If your business is offering a special promotion, it’s important to make certain that customers know that they DID indeed receive a promotional offer.

Personal example: Rite-Aid has a rewards program. Until recently, I believed that the sole purpose of giving them my rewards card was to receive the sales prices.

I didn’t realize is that the program is cumulative. One day, the clerk said, “You have 200 points [or whatnot], do you know what that means?” “No,” I answered. “You receive 10% off all regularly priced, non-prescription merchandise.” I had absolutely no idea. The receipt is cluttered with information and text at the bottom; I simply hadn’t noticed that I had been paying 10% less on the regularly priced items!

By my ignorance of the situation, Rite-Aid was in effect giving away a) 10% of their revenue (I had no idea I was saving it, so it stands to reason I probably wouldn’t have noticed if I had been paying it), and b) receiving no Thanks/Loyalty from me in return. Once I learned about the 10% off, their store was indeed a more enticing option than before. Once I knew what was going on, their promotion worked. But my knowing was a simple matter of communication from the clerk, which may not have happened if the clerk had been in a different mood. It was sheer chance.

Avoid this in your business. If you’re running a promotion, at least make certain that customers know that they received a special deal. No need to be aggressive about it; matter-of-fact works just fine (and probably best!).

We're signed up to receive offers from a restaurant, Not Your Average Joes. They recently ran a promotion that I thought was clever and effective: For each $100 in gift cards purchased, the customer receives a $25 gift card free. Why does this work?

• Gift certificates are highly appealing as a promotion. See a previous blog article for further elaboration, but in a nutshell:
  • A significant portion of gift certificates are lost or forgotten. This means that you can expect a higher margin from $100 gift card sale than $100 product/service sale, right off the bat.
  • Being paid first, performing the sale/service later: instant cash flow benefit
  • Consumers typically spend more when there’s a gift card. Suddenly a $130 purchase only “seems” like it costs $30, with a $100 gift card.
• We find the restaurant to be very good but a tad expensive. We go there occasionally, as something special. With effectively a 20% off discount, the restaurant is back in-play as a regular option. This is the very essence of a good coupon: it lures potential customers, those on the cusp, as active customers.
• Unless you’re going with a large group, it would be hard to spend $125 at one meal. So, this encourages future visits.
• With $125 that needs to be spent, someone may be more likely to coordinate a larger group… even better, the restaurant could be exposed to new customers.
• If someone did spend $125 in one meal, it would likely be an awesome meal (bottle of wine, full dessert options, etc.), leaving a better impression and encouraging future visits.

This coupon is hitting nearly all of the elements of an effective promotion, and with the non-redemption aspect of gift certificates + the cash flow float, it costs the company relatively very little.

A recent article was entitled, “Groupon’s Fall to Earth Swifter than its Fast Rise” (link below or google the title, as I find these article links often change).

There’s no reason to pile on to the criticisms contained within the article, but suffice to say, it made an interesting read from the standpoint of a business. Consumers likely do win—in an arguably unsustainable way—but the conclusion for businesses is less certain. I think that clear-headed thinking, perhaps using the Socratic method, would help businesses discover that they probably already know the rational answer to whether or not such a promotion is a good idea:

• You’re selling $50 worth of products or services to a consumer for $25, and from there, you only net $12.50 minus a 3% exchange fee. Does it sound like a good idea, selling $50 worth of product/service for $12.13?
• You’re waiting for up to 90 days to receive that $12.13. Does this sound like a good idea for a cash flow-challenged small business?
• A large number of customers is no doubt exciting, but when they all descend upon your business during a short time period, will you and your team be prepared to bring out the A game? Or will it be chaotic? Will you leave these first-time customers with the best possible portrayal of your business?
• Do you think that consumers that scour the web only for rock-bottom discounts are apt to come back and visit your business again?

I’m concerned that negative experiences associated with these sorts of coupon offerings may sour businesses to coupons overall.

