The Problem With Online Coupons - Why Using Coupons on the Internet Could Be Hurting Your Business

Traditionally, advertising with coupons has been an excellent way to capture new customers and retain existing customers. Using the Internet, promoting your business with coupons has become quicker, cheaper and easier than ever before. Unfortunately, Internet coupons for "Brick and Mortar" businesses may have become ineffective and quite possibly have a negative impact on your business if not used properly. The reasons for this are as follows:

1. Printing coupons from the Internet is like printing money, it devalues the coupons for the customer as well as for the merchant.

Coupons really are a form of currency. They are an agreement between the customer and the merchant. The merchant uses the coupon to say, "I will give you a discount or a special deal, and in return you will patronize my business." This is the basic give and take relationship that the coupon establishes and works very well, but only if there is just one coupon at a time.

The problem with most Internet coupons is that they are infinitely redeemable. Most of the time, patrons can print Internet coupons as many times as they want so that they can effectively receive the same discount every time they go to that merchant. If we were all able to print money from our computers in the same way, then our currency would instantaneously lose all of its value. By using printable coupons this way, the customer reduces the value in his or her mind of the products that the coupon applies to and therefore the coupons themselves. The merchant on the other hand must devalue the coupon similarly since it is no longer effective in creating a "give and take" relationship but rather just permanently discounts their products or services.

2. Having coupons always available further devalues them. If they are always there for the taking, then there is no urgency to go get them.

Similar to the point above, having a coupon always available to print off or redeem has the same effect as printing off hundreds of copies. Traditional print coupons have always been distributed periodically in a newspaper, magazine, postal mail, etc. This meant that you were only going to receive one and only one of those coupons until the next periodical was distributed. Therefore, if you had any sort of interest in possibly using that coupon in the future, then you would cut out the coupon at that moment and be ready to use it. With Internet coupons, knowing that you can always revisit a website and print off a coupon whenever the need arises has the effect of also making the coupon worthless. This is because, (a) most will forget that they ever saw the coupon and will therefore never go back to print it off and (b) most importantly, the coupon loses its promotional value of trying to get someone to take action now.

3. Most coupons on the Internet are on a "pull" model instead of a "push" model.

When customers have to go out and get coupons, instead of the coupons being "pushed" out to the customer, then they only get used by the true coupon frugal fanatics and not by first time customers or customers who have forgotten about you. Again, traditional coupons have always been sent "pushed" out to prospective customers and therefore acted as a great way to proactively promote businesses.

Also, Internet coupons on a "pull" model, where customers must visit a coupon website and see what coupons are available, have no market testing value. One of the greatest advantages of marketing with coupons since they were first studied by Claude Hopkins in the early 20th century, was to be able to scientifically test marketing messages by "pushing" out the coupons and then tracking the ones that came back to you. Although this could still theoretically be done in a "pull" type scenario, the benefit of the "push" test system is that you could send out your message to a specific number of recipients within a specific time period and then receive back a specific statistical sample to draw conclusions from.

The Right Way to Use Internet Printable Coupons

The solution to "The Problem with Online Coupons" is to use the Internet to distribute your coupons while eliminating the issues stated above.

First, use an email marketing solution. Sending coupons in email solves the "push vs. pull" problem by delivering coupons to specific group of people who have opted-in to receiving updates and specials from your business. Sending coupons via email also solves the problem of having coupons always available. Email allows businesses to mimic and even surpass the benefits of traditional print periodicals. Businesses can test to find the ideal sending frequency that keeps their business in the forefront of their customer's minds while also maintaining a sense of urgency and timeliness. Also, make sure to use expiration dates and/or "print by" dates to further increase the sense of urgency.

Next, incorporate a secure "one-time" printing system for coupon distribution. This will allow each email recipient of your coupons to be able to print them once and only once for each coupon sent. This may seem somewhat trivial or possibly even petty, but the reality is that coupons that can only be used once allows the merchant to be more comfortable with promoting bigger discounts and better deals while at the same time giving the customer higher perceived and actual value of the coupon.

Using these tools will allow you to not only dramatically cut advertising costs compared to traditional print coupon advertising but also allow you to use coupon advertising in the best ways possible. Actively promote your business to new and existing customers while using scientific testing to discover the best possible marketing messages for your business' success. Create a real marketplace for your coupons and their value will increase to everyone who uses them.

Scott Knight is Founder and CEO of ZoomDeals.com, an email service provider for small and local businesses focused on secure printable coupon distribution. ZoomDeals is an innovative combination of a powerful do-it-yourself email marketing platform and a unique cross-promotional network of printable coupons that are searchable within a geographic area.

