Coupons Click with Consumers

Customer Strategy
Customer Experience
More than a draw for bargain hunters, coupons can bolster customer retention and acquisition.

There's a marketing myth that coupons only serve to keep low-value consumers buying a brand on discount. But current studies have shown that coupons have clear and valuable positive effects on consumer purchasing behavior. According to BIGResearch, for example, 35.2 percent of holiday shoppers are most influenced by a coupon. In addition, comScore recently found that 53 percent of consumers say they regularly visit brand websites to find promotions like coupons.

Here are four other benefits of offering coupons:

Target new audiences:
Printable coupons offered via the Internet allow marketers to encourage consumer purchases in more creative and efficient ways. Rather than the limits of a Sunday newspaper, online coupons are delivered across a network of websites, reaching more consumers than the traditional offline counterparts.Furthermore, each site that provides coupons offers different contextual and demographic opportunities for micro-targeting consumers.

Gain new consumers:
Contrary to common misperceptions, coupons don't force brands to grin and bear frugal consumers looking for savings. Market research of actual purchase behavior shows coupons increase purchases by consumers who may not try a product otherwise, and increase overall category incidence.And people that purchase a product for the first time because of a coupon are more likely to buy the product again - without a coupon.

Studies have also shown significant incremental sales from coupon campaigns, and find that exposure to a coupon (especially one with a high value), even in the absence of redemption, generated incremental sales volume. These effects varied in intensity by category and by the demographics of the consumer, providing opportunities to tailor programs to meet the desired promotional goals.

It's notable that consumers attribute the coupon discounts to their savvy and skill, not to a lower value of the product. This is an important effect, and contrasts with retail shelf discounts and other price actions where the discount is serendipitous and offered to everyone.

Increase brand loyalty:
Brand-loyal purchases are, in fact, incremental to the brand providing the coupon if consumers would have gone to a competitor in the absence of the offer. A properly run coupon program considers the distribution medium, the offer value, and other factors to focus coupon-driven purchases on consumers for whom the effort of obtaining the coupon is outweighed by the discount offered.

Coupons can also be used as a reward for providing information or taking a desired action, or as a gift to make up for a poor consumer experience. These tactics work because coupons have a real and perceived value, and are not viewed as reducing the value of the product offered.

It is worth repeating that the distribution medium is a critical factor in achieving the best results. A coupon that the consumer doesn't know they have when they make a purchasing decision is not going to drive these desirable effects. That's one reason printable online coupons continue to be a proven, effective tactic. Consumers actively printed the promotion and brought it to the store when shopping.

Leverage online socialization:
The social aspects of the online world are also important and can amplify the impact of a coupon campaign. Tell-a-friend features allow consumers to assist marketers in finding like-minded purchasers. Contextual targeting and integration allow brand marketers to leverage what Jared Spool called the "seducible moment," when a consumer is most receptive to making a purchasing or brand decision. Tagging recipe ingredients with a coupon is a perfect example. Discussion groups and email lists where consumers can recommend products or share opinions and refer others to available offers can extend the reach and increase the ROI of a campaign.

Coupons are a highly measurable promotional tactic with a high ROI and proven capacity for driving incremental sales and improving the consumer experience.