Coupons should be structured in such a way that a business is happy to see them redeemed: A good coupon is a way of offering a customer a little something extra and improve the customer experience (a large size coffee for the same price as a small, a free dessert) at a modest cost. A business should be happy to see these sorts of offers redeemed because they’re building blocks of long-term, positive relationships. When coupons become divorced from genuine business development efforts, and become vehicles of embarrassing greed, then both consumers and businesses stand to lose, long-term.

http://news.yahoo.com/groupons-fall-earth-swifter-fast-rise-184713324.html;_ylt=AsUQH.aDa5jt38CGGdpftUOwag8F;_ylu=X3oDMTRocThvMDRiBGNjb2RlA2dtcHRvcDIwMHBvb2xyZXN0BG1pdANOZXdzIGZvciB5b3UEcGtnAzhhMGFkYTdmLWYyOGEtMzUzNy04ODVlLWFlZDhmMmEyNDlkMgRwb3MDOQRzZWMDbmV3c19mb3JfeW91BHZlcgM0ZmM0YWY2OC1mYzE4LTExZTAtOGQ2NC1kZmJiY2U2YjA5NDM-;_ylg=X3oDMTJ0YjA3NmdmBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDMGZjZWZlMjgtNzkyMS0zN2VjLThjZDEtZjBmMzk5OWEzY2M3BHBzdGNhdAN3b3JsZHxhc2lhBHB0A3N0b3J5cGFnZQ--;_ylv=3

Most coupons fall into four general buckets: 1) a precise dollar value off, 2) a percentage off, 3) a buy-one-get-one-free offer (technically a percentage off, but worded differently enough to warrant its own classification), and 4) a specific in-kind offer, typically including the word “Free” in the title (i.e., “Free Egg Roll w/Purchase”).

Which types of coupons are most common? Quick and precise answer*: specific dollar amount:  49%, percentage off: 27%, in-kind offer: 19%, and BOGO: 5%.

Dollar amount coupons are very easy to communicate: $1 Off and 20% Off a $5 item are the same way of saying the same thing. But the $1 example seems more tangible, which likely goes far in explaining the far more common usage.

In-Kind offers can be very effective, but of course depends on your inventory. Most businesses can think of *something* to offer for free, that makes natural sense in conjunction with a sale: a free bottle of shampoo with a haircut and style, a free tire gauge with an oil change, etc.  Even just a free consultation can count as something meaningful, for free.

BOGO is relatively rarely used, due to its limited range. Many items just can’t be offered in this manner. It’s also a fairly high percentage off. However, it can be absolutely perfect for pre-seasonal clearance efforts.

Any of the types could be good, in their own ways. Your line of business, inventory status, and/or availability all go into consideration.   

* Based on the approximately 15,000 coupons on Couponfield.com as of October 1, 2011.

The 30k, 60k and 90k maintenance services for newer cars are—of course—extremely important, but they’re also a) pricey, and b) time-consuming. It’s fair to say that most consumers regard these vital services as annoying chores.

It was therefore interesting to see a coupon that attempted to neutralize the emotionally negative response. Instead of offering an explicit discount, the coupon offered use of a free rental car for 2 (!) days with the purchase of one of these service bundles. Why was this coupon compelling?

• It wasn’t competing merely on price. In fact, it never mentioned price.
• It was offering something pleasant. “Don’t wallow in boredom for 4 hours as we perform a host of services on your car. Try out a new car, take care of errands, do whatever you want. You can even come back the next day, if you’d like.”
• It was attempting to solidify a long-term relationship. If a customer takes them up on their offer for 30k service, how likely will they be to take up the offer at the 60k interval? Arguably, very.

Their coupon strategy was to identify a negative associated with their service (consumers being stuck waiting in a lobby) and replace it with something positive (try out a new car) and thereby make the customer experience painless as possible. Can you think of anything potentially sub-optimal with your customer experience, and use a special offer to neutralize it?

<<Why are comments disabled on this blog? It’s not that we don’t want feedback. We do. But unfortunately, we received literally 100s of spam comments to prior articles. They were vapid compliments, “great blog, keep up the good work!” with backlinks to questionable sites. Normally, we may not have worried too much. But, security services such as McAfee may potentially flag us as questionable if they detect too many connections to malicious sites—as many of these backlinks no doubt were. So, here we are, with disabled comments. Sorry! We wish it wasn’t so…>>

Are you looking for an innovative way to spruce up your coupon offerings? Consider connecting local charity drives to your coupon campaigns. Not all coupons have to simply be for a given dollar or percentage off a sale (not that there’s anything wrong with those). There are plenty of innovative, creative strategies for local coupons that you can use when creating a campaign.

For example, are you looking for a way to demonstrate your commitment to your community? How about partnering with a charity—preferably a locally based one—for a coupon campaign? Instead of $5 dollars off an oil change, how about, "Present this certificate when you purchase an oil change, and we'll donate $5.00 to the local elementary school's PTA fund." The emotional resonance of a promotion is arguably more powerful than a simple $1 off. Many people may not go out of their way to save $1, but will in order to boost the resources of a charity.

