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Four Misconceptions About Couponing

Posted by Alexander Hold on Jul 7, 2019 8:51:37 PM
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A guest post from Global Savings Group. From time to time, our partners and clients submit posts to our site for publication. We are pleased to publish a range of these opinions, which reflect the POVs of the author(s).

Modern coupons have evolved far beyond the paper trimmings that were once associated with promotional deals. Today, most coupons are digital and many are delivered to highly targeted audiences. Coupons are also very influential during the consumer decision journey – they can even help in building brand awareness and brand loyalty.

A recent study from Valassis indicates 90% of consumers want to use coupons and deals during the buying process. People love coupons. Yet despite such widespread usage by consumers, many brands have misconceptions about both coupons and the coupon industry. These misconceptions hold back the industry from realizing its true potential.

In this blog, I'm going to walk through some of the major misconceptions, and see why they’re ill-founded.

 

Misconception #1: Only Low-Value Customers Use Coupons

Coupons have been (wrongly) associated with low-value customers – customers who don’t contribute much to your revenue figures but may take up a large chunk of your customer acquisition costs. Nothing could be further from the truth. Digital couponers of the modern day are smart, savvy, and most importantly, they are cost conscious. As The Street aptly concludes:

“The popularity of the movement once affiliated with the budget-conscious middle class now cuts across all gender, age and socioeconomic groups. We see that the biggest adopters tend to be high-income earners.”

“The most popular sites focus on deals on restaurants, travel, classes, and services like teeth-whitening. These aren’t exactly luxury items, but they are aimed at people with disposable income – and that’s exactly who is buying.”  

Modern consumers of all income groups are more aware and conscious of getting great value for their money. It is no longer thought of as “cheap” to use coupons; people interpret  it as a wise buying tactic that can save lots of hard-earned money.

Whether its showbiz stars like Lady Gaga or financial tycoons such as Warren Buffet – coupons are in virtually everyone’s hands, transcending all socioeconomic groups to provide valuable deals for people of all incomes.

In fact, a study by Nielsen concluded that “41 percent of coupon "enthusiasts" come from households with income greater than $70,000” – certainly not really the ‘low-value customers’ you might be less interested in attracting.

 

Misconception #2: Coupon Customers Are Not Loyal

There is a general misconception that coupon users are not loyal – that they are only interested in the financial incentive, and don’t develop connections to brands.

Many studies provide evidence to the contrary. Research by Google, conducted along with ComScore, shows that coupons are actually very influential in increasing brand loyalty. The study concluded that over a six month period, coupon users continued to make repeat purchases at a brand overall, compared to customers who did not use coupons.

The study also revealed that coupon users do more research across brands, but still often come back to the same retailer to make multiple purchases. In the study, coupon users drove 5% more per capita than non-coupon users.

Additionally, coupons are a proven strategy that can help organizations increase brand awareness and gain exposure. 78% of consumers, who otherwise would not buy from a brand, report that can be persuaded to do so when presented with a coupon.

 

Misconception #3: Coupons Only Allow Slim Margins

Another misconception is that coupons tend to decimate retailer margins. Naturally, this thinking comes from the idea that a discount naturally depresses retailer margins. There is truth to that. But what marketers and retailers fail to consider are the other sources of value that coupons create. 

For example, a recent study we conducted for our GSG Dynamic.Coupons product actually increased the average order value by 25%. That kind of sales growth can make up for margin loss. 

Modern coupons, such as Dynamic.Coupons, utilize data directly from what is in the shoppers’ basket to provide offers to upgrade to an even better alternative – and therefore, enjoy an even better brand experience.

Retailers have constructed intelligent sales schemes that not only increase coupon-based sales, but also improve profit margins by decreasing coupon discounts.

For example, a leading fashion retailer utilized GSG Dynamic.Coupons to increase coupon-driven sales by 92% while at the same time reducing the coupon discount rate from 20% to 15% .This shift increased profitability while also increasing their revenue as a whole.

 

Misconception #4: Coupons Are Not In-Line With Brand Values

Another reason marketers can be reluctant to utilize coupons is that they believe that such discounts do not align with their brand image and perception. In my view, they wrongfully perceive coupons as stand-alone strategies that do not contribute to the betterment of the buyer journey.

In fact, discounts and coupons have been known to make people feel that they are making smarter buying decisions. In fact, one study reported that exclusive offers such as digital coupons can make buyers feel rewarded, excited and special during the buying process.

Exclusive coupon offers give users the ability to shop for their desired products at special, reduced rates. Such brand-buyer interaction creates a high-quality bond between brand and shopper.

To provide a tangible example, imagine a customer looking at Dyson V8 vacuum on a retailer’s website. Intelligent coupon products like GSG Dynamic.Coupons would analyze the user’s history as well as the shoppers’ basket to ascertain the most-likely to convert offer and then deliver a tailored promotion to that shopper. In this scenario, the consumer is not only likely to be delighted by the offer, there is a high probability that they will discuss it with their friends and family.

 

Key Takeaway

Contrary to common perception, couponing can actually help businesses create value for their brand in addition to their customers.

The price-off discount is only one dimension of couponing. Intelligent dynamic coupon technology allows brands to target across income groups with personalized incentives that drive not only loyalty, but also protect margins.

Further, today’s couponing should not be seen as a standalone tool but should be leveraged in parallel with other marketing channels to foster meaningful customer relationships and build stronger brand image.

Topics: Partner

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