Have You Considered Coupons For Promoting Your Business?

Coupons work on consumers' desire for bargains. With a coupon they can get something at, say 20% off. Businesses have found that coupons are an excellent way to get new customers, or make existing customers buy more. The returns in the form of increased sales are typically much more than the loss they suffer.

Coupons might offer a straight discount on price, or offer free shipping, or promise a freebie when you purchase something, and so on. They are delivered through mail, newspapers, flyers delivered door-to-door, the Internet and even mobile devices.

How Do Coupons Promote Business?

If you are a manufacturer, you can issue a discount coupon on a countrywide basis. The coupons will carry your logo and an excellent photograph of the product, in addition to the discount offer. The consumers who use the coupon thus become aware of your brand and product. Additionally, bargain hunters flock to the stores selling your product, leading to increased sales of the product.

Retailers distribute coupons in areas where they have a presence. New customers visit the store to take advantage of the offer. When they are at the store, they buy other things that they need, priced normally. If this first experience was a pleasing one, these customers might become regular customers.

Coupons constitute an excellent business promotional strategy.

How Do You Get Coupons to Consumers?

Coupons can be sent to customers through mail, newspapers, door-to-door delivery, on the Internet or mobile devices. The mail and door-to-door options involve expenses for printing and distributing the coupons. Publishing it in a newspaper or magazine involves advertisement costs. Internet and mobile device options save on printing costs.

The Internet option might involve just providing a promotional code which the consumer uses to get the bargain. Where it is in the form of a traditional coupon, the user has to print it out and surrender the printout at the sales point.

What Is Coupon Fraud?

Coupon fraud involves misusing the coupons in ways not intended by the issuer. For example, Internet coupons might be printed multiple times. Promotional codes might be posted to freebie sites. In such cases, the volumes of coupons used will not fit normal patterns assumed by the issuer.

Paper coupons might be counterfeited, resulting in more coupons being surrendered than what the company had issued.

One report estimates the loss from coupon fraud at $500 million in the US alone. The Institute of Sales Promotion has published a guide for those planning electronic couponing. The guide will help you minimize the incidence of coupon fraud.

The Cost of a Coupon Issue

A coupon issue has the following cost elements:

Salaries of staff involved in planning and executing the campaign
Cost of printing and distributing the coupons
The value of the coupons, i.e. the profit lost by making the offer
Cost of processing the surrendered coupons

Coupons surrendered by customers at sales outlets have to be sent to the manufacturers concerned (where the issue is made by manufacturers) so that they will reimburse the coupon amounts to the retailers. This can be a significant cost element as coupons could number in millions.

Despite the costs, coupons have proved a preferred promotional method for businesses, as indicated in the coupon trends report. It is however for the business to compute the estimated return from a coupon issue. The return can even be increased brand awareness.

Coupons are a great way to increase sales and even build brands. However, you have to handle the issues of coupon fraud, incidental costs and management of the whole campaign in a systematic manner.

Gopinathan has several decades of business experience and now focuses on business writing and small business mentoring services. His website The Emerging Technologies Magazine explores the business opportunities offered by emerging technologies such as nanotechnology, biotechnology and information technology. Small business mentoring services are offered through the personal site tgopinathan.com.

Are Coupons Right For Your Business?

Like other types of promotions, coupons can be effective but there are a few things to consider before drawing that dotted line around a special offer.

Advantages

As a promotional tool, coupons offer a few distinct advantages.

Action: Discounts and expiration dates give consumers a sense of urgency and incentive to spend money with your business.

Measurability: Coupons are a great way to find out how many people follow through on a particular offer. In order for this to be effective, be thoughtful about not only the coupon, but other simultaneous promotions. A campaign can't be accurately measured if coupons aren't collected, so staff must be trained to follow through.

Testing: Other ways to use coupons is to test the effectiveness of features including creative, offers, headlines and copy. Segment the total list and send one coupon to group A and a different coupon to group B. Be sure to only change one element or it will be nearly impossible to test which change made the difference.

Pass along: If someone receives a coupon they can't use or aren't interested in, it's easy to pass it on to others who may use it.

Disadvantages

Many businesses are turned off by the idea of using coupons because of the following real and perceived negatives.

Image: Just like every other marketing decision you make, offering coupons affects your business image. If your industry doesn't traditionally coupon, think through your strategy carefully and have a good reason to go against the norm. Consider providing a special offer in a more upscale and sophisticated way - like a gift with purchase - instead of a coupon.

Price freeze: New customers lured with coupons may only buy on price and won't come back without another coupon. One way to track this is by writing the total spent on the back of each coupon to determine if customers only came in to buy the advertised item, or if they bought more. If you consistently coupon, it can be hard to wean customers off the discount.