Certainly, some people won’t particularly care about the local PTA. You’ll need to have a good idea of your target market, and what kind of issues they’re likely to care about, when creating a local coupon for a charity campaign. There’s also nothing stopping you from arranging for several different partnerships with charities per year. You can even run simultaneous donation drives, and provide customers with the choice of which they’d like to support.

In addition to the creation of a local coupon, you could announce that x% of your gross receipts for a given day or week will be donated. This can work great for restaurants in particular, especially if employees planning lunches in nearby office buildings hear the word.

Find a charity that is easy to work with, that provides you with a helpful point of contact. During the ramp-up of your program, you’ll want to be able to share marketing resources. Making a poster or flyer for your charity day? You’ll need the logo or other graphics of that charity. Quite possibly, the organization will even have someone on staff who will produce these materials for you.

You’ll also want to be able to reach out to the charity’s local network, indirectly. If they have an email newsletter, you’ll obviously want to have an announcement there. This brings your business to the attention to a whole new group of potential customers. Contrast this against simply putting a flyer up on your door: People who are already at your door, already know about you. If they show up for the charity drive, great, but repeat/future business from them was quite possibly already in the cards. Getting your announcement in front of a new audience is what will ultimately increase your customer base. This is similar to making certain that your coupons are posted on an external site, and not just on your own website.

Speaking of getting in front of new audiences, don't undervalue the power of having an advocate on the ground for you. As an example, you can sponsor runners for fundraising races. The runners all have fundraising goals. Consider partnering with a runner to help him/her meet their goals: You'll almost certainly be instantly tied into their social network (of potential new customers for you!). While the local aspect of the charity may not be there, depending on the cause supported, the local connections will be.

Administering the donation adds some labor to process, but ultimately, this is an opportunity. It’s a chance to meet people involved in the community and get the word out about your business. The group may even send you a letter of appreciation for your lobby (if your business has a lobby), and there may be additional ways to publicize the total amount of contributions raised.

A final bit of polish on the idea of charity coupons is that they may possibly not cost the full amount, when you consider the tax write-off implication.

Be careful to receive the approval of the charity before running the promotion, though. Sometimes, charities will reject partnerships that don't provide them with a certain threshold of donations. On the surface, that may seem downright ridiculous, but it makes business sense: If a large corporate sponsor needs to donate $50k for a sponsorship, and they offer your organization a partnership that generates only $100 in donations, they can risk antagonizing the donor that had to donate far more for the same partnership. Keeping the charities local helps avoid that brand-name issue, and the local relevance can go a long way in generating public loyalty and improving your sales. 

Here are some ideas for Automotive Repairs, Beauty Services, Cleaning Services, Consignment Shops, Education, Gift Stores, Interior Designers, Landscaping, Massage Therapy, Travel, and Veterinary Services.

• Automotive repairs: Can your shop service hybrid cars? Not all repair services can. If you’re one of them, let consumers know about you with a hybrid-specific coupon. Is your shop open on weekends? If so, your service may be unusually convenient. You can advertise this in a coupon with discounts specifically for weekend service.

• Beauty Services/Spas: Most coupons are designed for first time visits. Instead of focusing entirely on winning new clients, why buy some insurance for repeat visits with a stamp-able coupon for multiple discounts, with the 3rd or 4th or 5th service free?

• Cleaning Services: Do your employees have the courage to work with houses that are also, essentially, pet menageries? If so, maybe you can try a "Pet Lovers" discount. It may not be the most pleasant work, but it could bring people in who may otherwise not think of hiring assistance.

• Consignment shops: What about offering a deeper discount for the consignors themselves?

• Education/Classes/Instructional: A free introductory class may be effective to get new students, possibly the best coupon you could offer. But, perhaps you can also provide an incentive to persevere and succeed in the program, i.e., "receive 30% off the purchase of a new musical instrument, after completing 10 or more lessons." Or, “Lose 20 pounds with our fitness program, and we’ll give you a $25 gift certificate towards your new wardrobe” (and negotiate a discounted bulk purchase of these gift certificates with a local apparel retailer).

• Gift Shops: Do you offer free gift wrapping? Promote this in a coupon! (A coupon doesn’t have to always be for something you’re not already willing to offer!)

• Interior Design: Does your design service offer a distinctive style? If so, is there a coffee table book that represents it compellingly? A book that may serve as inspiration for your prospective client, and even help close the deal? What about offering free copies of this book upon completion of an initial consultation? (A bulk book purchase may make this far more affordable than initially imagined.)

