Can coupons drive long-term business?

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The gloves are off
The gloves are off

CONTENDER
Peter Meyers
VP of marketing, ICOM Information &Communications LP
Former brand manager at Procter & Gamble

I'm passionate about the use of coupons as a marketing tool. I am convinced that coupons can be used in a number of different ways to drive business, both in the short and long terms. They are a popular tool with consumers — $3 billion was saved last year — so clearly coupons are some­thing that are here to stay.

I would argue that they are a favorite of marketers as well as well as consum­ers, because they are a controllable way to drive traffic to a particular product and measure response rates.

Relevance is the key to using any marketing tool, particularly coupons. You cannot sell the same thing in the same way to the same people.

As a customer moves down the loy­alty chain with your product, different offers and promotions are relevant for them based on how familiar they are with your product. For example, with a new product launch or new customer acquisition push, a deeper discount of 25%-50% off may be necessary to get someone to try your product. Once a customer has used your product, you need only retarget them with a smaller discount, maybe 10% to 15%. The offer on these coupons will also change.

The myth that coupons only work for new customers is false. Coupons can't be looked at in isolation. They are a handy and powerful sales driver and the use of them should be aligned with the rest of your marketing mes­sages. Once you've established the product and the proper audience to target, the next step is the messaging, or the why. You must ensure that the messaging is compelling, in either an emotional or logical way that fits with your product, your audience and your overall goals.


CONTENDER
Elizabeth Gordon
President of Flourishing Business
More than 10 years of marketing experi­ence with brands including Wachovia

Coupons are calling cards for cheapskates. Only 5% of the popula­tion makes buying decisions based on price. These are rarely the people you want to attract.

One of the biggest positive aspects of a loyal customer is that they will pay a little bit more and drive out of their way to go to your business. Coupon offers, especially those driven by discounts, just train people to be price-sensitive. In contrast, long-term, sustainable loyalty programs offer people extra points or extra gifts based on their past history with the company. This rewards the behavior of buying with a particular company rather than cashing in on the lowest price point.

Coupons can be an effective short-term fix to get people in the door quickly. They can certainly work for very specific short-term goals, that marketers all face. If you are looking to drive new customer acquisition quickly, coupons can be a good strategy.

Over the long term, a business owner's goal is to build a loyal cus­tomer base, and loyal customers are not price sensitive. So be careful not to teach your customers bad habits using a short-term marketing tactic that con­flicts with your long-term goals.

If you are going to use a coupon make it a value-added coupon as op­posed to a discount, such as “Receive a free pedicure with your one-hour massage.”

Remember that price is just one fac­tor that impacts a consumer's buying decision. There is a slight psychological push for a consumer to use a coupon they've been sent, but there are better marketing tools that can drive consum­ers to make an emotional choice to become a loyal customer.

THE DECISION
KNOCKOUT

As mobile couponing grows and a weakening US economy increases focus on prices, it's clear that coupons are not going away, even if the waythey're distributed is changing. Meyers says, target coupon offers for a variety of lifetime cycles to drive repeat business rather than discourage it. Coupons may attract bargain shoppers; however, leveraged correctly across channels, coupons are a good place to start and maintain sales.

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