More work: In addition to design and list issues, coupons must be collected and documented to determine their effectiveness. If you have a sales or wait staff, be sure to inform them of the campaign and its importance. Different offers and other elements must be tracked and analyzed. Write down the comments made by coupon customers for even more insight. Is it a new or repeat customer? Had they heard of your business before receiving the coupon? Did they seem satisfied with their experience? Document the details in a designated notebook because a month or two later, you won't remember.

Determine your goals

Salvation: If you're trying to save a failing business, coupons aren't the answer. The problems that brought your business to the brink are still in place, and now you're exposing those problems to lots of new customers who'll use word of mouth to tell even more people.

Generate traffic: If you have confidence in your product or service, coupons can be a great fit. A tempting offer will bring people in, and if they like what they see, you'll earn new customers and more positive word of mouth. Again, the design and delivery method must be a good fit for your industry and customer base.

Reward loyalty: All too often, businesses focus on getting new customers and forget to thank current customers. It's more expensive to acquire a new customer than to keep an old one, so consider special coupons for your loyal customers, through an email club, for example.

Build segments: Coupons are a great way to focus attention on a particular product or increase an area of your business. A restaurant can use coupons to bring in customers on slow days, and a hair salon can use coupons to build a client base for a new stylist.

Increase Effectiveness

Once you've decided to give coupons a try, use these tips to make your campaign work as hard as possible.

Design details: Be sure to include the following and keep your ad as uncluttered as possible.

o An offer

o A concise headline

o An appropriate image

o Other relevant information like address, phone, store hours, website, etc.

o Don't clutter the ad or coupon with unnecessary information or too much detail.

Time limit: An expiration date encourages recipients to use the coupon sooner rather than later.

Simple math: Make it painless for people to use your coupon with an uncomplicated offer that's easy to calculate. $10 off is better than 15% off. If a percentage off is the best option (perhaps your offer includes a wide variety of products), then use a round number like 20%.

No games: They may not want to spend a lot of time calculating 15% off, but let's face it, your customers aren't dummies. They won't fall for tricks like increasing your price for the length of the sale and then discounting it back to its original price. Another no-no is making claims like "only available for the first 100 people" and "prices will never be this low again," if they're not true. These types of tactics are ineffective and damage your business reputation in the long run.

High value: Give the most perceived value to the customer at the lowest cost to you. For example, a glass of house wine usually costs less than a dollar to the restaurant owner, but has a value to the customer of $5 or more. Therefore this can be a better option than $5 off a meal. If you're not willing to offer something of value to your customers, don't bother using a coupon, as a weak offer, like a free soda with the purchase of $30 or more, typically backfires.

Disclaimers to consider

Add these to the coupon itself if they apply (not just on the ad since some people tear the coupon off and only bring that), so there's no confusion when customers take you up on your offer.

o Expiration date

o Purchased item must be of equal or greater value than the free or discounted item

o Only one discount/coupon per person/party

o Original coupon is required to get the offer/discount

o Coupon is only good on certain days or hours (i.e., Sunday through Thursday only or lunch menu only)

o Coupon is only good on certain items (i.e., free glass of house wine versus free glass of wine)

Delivery options

Whichever method you choose to get your coupon in front of someone, build in campaign measurement through redemption codes.

o Direct mail - either a solo mailing (postcard) or cooperative mailing (Valpak)

o Email to your opt-in list, preferably via a well-designed newsletter or e-blast using service like MailChimp

o Cell phone technology - companies like Cellfire deliver coupons directly to your mobile phone and/or PC

o In-store promotion

o Loyal customer promotion

o Newspaper or magazine ad

o Radio or TV code mention (technically, it's not a coupon but can work in some of the same ways and is a good practice for campaign measurability)

Redemption rate facts and fantasy

Will your coupon campaign be successful? What kind of response can you expect?

o The most critical factor is your list. Make sure you're targeting the right audience. If you're sending to current customers you can expect higher response rates than if sending to a list of prospects or a broad-based list.

o The offer is also important and again, must be well matched to your industry and audience. Think about what would entice you to change your behavior and try a new business or product, and then do something of that scale.

o Redemption rates also depend on what you're asking people to do (simply sign up for an email club versus make a purchase), and how many restrictions you put on them.

o Design is important as it must wear many hats: reflect your brand, get instant attention and stand out from all the other marketing messages people get daily.

o Don't forget repetition. It can take 7-10 impressions before someone's ready to take action, so looking at an isolated coupon campaign and expecting big numbers isn't realistic.

o Instead of looking for a magic number or industry average, designate a specific goal for your campaign and compare new campaigns against prior campaigns. Continue to test, analyze and refine coupon elements to improve redemption rates.

