A Small Business’ Guide to Using Coupons to Drive Sales

An SBO’s Guide to the Advantages of Coupons

Many small business owners are intimidated by the thought of coupons. It’s just another item to add to the agenda and further complicates bookkeeping. They’ve also heard scary stories about the disadvantages and “real costs” of these discounts. And while coupons aren’t right for every business, most can benefit from a carefully planned coupon campaign.

The Logic Behind Using Coupons

While you shouldn’t make business decisions based on the fact that other businesses around you are doing the same thing, you can use mass participation as a guiding force in your choice to learn more about coupons. After all, would major corporations like Procter and Gamble, Nestle, and Kraft offer coupons to customers if they weren’t cost-effective? You can answer that question yourself.

While the value of coupons is often directly tied to the offer on the coupon and the manufacturer or store distributing them, the following points include four of the primary reasons businesses use coupons as a part of their overall sales strategies.

• Acquire customers. Coupons are frequently used to directly target new customers. By offering a deal that’s too hard to ignore, companies persuade customers to do business with them, as opposed to the competition. While existing customers will undoubtedly use the coupons as well, the benefit of gaining new customers typically offsets the costs.

• Increase revenue per transaction. Coupons such as “buy two, get one free” and “spend $50, get $5 off” are used to increase the revenue per transaction. By requiring customers to spend a certain amount of money, the retailer is guaranteed to make a profit. Profits will never decrease – they can only increase.

• Instill loyalty. Coupons may be used to reward customers and instill brand loyalty. If customers are constantly receiving good deals from the stores they shop in, they have no reason to purchase from the competition.

Benefits of Using Coupons

While acquiring customers, increasing revenue per transaction, and instilling loyalty are the three primary motivating factors for pursuing a coupon strategy, there are many more benefits to be derived.

• Sell products faster. For businesses looking to move inventory and accelerate the sales process for certain SKUs, coupons are incredibly effective. With the right offer and appropriate distribution strategy, coupons allow a company to sell products much faster than normal. This is especially true in the age of the internet where coupons can “go viral” and rapidly spread from customer to customer. Obviously, the more generous an offer is, the faster the product will sell. Retailers with years of experience have a keen understanding of the relationship between a discount percentage and the speed of sales. Knowing how this relationship works allows these businesses to carefully control inventories.

• Sell more products. Traditionally, retailers leverage coupons to sell more products and increase the overall size of transactions. This can be done by requiring a customer to purchase a certain dollar amount in order to get a discount, or by offering deals on complimentary products when certain items are purchased. This works particularly well for ecommerce stores, as revolutionary software allows businesses to suggest products based on customer profiles and buying behaviors.

• Increase website traffic. Sticking with the online trend, coupons are commonly used by ecommerce businesses to increase website traffic. Not only does this encourage more sales, but it also helps from SEO and advertising perspectives (giving the site more authority and power). While many online coupons are distributed through third-party sites like RetailMeNot.com, online retailers can require shoppers to click through to a certain page of their website before revealing the coupon code.

• Minimize advertising costs. Ultimately, coupons are another form of marketing or advertising. They help businesses to position their brands as price-friendly, generous, and competitive without having to explicitly state it. When distributed through the right channels, coupons are essentially small advertisements that happen to offer a deal.

2 Common Myths Debunked

Still, despite all of the logic and benefits behind using coupons, many businesses are still intimidated by the thought of incorporating them into their sales strategies. In most cases, they’re afraid coupons will harm their brand or lose them money. Unfortunately, these are two commonly cited myths that really have no foundation.

• Cheapens your brand. Are you afraid that a coupon strategy would cheapen your brand? This is a common fear among many business owners, but very few actually have to worry about it. Sure, certain industries – such as the pizza industry – have conditioned customers to expect coupons, but that’s the exception, not the rule. Thousands of businesses across the country use coupons without ruining the perception or value of their brands. It’s all about being strategic and timely with deals and never oversaturating consumers with too many of them at the same time.

• Redemption process is too complicated. The second commonly cited reason for not using coupons is based on the myth that redeeming manufacturer coupons is a complicated process that ultimately ends up losing the business money. This is far from the truth! Coupon clearinghouses are now so advanced in terms of technological capabilities and quality control that businesses are able to redeem the value of their coupons to the very penny, within a matter of weeks. With end-to-end visibility and quick redemption times, there’s really no reason to worry about the process.

Mandlik & Rhodes Coupon Clearinghouse

At Mandlik & Rhodes, one out of every ten coupons in the United States is processed using our technology and/or services. Manufacturers and retailers all around the country trust our authorized clearinghouses because we are transparent and technologically sophisticated. Our state of the art C*Clear system is the best in the industry and ensures the processing and redemption process is as fluid and streamlined as possible.

If you’re still not sure about coupons and how they fit into your strategy, let us help you overcome your doubts and build confidence. From concept to redemption, we’re committed to helping our clients succeed. In fact, helping manufacturers, retailers, and customers mutually benefit is what brings us the most satisfaction. For additional information or questions regarding your coupon processing needs, please contact us today!