Coupons have been around since the 1880s when Coca-Cola issued first coupons which were meant to promote the drink. What is a coupon? It is a ticket that grants a discount to the person who presents it to the salesperson. Coupons are issued by the manufacturers and are traditionally found in newspapers. Years ago, coupons were quite popular because people could not afford to buy as many items as they needed and so coupons gave them a chance to obtain them cheaper. Statistically, coupon popularity has been declining since 2011. For instance, 321 billion coupons were distributed in 2015 along with only 2.2 billion coupons redeemed. The bottom line is that there exists enormous supply of coupons on the market, yet coupons are not popular due to their low demand during the last six years.
Customer’s failure to redeem coupons and results
One of the first analytical insights about the matter is that there is a low return on investment. This means that the money invested does not generate more profit than the initial input. Coupons are a great way to increase sales, and that is the reason for their popularity among various businesses. The most significant number of coupons is distributed as free-standing insert (FSI’s) which are typically placed in newspapers or magazines. These coupons receive a poor redemption rate of 38,4 out of 89,1 percent distributed.
One of the problems for marketers is the allocation of coupons. As the world is becoming more digital, more people are searching for deals online. Analytical data based on various surveys asserts that 3 out of 10 customers are not prone to spend time clipping coupons out of newspapers, but would be more than willing to use electronic coupons. Therefore, businesses should consider reallocation of coupons to online portals like RetailMeNot.
Advice for businesses
– Food coupons are far more demanded than coupons for electronics or cosmetics. Businesses should also issue out fewer coupons for non-food items because there is a big mismatch between immense supply and lower demand. Having printed more food coupons will stimulate higher revenues for small and medium businesses.
The success of your coupon depends on phrasing. Marketing consultants suggest wording a coupon easier and eliminate if’s and but’s which make customers refrain from a deal? For instance, you will have 30% off on a deal, but only if you sign up for several months and pay an application fee. This does not seem attractive thus making people hesitate to use coupons. If the purpose of a coupon is to establish loyalty of the customer to the brand, it is necessary to be as friendly and open as possible. The coupon and the follow-up service or commodities have to be superior in order to succeed. Basically, the image of the coupon might make a customer’s decision.
It is important for the marketers to target specific audiences. The offer of hearing amplifiers might not be quite appealing to teenagers than it is for the elderly. There could be combinations of offers that would appeal to various groups such as a discount + free delivery or the ability to order online altogether.
– Scope – single- or multi-channel promotion
In the end, companies can choose a single vector of doing business. They can use a single channel promotion or a multi-channel promotion. For starters, a single channel promotion will be easier to manage because the focus is firm and there are fewer nuances. For bigger companies, it will be more lucrative to expand into various fields of business since there are capabilities of control and multi-level expansion both online and through the press.
In conclusion, it is crucial to understand that the abovementioned phenomena significantly impact the coupon business. In order for the coupons to be efficient, the market and the audience have to be carefully studied. Coupons ought to be attractive and appealing so that the customers will have what a famous psychologist Robert Cialdini called a click, whirr (a trigger) response which will approximate them to the purchase. Carefully envisioned and implemented coupon strategy will increase the return on investment for the businesses thus benefitting both the business and the customer.
Read More: A Guide to Couponing