Adding coupons to your marketing mix can be successful if done thoughtfully, and not as a knee-jerk response to a slow month. As with any customer acquisition or retention effort, know your audience, your goal and how effectiveness will be measured. With this data in place, even a low response rate will yield valuable information about future marketing strategies.

Julie D. Thompson is a consultant, writer and partner in J&J Marketing, http://www.2jsmarketing.com, which provides marketing strategy, analysis and copywriting services.

The Problem With Online Coupons - Why Using Coupons on the Internet Could Be Hurting Your Business

Traditionally, advertising with coupons has been an excellent way to capture new customers and retain existing customers. Using the Internet, promoting your business with coupons has become quicker, cheaper and easier than ever before. Unfortunately, Internet coupons for "Brick and Mortar" businesses may have become ineffective and quite possibly have a negative impact on your business if not used properly. The reasons for this are as follows:

1. Printing coupons from the Internet is like printing money, it devalues the coupons for the customer as well as for the merchant.

Coupons really are a form of currency. They are an agreement between the customer and the merchant. The merchant uses the coupon to say, "I will give you a discount or a special deal, and in return you will patronize my business." This is the basic give and take relationship that the coupon establishes and works very well, but only if there is just one coupon at a time.

The problem with most Internet coupons is that they are infinitely redeemable. Most of the time, patrons can print Internet coupons as many times as they want so that they can effectively receive the same discount every time they go to that merchant. If we were all able to print money from our computers in the same way, then our currency would instantaneously lose all of its value. By using printable coupons this way, the customer reduces the value in his or her mind of the products that the coupon applies to and therefore the coupons themselves. The merchant on the other hand must devalue the coupon similarly since it is no longer effective in creating a "give and take" relationship but rather just permanently discounts their products or services.

2. Having coupons always available further devalues them. If they are always there for the taking, then there is no urgency to go get them.

Similar to the point above, having a coupon always available to print off or redeem has the same effect as printing off hundreds of copies. Traditional print coupons have always been distributed periodically in a newspaper, magazine, postal mail, etc. This meant that you were only going to receive one and only one of those coupons until the next periodical was distributed. Therefore, if you had any sort of interest in possibly using that coupon in the future, then you would cut out the coupon at that moment and be ready to use it. With Internet coupons, knowing that you can always revisit a website and print off a coupon whenever the need arises has the effect of also making the coupon worthless. This is because, (a) most will forget that they ever saw the coupon and will therefore never go back to print it off and (b) most importantly, the coupon loses its promotional value of trying to get someone to take action now.

3. Most coupons on the Internet are on a "pull" model instead of a "push" model.

When customers have to go out and get coupons, instead of the coupons being "pushed" out to the customer, then they only get used by the true coupon frugal fanatics and not by first time customers or customers who have forgotten about you. Again, traditional coupons have always been sent "pushed" out to prospective customers and therefore acted as a great way to proactively promote businesses.

Also, Internet coupons on a "pull" model, where customers must visit a coupon website and see what coupons are available, have no market testing value. One of the greatest advantages of marketing with coupons since they were first studied by Claude Hopkins in the early 20th century, was to be able to scientifically test marketing messages by "pushing" out the coupons and then tracking the ones that came back to you. Although this could still theoretically be done in a "pull" type scenario, the benefit of the "push" test system is that you could send out your message to a specific number of recipients within a specific time period and then receive back a specific statistical sample to draw conclusions from.

The Right Way to Use Internet Printable Coupons

The solution to "The Problem with Online Coupons" is to use the Internet to distribute your coupons while eliminating the issues stated above.

First, use an email marketing solution. Sending coupons in email solves the "push vs. pull" problem by delivering coupons to specific group of people who have opted-in to receiving updates and specials from your business. Sending coupons via email also solves the problem of having coupons always available. Email allows businesses to mimic and even surpass the benefits of traditional print periodicals. Businesses can test to find the ideal sending frequency that keeps their business in the forefront of their customer's minds while also maintaining a sense of urgency and timeliness. Also, make sure to use expiration dates and/or "print by" dates to further increase the sense of urgency.

Next, incorporate a secure "one-time" printing system for coupon distribution. This will allow each email recipient of your coupons to be able to print them once and only once for each coupon sent. This may seem somewhat trivial or possibly even petty, but the reality is that coupons that can only be used once allows the merchant to be more comfortable with promoting bigger discounts and better deals while at the same time giving the customer higher perceived and actual value of the coupon.

