Offering discounts and money off to get more customers has been a part of marketing and promotional strategy for ages. There’s nothing wrong with that and the strategies work even today. However, the UK voucher site Wikigains says that it is more important for businesses to compete on the real value of products or services offered than compete on the price.
It is essential to focus on offering more benefits to the customers instead of just discounting the products, unless that is your core business such as the Dollar Store.
Surprisingly, many businesses get into coupon marketing without much thought or analysis and end up with failed strategies that don’t offer value to anyone. If you have heard business owners complain about how useless coupons are, they probably belong to that group.
To be successful, it is important that you draw a line that is your profit margin and then decided how much discount you can offer. Make sure you also include the overhead cost in your analysis. This should not just involve the cost of raw materials but also the cost involved in producing the final products.
If your business runs on extremely thin profit margins then offering coupons may not be the right move for you as you will be incurring losses at its expense. While a coupon strategy may work great for supermarkets where you expect the customers to buy a shopping cart full of items, it may or may not work for your business that sells one or few products.
When making an offer, always considering analysing it from the customer’s perspective. Do the offer provide any value to the customers? Will the coupon encourage people to purchase more than just the discounted product? Will the customer want to return back to your business after the discount period is over? Wikigains says that they probably will if the products or services offer good value.
After a discount period is over, it is important that you evaluate your coupon strategy to see its impact on your customer base and business profits. Take coupon strategies not just as a one-time deal but assess their lifetime value based on how they help you acquire more customers.
Don’t forget that the customers are also smart and they will also consider the value of services offered. They may not want to commit for a lifetime user for a one-month free service unless that service is really good.
Similarly, take into account the percentage discount over an item based on the actual price. For example, 1% off purchase of a product that costs $20K may not motivate a buyer to purchase but a 25% discount certainly will.
After you have decided on the amount or percentage, you will then need to set the expiration date, minimum amount spent and other limitations like first time buyer only, etc. The low value deals will yield no interest from customers and the entire strategy may turn into failure.
Wikigains says that it is important for businesses to find a balance between deals that are good enough to attract new customers and discounts so lucrative that customers are forced to rethink their concept of good value.