Today’s article comes courtesy of Sheldon Armstrong of 522 Productions.
Recent reports show that up to 87 percent of shoppers use coupons. Sixty percent of these shoppers actively look for coupons, while the remainder use coupons if they are convenient. These are numbers that no business owner can afford to ignore. Coupons are loved by customers and are a great way to increase sales. Plus, they are a form of advertising and a way to endear yourself to your customers.
Most people with email addresses receive daily or weekly emails with coupons. Everyone loves receiving discounts for products and services they buy, and emails promoting these products and offering coupons are hugely popular. As with anything in the business world, there are both risks and rewards to using coupons. As a savvy business owner, you need to understand exactly what you are offering and how it will benefit you.
Profit Margins With Coupons
All business owners understand the concept of mark-ups, so when they are offering coupons or discounts, they are simply bringing the cost of the product closer to the actual buying cost. While this can initially lower your profit margin, the sheer number of people that use coupons can increase the total number of sales. Additionally, requesting a customer’s name and email address to be added to an email list helps you to form leads and know where your customers are.
Pros and Cons of Using Groupon
If you are offering your coupons on a website such as Groupon, read the fine print and know exactly what you will be getting out of the deal. Businesses who do not understand the price of offering their coupons can end up losing a large amount of money with these types of sites.
Groupon keeps fifty percent of any profits. Remember to subtract their commission fee from the discount you are already offering. You do not want this number to be negative, as this means you are losing money on the deal. However, some businesses choose to remain on Groupon for volume of sales and advertising.
A study of 150 businesses revealed that 66 percent reported that their Groupon promotions were profitable. 32 percent reported that their campaign was unprofitable, and 40 percent of respondents said they would not use Groupon again. You should consider these statistics when deciding to launch your own Groupon promotion.
Coupons Advertise Your Business
One aspect of coupons that business owners often forget is that they are a form of advertising, so even if your profit margin seems low or nonexistent, you can chalk it up to an advertising expense. It is still a cheaper way to advertise than other markets.
Inspire Repeat Purchases with Coupons
Coupon users tend to be loyal. Once they have received the initial discount they are more likely to come back later and purchase the product at full price. Other coupon users try new products simply because they have a coupon, and then later continue to buy it regularly. To keep old customers and entice new ones are the entire goal of offering coupons.
All of these factors should be considered by a business owner interested in launching a coupon campaign. There are many available avenues for coupons, from the Internet to the Sunday paper inserts. Do your research, and determine what you can afford and what your goals for your coupons are, then track your results so you can do even better next time.
This article was written by Sheldon Armstrong on behalf of 522 Productions with services to help you tell your story and help you get in front of your customers.