When it comes to developing proven and effective ways to drive business to your platform, especially when you operate an online business, it’s difficult to argue against the effectiveness of coupons. They are one of the oldest and trusted methods of helping to garner more eyes onto what you can offer customers.
Sadly, however, the discussion around coupon use is often one-sided. Many business leaders worldwide stick to this method with an almost religious level of commitment. This often obscures the finer points about coupon programs and fails to explore both sides of what using coupons can mean for your business.
Today we’ll be exploring coupons, as well as discount programs, in a more leveled approach. Extrapolating on both the positives and negatives of using coupons, provides you with a better overview to make a more intelligent choice when it comes to using coupons or discount programs for your own business.
Read on to see the advantages and disadvantages of using coupons for your business:
Advantages of Using Coupons for Your Business
There are many advantages to using coupons for your business. Coupons, which are simply a discount program, supply you with a way to convert visitors into loyal returning customers. Furthermore, it’s a great way to expand your brand.
Yet, understanding this doesn’t take the slightest bit of business aptitude. So, let’s explore some more specific ways coupons provide advantages to your business.
Expands Your Mailing List
Coupons are a fantastic method of expanding your mailing list, which is one of the most reliable ways to engage with your customer base. A mailing list will often be the most reliable method of continuing to bring users back to your store and engaging with new products and services that you are offering.
It’s important to always develop coupon or discount programs with this in mind. Make sure to always get people to sign up with their email, which you can in turn roll into your mailing list.
Social Media Engagement
Whether we like it or not, social media plays a large role in business. This is especially true for small businesses, which rely on word-of-mouth far more than bigger organizations. Yet, expanding your social media engagement can be a struggle.
This is where coupons step in. Customers are always looking for ways to get a good deal, and if you tie your coupon or discount programs to your social media accounts (Such as requiring a like, follow, or retweet) you’ll be able to seamlessly grow your platform, whilst offering a deal that will see you develop loyal customers.
Easy to Manage and Maintain
When it comes to any form of marketing, there is a cost that many people don’t consider. The work and continued support that you need to provide. Every hour you invest in any marketing venture is an hour not spent on improving your business in other areas.
Coupons, as well as discount programs, require very little work to get started. Once they are set up, the work required to maintain them is always zero. It simply requires you to manage the number of coupons you give out, and the products they are used for.
For many small business owners, this is a blessing. As it’s often a struggle to undertake the large and daunting task of self-marketing your business. You won’t have that problem with coupons or discount programs!
Disadvantages of Using Coupons for Your Business
As promised, we wanted to get a closer look at the disadvantages involved in running a coupon or discount program. Because, whilst many marketing publications don’t touch on them, there are absolutely disadvantages involved in setting up a program of this nature.
Let’s take a moment to cover some of the most significant disadvantages that will affect businesses of any shape or size when employing coupon or discount programs.
Cannibalizes Revenue
You will find that even your regular customers may develop the habit of waiting for coupons, which cannibalizes sales that were previously made before the discount program was implemented. Therefore, it could be better if you thought about when and how to distribute those vouchers to prevent affecting your current clientele.
If you are in the habit of running coupon or discount programs around quarterly or financial year time frames, customers will become accustomed to this. This means they will often wait to engage with your business until those moments open up.
This doesn’t affect all business types. If you deal in perishable goods or provide services that customers, come back to regularly, then you may be more resilient to this problem than others.
Reduced Overall Profit Margin
Whilst it’s easy to focus on the positives of getting more customers engaged with your business, what is often overlooked is that this will undercut your bottom line. Even a discount program that offers 15% off will cut that directly off your yearly estimated sales.
Coupled with this is the reality of discount inflation. If you offer a coupon with a 10% discount for a year and wish to reengage, or create a splash, to engage a large number of customers, then you’ll be inclined to push that up. Over time, you’ll push those discounts to a standard that may not be sustainable for your business model.
If you operate a business with thin margins as it is, then a coupon or discount program may be a terrible idea to expand your business. It should be reserved for rare moments, when you stand to gain much more from the exposure, compared to the loss you’ll face when offering a discount.
Coupon and Discount Programs Are Not Free
If you do even a little bit of research into setting up your discount or coupon program, you’ll immediately realize that there are many businesses (or apps) ready to help you. This is, overall, fantastic, as it helps to cut down on the time required to set these programs up.
However, this will come with a cost. You won’t be able to avoid this, as pretty much every single coupon or discount assistance service out there will charge you a monthly fee to continue the program through them.
If you are operating under tight margins, this added cost of doing business could make a significant difference to your yearly earnings.
What Can Be Learned from All This?
With these fundamental advantages and disadvantages outlined for you here, you must make an educated choice when it comes to choosing to operate a coupon or discount program. Nothing in business is free, but with the right choices, you’ll stand to make a significant gain for whatever venture you find yourself in.
Are you operating a small business, and thinking about using a coupon or discount program? Perhaps you’re curious about learning more about how coupons can help excel your business. Take a look at our other in-depth articles covering everything you need to know and educate yourself before you get started.
Official Save is a prime location to access incredible coupons, and unbeatable discounts, and educate yourself on everything there is to know about both.