• Landscaping: Offer low chemical treatment options? Maybe you can advertise this with a coupon. Or, couple your promotional efforts with a charity drive. For example, a program founded by John Denver, plant-it-2020.org, will plant trees for $1. What about a charitable coupon, in which you promise to plant 10 or 20 trees for every new client?

• Masseuses: Many spas offer innovative, potentially mysterious, services alongside the traditional massage. What about package deals offering the well-known item (massages), with more unusual treatments (i.e. Egyptian body wraps) at a combined discount?

• Travel: Do you specialize in a country or region? If so, what about offering travel guides or coffee table books as a free gift with a consultation. Or, possibly, a gift certificate to a local restaurant that serves food from the region's cuisine?

• Veterinary Services: How many people have multiple pets of the same species, and can only afford to take them in to see a vet one-at-a-time, when the animal is sick? How about a discount for introductory/check-up exams for the same species, i.e., bring in two ferrets for the price of one? This is the sort of promotion that will probably cost you little to offer, but provides a huge benefit to the pet owner.

Not all coupons are created equal, when it comes to beefing up your bottom line. 

Which do you think will tend to give you higher margins, a coupon for $10 off a $100 purchase, or a coupon for $10 off a $100 gift certificate?

On the surface, the numbers are the same, and it shouldn't really make a difference. But, consider these points:

• You benefit from the "float" of gift certificates: Your payment arrives today, your inventory/services exits later. A great thing, as long as you're not somehow earning a negative return on cash flow!
• The psychology of a gift certificate recipient is a bit different from that of the buyer. The recipient may be thinking, "Santa Claus gave me this $100 gift certificate, but I see $120 worth of stuff I like. I spend just $20, and get all of this stuff? OK." The data displays this attitude. According to the National Retail Federation, the average customer uses the full amount of the certificate plus an additional 15% of the face value. What if they just want to cash out? Fine: you still received interest on their money while the certificate was outstanding.
• Not everyone spends the whole certificate in one sitting. In fact, according to the Tower Group, more than half of customers take more than 1 trip to utilize a certificate. Increasing your foot traffic equates to more sales opportunities.
• Unfortunately for consumers, not all gift certificates find their way back home. Estimates vary, but most businesses can expect 4% - 16% of certificates go unredeemed, instantly boosting margins.

Whether a coupon for a gift certificate is a brilliant idea for your business or a mediocre one depends heavily on many factors, including your industry (i.e., If you're in the pest control business, you may want to skip over the gift certificate idea! "I was in your house and noticed a lot of roaches" is probably not a great Hallmark card sentiment...). But for most businesses, it's worth considering. With unlimited coupon postings at Couponfield, there's no problem posting a coupon for a gift certificate alongside additional offers.

Some businesses stay away from coupons because of the perceived “couponing culture”: That all they get are one-time visits from scavengers who seek out the cheapest bargain and never return until there’s another deep-discount coupon. How do you avoid these problems and make coupons work—and work very well—for both consumers and businesses?

I noticed a memorable advertisement in an automotive dealer trade journal, circa 1997. Two Seattle-style grungy kids were sitting on top of the hood of a new car, smiling and eating hot dogs. A sales person watched them with dismay, assuming (most likely, accurately) that they weren't going to provide a sale. I can't remember the exact wording of the subtitle, but it was along the lines of, “Customers who come out for the free hot dogs probably aren’t the customers you want.”

The point was clear. Any sort of giveaway is an invitation to consumer behaviors: Behaviors which may be beneficial, neutral or negative. Coupons are excellent marketing tools, but need to be done the right way... or else you're just giving away free hot dogs and not seeing a return. Done the right way, coupons benefit both the business and the consumer.

Let’s review what sort of behaviors are encouraged by coupons:

Positive Behavior 1: Consumers learn of your business for the first time. (Note: if your coupon is directly on your website, this doesn’t happen. The prospective customer already knew about you.)

Positive Behavior 2: Consumers may or may not have heard of your business before, but in either case now have a call-to-action, with an enticing discount. 

Positive Behavior 3: Existing customers learn of your discount and buy more goods and services, now that a lower price is available. Your margin goes down but total gross profit goes up. 

Negative/Mixed Behavior 1: Existing customers feel "entitled" and stop buying without a coupon. I have done this. There's a smoothie place that regularly mails Valpak coupons for buy 1, get 1 free. That's when I go for a smoothie... and pretty much only then. Granted, the smoothie place probably makes a tiny bit of money from my visit, but not much! All things being equal, they may prefer this arrangement, rather than never see me.

