If you run an online business, you have probably heard about coupon marketing and may be you are on the verge of trying it for your business. Alex Papaconstantinou , the founder of UK coupon site Wikigains suggest you to wait and think before you leap. Coupons are fine but let’s not forget that they don’t convert by themselves.
Unless you have a proper coupon marketing strategy in place, you cannot expect it to benefit your business. Thus, Alex has created a checklist of some of the key things to consider before using coupons.
First things first. Remember that it’s always better to compete on offering better value products to the customers instead of chasing after a cut-throat price. Promote the benefits of your products along with a welcome coupon for those who wish to try your product for the first time. Abstain from mindlessly offering coupons for all online items without any specific purpose.
Always do your math and know your exact profit margin on any product before deciding on the discount amount (don’t forget to include the overhead cost). The total price should not just include the cost of materials but also include the cost involved in producing that item. If you have a very thin profit margin then offering coupons may not be right for your online business.
Think from customers’ point of view
Don’t offer a coupon or offer just for the sake of belonging to the group or doing what others are doing. Instead, consider any offer from the point of view of the customers. Will they find it useful? Will they get some good value from using the coupon? Will the offer devalue your brand in their eyes? Will they want to come back again even when there are no offers?
Measure the impact on your regular customers or business
Evaluate the cost involved in acquiring customers against the lifetime value and not just what you will earn through the short-term deal. Remember that customers are also smart and they will also do the math about giving their business you to for lifetime. For example, an offer of one month of free call service may be insignificant if your manage to make them customers for life.
You must also consider the impact of percentage discount on any specific product. For example, if the fixed cost of your business is high, like in the case of a movie theatre, it won’t coat a great deal to give away free seats that may anyways go vacant.
Another important aspect is to set appropriate limits for the use of coupons. Some of the essentials include as expiration, who can redeem, how many times a coupon can be used and so on. You may also set an amount for minimum purchase to be eligible to use the coupon.
In case of serving industry, offering a service for the first time may cost high but subsequent services may cost less, giving you the opportunity to increase your profit margin. Thus, wikigains says that it is essential to do your math well and create a coupon strategy that strikes a balance between short-term and long-term benefits.