Using these tools will allow you to not only dramatically cut advertising costs compared to traditional print coupon advertising but also allow you to use coupon advertising in the best ways possible. Actively promote your business to new and existing customers while using scientific testing to discover the best possible marketing messages for your business' success. Create a real marketplace for your coupons and their value will increase to everyone who uses them.

The Problem With Online Coupons - Why Using Coupons on the Internet Could Be Hurting Your Business

Traditionally, advertising with coupons has been an excellent way to capture new customers and retain existing customers. Using the Internet, promoting your business with coupons has become quicker, cheaper and easier than ever before. Unfortunately, Internet coupons for "Brick and Mortar" businesses may have become ineffective and quite possibly have a negative impact on your business if not used properly. The reasons for this are as follows:

1. Printing coupons from the Internet is like printing money, it devalues the coupons for the customer as well as for the merchant.

Coupons really are a form of currency. They are an agreement between the customer and the merchant. The merchant uses the coupon to say, "I will give you a discount or a special deal, and in return you will patronize my business." This is the basic give and take relationship that the coupon establishes and works very well, but only if there is just one coupon at a time.

The problem with most Internet coupons is that they are infinitely redeemable. Most of the time, patrons can print Internet coupons as many times as they want so that they can effectively receive the same discount every time they go to that merchant. If we were all able to print money from our computers in the same way, then our currency would instantaneously lose all of its value. By using printable coupons this way, the customer reduces the value in his or her mind of the products that the coupon applies to and therefore the coupons themselves. The merchant on the other hand must devalue the coupon similarly since it is no longer effective in creating a "give and take" relationship but rather just permanently discounts their products or services.

2. Having coupons always available further devalues them. If they are always there for the taking, then there is no urgency to go get them.

Similar to the point above, having a coupon always available to print off or redeem has the same effect as printing off hundreds of copies. Traditional print coupons have always been distributed periodically in a newspaper, magazine, postal mail, etc. This meant that you were only going to receive one and only one of those coupons until the next periodical was distributed. Therefore, if you had any sort of interest in possibly using that coupon in the future, then you would cut out the coupon at that moment and be ready to use it. With Internet coupons, knowing that you can always revisit a website and print off a coupon whenever the need arises has the effect of also making the coupon worthless. This is because, (a) most will forget that they ever saw the coupon and will therefore never go back to print it off and (b) most importantly, the coupon loses its promotional value of trying to get someone to take action now.

3. Most coupons on the Internet are on a "pull" model instead of a "push" model.

When customers have to go out and get coupons, instead of the coupons being "pushed" out to the customer, then they only get used by the true coupon frugal fanatics and not by first time customers or customers who have forgotten about you. Again, traditional coupons have always been sent "pushed" out to prospective customers and therefore acted as a great way to proactively promote businesses.

Also, Internet coupons on a "pull" model, where customers must visit a coupon website and see what coupons are available, have no market testing value. One of the greatest advantages of marketing with coupons since they were first studied by Claude Hopkins in the early 20th century, was to be able to scientifically test marketing messages by "pushing" out the coupons and then tracking the ones that came back to you. Although this could still theoretically be done in a "pull" type scenario, the benefit of the "push" test system is that you could send out your message to a specific number of recipients within a specific time period and then receive back a specific statistical sample to draw conclusions from.

The Right Way to Use Internet Printable Coupons

The solution to "The Problem with Online Coupons" is to use the Internet to distribute your coupons while eliminating the issues stated above.

First, use an email marketing solution. Sending coupons in email solves the "push vs. pull" problem by delivering coupons to specific group of people who have opted-in to receiving updates and specials from your business. Sending coupons via email also solves the problem of having coupons always available. Email allows businesses to mimic and even surpass the benefits of traditional print periodicals. Businesses can test to find the ideal sending frequency that keeps their business in the forefront of their customer's minds while also maintaining a sense of urgency and timeliness. Also, make sure to use expiration dates and/or "print by" dates to further increase the sense of urgency.

Next, incorporate a secure "one-time" printing system for coupon distribution. This will allow each email recipient of your coupons to be able to print them once and only once for each coupon sent. This may seem somewhat trivial or possibly even petty, but the reality is that coupons that can only be used once allows the merchant to be more comfortable with promoting bigger discounts and better deals while at the same time giving the customer higher perceived and actual value of the coupon.

Using these tools will allow you to not only dramatically cut advertising costs compared to traditional print coupon advertising but also allow you to use coupon advertising in the best ways possible. Actively promote your business to new and existing customers while using scientific testing to discover the best possible marketing messages for your business' success. Create a real marketplace for your coupons and their value will increase to everyone who uses them.