As someone running a coupon site, it may sound like a gaffe to call this "negative" behavior. But, my perspective is that coupons should be a part of a long-term strategy. If a business simply loses money on coupons, then they'll stop offering them. The goal of an effective couponing is to make sure that everyone benefits, and continues to benefit again and again. If you're going to risk the entitlement coupon, then please couple it with an actual loyalty program. (More on loyalty programs in other blog articles)

Negative/Mixed Behavior 2: The coupon does not alter behavior in any way, other than price. An existing customer uses it, buys something that they'd otherwise buy, but pays less. This can be a beautiful thing, if it accomplishes another goal: encourages loyalty, encourages referrals and positive word-of-mouth, helps move excess inventory, fills out a work schedule that otherwise would have gone empty (low margin is better than no margin!), etc.. In these cases, you need to ensure that you're getting some sort of benefit along these lines, or otherwise, you may forgo couponing altogether. Fortunately, it's fairly easy to tie your discount program into one of these goals.

Looking at coupons this way, it's almost like a negotiation between you and your existing customers: i.e., "OK, I'll take a tiny margin on your sale. Just bring the coupon in between the hours of 3 and 5, when our business is otherwise quiet." Make it work as a win-win!

So, how do you write coupons with these points in mind? Let me throw some ideas out there: 

• Find an external website to place your coupon. When posting a coupon on your site, consider the placement. If it's right at the top of the screen, you'll have a nice call-to-action for prospective customers, but you’re also going to end up with a lot of existing customers simply paying less. Post your offer where new people will learn of your business.  
• Primarily use your website to sell your products/services on merits other than price. Use price as a final enticement, not as your lead argument. Linking to your coupon towards the bottom of your “pitch" is a good idea... you've already argued persuasively why your products/services are awesome. Now, as a final sweetener on the deal, here's a link to a coupon. 
• Existing customers are probably going to your site to find the your Contact Info, Hours, Current Events, or Applications, such as calculators or games you may have provided. Put the link where the new prospects would be looking. The bottom of the home page is probably a good place: It’s old news to existing customers but the place where new prospects are looking, to check you out.
• Once you have an external location for your coupon, make certain that you’re able to limit the number of prints, if you’re concerned about over-use. Can you track prints of a coupon on your website? Even if you can, do you want to spend time doing that? Find a site where you put your print limit information into auto-pilot.
• In cases other than Couponfield, there's a marketing fee associated with distributing a coupon. It seems fair to pass at least a portion of the marketing cost that you avoided, in the form of a better discount.
• Bundled coupons: Combine complementary items, maintaining the standard margin on the first item and giving away the second at wholesale prices, i.e. “Buy a pencil and get a novelty eraser for 10 cents.” Write a coupon like this, and it doesn’t matter if existing customers use it: You still made the primary sale, and you’re none the poorer for the second item. Existing clients will love the coupon, and likely become even more loyal. 
• Never completely give away the store! When you see a coupon being redeemed, don't be disappointed by the lower margin. Know that you already structured the coupon with profit in mind. I hope that the smoothie place makes some gross profit from my Buy 1, Get 1 free sales. As long as they're making a little something, they have opportunity. No one knows when I may give the smoothie place a reference or otherwise really crave one enough to pay full price. The more warm bodies you’re doing business with, the more likely that’s to be sooner and not later. It’s a numbers game. As long as you’re not actively losing money on the deep bargain shoppers, you’re doing OK. 
• Create coupons that reward loyalty. A buy 3 oil changes, get the 4^th one free is an example of a coupon that’s great for locking in a customer’s business. Sure, you may have been able to get the 4^th oil change at full price. A loyalty based coupon such as this insurance. Plus, it’s a way to encourage better, more profitable, more enjoyable relationships with customers.  

A good measurement of success, truly, is the benefit on both sides.

A quick note about Kwik Surveys (kwiksurveys.com): It's another free resource that can help your business. A survey is a great way to find out a few critical things: 1) What customers think of your business, 2) What customers think of your competitors, 3) Opportunities to earn more business, and 4) Potential risks.

Conducting a survey online is, generally, a vast improvement over paper. Not only is it easier to distribute, but tallying and correlating results using an online survey tool like kwiksurveys.com is effortless. There are other survey tools out there, most of which cost money (a few years ago, a company I was working with paid about $300 a month for their survey platform). Kwiksurveys.com is completely free.

If you'd like a quick, objective second opinion about a customer survey you're conducting, feel free to send it over to re.tyler @ Couponfield.com