target a specific market segment. For example tourists. Again the coupon may be the extra motivation that will send people to your store.
It is also a mistake to evaluate a coupon promotion only on the sales you make during that limited time period. Most business people do not use the “Lifetime Value of a Customer” concept to evaluate the results of promotions.
I believe that if you structure the coupon offer properly, it can be a very effective tactical tool in the implementation of your marketing plan.
Wow, pretty strong words from a guy who wants to see his services. We use coupons to bring in new areas we have not tapped and then turn those into return customers. We always reward our loyal customers. I do agree with his opinion of deep discount coupons. Look at JC Penney is doing and you can see the damage of too many discounts. I know we had to rethink sales and do very few now. We have also raised prices and lowered markdowns. The combination is working.
I like that he advises loyalty coupons are the ONLY ones worth giving. We mail Thank-you cards with a coupon to every customer that makes a purchase of $50 or more. Also we send direct mail coupons 4 times a year to customers who have spent more than $50 during the past year. Finally we give every 1st time shopper a ‘comeback’ coupon for their next purchase. So we are rewarding our LOYAL shoppers and not just giving one time discounts to strangers.
Exactly, reward loyalty only.
I say no to handing out discount coupons (I can discount items or hand a discount to reward a customer), I prefer to repackage, display differently, hand out more business cards.
Bravo!
I think Mr Phibbs way overplays the ‘they won’t be back’ point. I just figure if the other person has the time to hunt down a coupon that’s good for them.
I don’t use coupons. I tried it with poor results. We have mark down tags(I know you don’t like them Kate) and whenever we feel like it, which may be once a month or months inbetween, we have a next price sale where we offer a discount on furniture, probably 10%, and drop to the next price on smalls.
They don’t know when it’s coming and we don’t advertize it. Our sales leep and we still do our usual sales when we aren’t having the sale. Since people never know when it’s coming they come in more often. More visits gives more opportunity to see new items and realize how quickly our inventory turns over. Snooze you loose, we say.
Check out small biz owners who openly share about Groupon and the rest, couponers follow the coupons. Profitable customers take work so reward their loyalty.
I am looking forward to one of our long-term TGtbT.com followers who has promised a “report” on her I-net couponing adventure when its term is over. Keep posted… or better yet, if you don’t already get our blog posts visa email, sign up (upper right column on this page) and of course, follow us on FB at http://facebook.com/sarasotakate and Twitter http://twitter.com/2Good2BThrew so you don’t miss a moment of that consignment-resale-thrift goodness!