By
Bob Phibbs
Untrained marketers who say we need to do something always go the easy way - discounts. It takes very little imagination, and since everybody else does it, they assume it must work.
As I've said in speeches around the country, you’re often condemned to repeating it as a lifestyle once you do it.
Yes, Groupon and the rest of the online "daily deal" sites tout how they can get a bunch of people to your doors, but that's not the point if you aren't meeting expenses.
Here are seven reasons discounts or coupons are not good marketing tools
- Coupons are perceived as an ongoing effort. In effect, they become the whole marketing plan.
- When you factor in your time in creating, printing, and distributing discounts, plus factoring in the actual price reduction itself, you have a very expensive promotion.
- You teach the customer that your product is not worth its full price. You may give the illusion you are raking in big bucks on their backs.
- People who found you through coupons will wait for your next one.
- You reward people who have no relationship to the success of your business
- Your sales staff will keep a copy of the coupon to offer to their customers or friends
- If your regular customers who have supported you find out someone who’s never been there is getting a better deal than they are, they just might not return.
How to lose regular customers paying full price, in a snap
That’s precisely what happened at a local restaurant in Long Beach, California, where we went for a birthday celebration.
Located in an old craftsman house with antiques and a wood-burning fireplace, this was a great place to enjoy a great meal.
We had ordered wine before dinner, enjoyed fabulous entrees, and saved room for their signature desserts.
The owner must have been tipped off when the couple at the table next to us paid their check with a 50 percent off coupon. He went to their table and sat down.
We overheard him discussing his participation in the 50 percent off Entertainment Book. He said that he valued the Entertainment Book because it brought in customers who had never tried him.
He told them the story of his business, how he and his wife built it, and how many years he’d been there.
The coupon bearers told him they were from Pacoima, about an hour’s drive from the restaurant, and that they would never have come without the coupon.
He smiled, wished them well, and said he looked forward to seeing them again.
The group at our table was incensed. We lived in the neighborhood. We’d gone there for years, paid top dollar, and received no special recognition.
How did we feel? Who was more important to his business?
Here we had paid full price as usual, and the people next to us who had no relationship paid half-price.
We never went back...
What to do instead
Reward those who buy from you 24/7, 365 days a year—those who shop with you regardless of the coupon, the deal, or the steal.
Getting them on your best customer list pays them back for their loyalty.
Getting coupon users on your preferred list misses the point...
I'm talking about giving people who don't know you 50% off to come in the door with the online deal sites and getting them on to your preferred customer list.
Why?
Because you just gave them 50% off. Unless you are going to offer that regularly, they'll feel your subsequent offers are not enough incentive and go elsewhere to someone else offering extreme coupons.
You took all the hit for giving them the deal with none of the promised rewards.
If you repeatedly market your business with coupons to people who don't know you, you’d better cut your staff. That's because profit is what suffers.
And once your best customers find out others else get a better deal than the regulars they'll be like me and never return.
No one likes to feel they are being taken advantage of...
Coupons are devaluing your business
The retail media are filled with how discount redemptions are way up on coupons, and free-standing inserts like you find in the Sunday papers are at an all-time high.
Don't be fooled.
Coupon-hunting sites have proliferated, from bloggers and influencers to individual business models that only exist to showcase the latest deals with tips and tricks.
Never has it been easier to find a coupon from anyone, anywhere
Just because everyone's doing them doesn't mean they are a successful strategy.
Just look at what it has done to Macy's - you'd be a fool not to shop there without a coupon.
Price isn't everything. You have to make a profit. You can't compete on price. You have to build your brand, or you won't be around for long.
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