Everyone enjoys finding ways to save money, and using coupons is one such strategy. Online coupon aggregators have emerged as a result of the couponing boom, and some people have turned traditional coupon clipping into a hobby to increase their savings. Even celebrities and coupon influencers post advice on social media.
But do the small businesses who provide these discounts using coupons get a good deal? This guide will show you how to offer coupons in a way that increases the revenue of your company.
How coupons can be good for business
Discounts and promotions must be specifically customized to your business in order to be profitable, whether they are offered online through websites like Groupon or LivingSocial or by mail through Valpak. Whether you want to debut a new product, discover new customers, or reward your top clients, coupons should always be utilized wisely. When a firm uses coupons to promote new features and upsells, they generally aim to engage as many customers as they can.
Coupons have the benefit of being simple to distribute. Businesses can distribute coupons to customers on social media or through email marketing tools, as well as through more traditional marketing channels like billboards and radio commercials. You may even offer customers coupons with QR codes, enabling them to quickly scan the code, download the discount, and give your company vital data about the lead. Coupons can assist you in reaching both potential and current clients in this manner.
How coupons can be risky for small businesses
The biggest risk with coupons is that they might prevent a company from having the cash flow it needs to survive. This can happen when discounts cause margins to contract below acceptable levels or when they lower the amount of money that would have been made from purchases even in the absence of coupons.
Another risk is that if a coupon is too well-liked, your company might not be able to honor the deal it promised to each coupon holder. This may turn away clients who anticipated profiting from the offer.
Coupon do’s and don’ts
Here are a few tips to keep in mind when you’re considering coupons as a business tool:
Do be careful when you’re structuring the offer.
The kind of discount, such as a price reduction or a buy one, get one (BOGO), also depends on the industry and the target market. Although a pizza shop might perform better with $2 off a pie, a retailer might want to offer a BOGO bargain as fewer people need two pizzas.
If these arrangements are going to increase your bottom line, you really need to be careful about how you structure them. If these transactions are going to make sense for your small business, there are a number of elements you as the owner must take into account.
For example, businesses may want to limit the deal to a certain number of customers, [or] a particular season or time period. You don’t need to offer a deal on a Friday or Saturday night when your restaurant is already full, or a discount on a hotel room at a time when all of your rooms are normally booked.
Do consider alternatives to discounts.
Every coupon does not have to be discounted. Small business owners should think about alternatives to dollar-off and percentage discounts, like offering free services.
A spa may include a service in a package, or a tiny hotel that wants to maintain its rate could provide free parking or Wi-Fi at very little expense.
Freebies that don’t cost the company much could encourage customers to make full-price purchases who might not otherwise do so. However, choose your freebies wisely; they shouldn’t be offers that need a lot of time or resources.
Don’t overpromise and underdeliver.
When clients attempt to redeem discounts or giveaways, you must fulfill your end of the bargain. When considering how to best promote themselves with coupons, small business owners must look closely at their operations and their clientele.
Business owners’ eyes can sometimes be larger than their stomachs.
Although they can only really accommodate 50 additional consumers, they want 500. For instance, [certain coupon services] can cooperate with them to set a limit on the number of offers that may be redeemed.
If they make these incentives aggressively enough, small firms risk becoming victims of their own success.
Be sure you can handle the additional volume if you’re a bakery and, for instance, are giving away a free cupcake with the purchase of a cake. You don’t want new or returning customers to arrive up and be disappointed when they can’t obtain the products they were anticipating.
Customers are eager to share their opinions, both positive and negative, in today’s environment of social media and rapid internet reviews, according to Mossler. If you promised a customer something for free or at a discounted price and didn’t live up to their expectations, you don’t want to be scrambling to address their complaints in online reviews.
Groupon collaborated with small business owners to create the greatest offers based on a variety of factors, including typical sales and the busiest hours.
But the business owners have to provide accurate data, so it all goes back to knowing your business. The profitability of the deal is dependent on accurate information from the business owner.
Don’t wing it.
Coupons shouldn’t be distributed on the spur of the moment; careful planning is necessary for this tactic to succeed. Small businesses must carefully review every transaction since they have less room for error than larger companies.
A wrong business decision could destroy a tiny company. Businesses need to calculate their desired return on investment before adding expenses, the cost of the discount, and profit margins.
Don’t forget to advertise consistently.
Another error that small business owners make is not advertising frequently, especially when there is a current promotion that clients can take advantage of.
Owners of small businesses must control their expectations. Businesses have a problem when people commit and then leave too soon. They must take into account the offer’s volume and regularity.
It’s probably not going to work if a roofing firm sends out a coupon once to 10,000 households. Encourage them to wait a few more weeks or months and devote themselves further if they are going to undertake anything like that.
When used well, coupons can be a powerful tool
Like so many of the tools available to small businesses, coupons can be powerful. Everyone loves a deal, and coupons are a great way to get new customers in the door or on your website. But be careful: Coupons can cause problems if they promise more than a business can reasonably offer. Follow the advice above to make your coupon campaign a resounding success.
Contact MCDA CCG, Inc today with any questions about your business!