The factor about coupons
Coupons are a surprisingly subtle invention. Now that anybody can offer them (because now anyone can have a store), it's worth a second to think about what they're for.
First benefit to the marketer is that coupons permit you to provide different prices to various people.
There is a reason that most coupons are not trivially simple to find or redeem. By trading effort for a discount, the marketer says, "if you care about cost, I'll sell it to you cheaper, but you have to prove it." Hence the original idea behind Priceline. It was intentionally awkward to use so that the airlines might be confident that only the fare-obsessed would use it.
"Outlet" malls are just coupons in disguise. There's a reason that Armani does not have an outlet store on Fifth Ave. in NY. The drive is your way of proving you are significant about cost.
The second benefit is that they provide the shopper with a totem. Paper coupons are greatest, but even digital codes work. With some thing tangible in hand, the shopper feels as although they have the power to go make an exchange. It's not just about trading cash for the object or service. It is about trading in this thing I have in my hand (or pasted onto my clipboard). If I do not purchase the factor, I've just lost the value of my totem. Now the purchase isn't just about spending money... it's about realizing the value of a thing I possess--or losing it forever.
Which leads to the third benefit: a coupon can mean now. Give me a coupon and I am forced to make a decision. Will I purchase the service or product before the coupon expires or gets lost, or should I forfeit this thing of value?
Three benefits from 1 tool--and two caveats.
The first: do not do a coupon unless you are able to execute properly. It needs to be large enough matter. It needs to avoid alienating the middleman (retailer) if that is not you. And it can't destroy the product and what it stands for. No coupons for high-end plastic surgeons, please. Why? Because those that don't want to use the coupon may see it, and its extremely existence means the surgeon has stopped being who you thought they had been. No coupons for Tiffany's either.
The second: in the event you make the use of the coupon a hassle, you've blown it. Barbeques Galore lured me in with a 10% off coupon. Yes, I'm a cheapskate, however it was the totem that got me to go do something I'd been meaning to do anyway. It took me two minutes to find the item I was replacing. I handed them the coupon, picked out some overpriced accessories and stood as they wrote up the whole factor.
The clerk handed me the receipt, and I asked, "Where's the discount? It seems to be missing." The manager walked over and said that the coupon wasn't valid simply because the grill was for sale.
Well, certain, that is their privilege, but:
They didn't tell me, I had to ask
The coupon said no such factor
They didn't even apply the coupon to the non-on-sale other stuff.
No budging on their part, I finished my transaction and went home.
So, the smart marketer used the coupon correctly. The short-term minded sales ops team decided that they could increase profits by alienating the very individuals the marketer lured in. One much more reason that the marketer needs to be responsible for the entire chain.
The very best thing about coupons in the post-newspaper insert era is that they are trivially simple to test and practically totally free to distribute.
PS Bryan Murley points out the other key benefit of coupons... they make it simple to track the media. That is why newspapers embraced them early on. Proof! Now, obviously, they create it easy for you to see what's working and what's not. Thanks, Bryan.
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