Should You Give Coupons?
I was having a great discussion with a person the other day about whether it’s useful to give coupons to attract people into your business. It turns out that there’s several dimensions that you have to think through.
First, coupon-clippers are different than loyalty-shoppers. You’re trying to attract the latter: the people who will grow to love your business, come back year after year, and recommend you to their friends. But coupon-clippers think of your product or service as a commodity, and will instantly switch to the next coupon they see. As a result, it can be quite dangerous to lose money on coupon offers, as those customers will take advantage of your generosity with no thought of becoming a loyal customer.
Second, consider how you think about coupon for products or services that you have to live with for a long time. I have no interest in coupons for haircuts – because I’m satisfied with my current barber and wouldn’t want to live with a bad haircut for weeks and weeks. For restaurants, though, I’m more inclined to use a coupon because it’ll just affect my satisfaction for a short period. And, of course, I might discover a great eatery!
I have different approaches to coupons because of the risk I’m taking, the size of the investment, and even my sense of adventure.
But when you attract new customers with these kinds of incentives, realize that those people will just as easily move to your competition. To convert them to loyal customers takes an extraordinary experience, and perhaps you’ll never be able to earn a deep loyalty. Be cautious about whether you want the coupon to be a money-losing deal, because most often you’ll never get them back as a full-paying customer.
I’d be careful about giving coupons as a regular matter of course. What you’re really doing is training your customers to expect that they’ll never pay full price, and in fact will delay their purchase until they see another coupon. There’s a well-known home goods store in the US that does a great job of mailing everyone a 20% coupon every month. Sure, it gets them visibility, but it also means that I’ll delay a purchase until I receive the coupon. And because it’s 20% off my first item only, I’ve noticed that I’ll sometimes make a point of purchasing exactly one item – and then wait until I get the next coupon to purchase another. This company is doing a great job of training me to be a bad customer for them.
How are YOU using coupons in your business?
Carl Dierschow
Small Fish Business Coaching Fort Collins
www.smallfish.us
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