We all know what coupons and promo codes are. We’ve all used them and we’ve all benefited from the financial savings they offer. But now it’s your turn to make this decision of whether or not you want to include coupons and promo codes in your business. You’re thinking about how might the business benefit from these cost cuts. Will you be making money that way or just losing it? In other words, are coupons and promo codes good for your business?
The Many Pros of Coupons and Promo Codes
First off, not only do coupons and promo codes introduce new customers to your business and website, but they also act as an extra incentive for the customer to buy what you are offering which, in turn, generates revenue. You may lose on the first purchase but the customer might find something else that suits their fancy in your business that will increase your average order size or even get you more customers. Studies have shown people who use coupons spend 24% more than regular consumers.
In addition to that, 82% of digital coupons are redeemed within a week or less. That means customers are interested in these deals that you are offering and will probably use them for their near future purchases on your website and e-commerce business.
The other thing these coupons and promo codes do is help get traffic to the business which brings back revenue. Not only that but these customers are also often added to a list so, whenever the business runs a promotion, they let these customers on the list know and have them purchase more.
That is not all. When a coupon or a promo code is placed as a prize at the end of action, it encourages the consumer to complete said action. When a person knows there is something in for them, they are willing to sacrifice the time and put in the effort to win the prize in the end. For example, granting them a coupon upon completing a survey or sharing your social media content. That means more sales and more social media exposure. 2 birds, and 1 digital marketing strategy stone.
It also helps you re-engage current customers. Since it’s easier to convince an already satisfied customer to purchase from you than to build trust with a stranger. In these particular cases with the re-engagement of previous customers as a goal in mind, one can send exclusive coupons or promo codes to these customers to create new buying opportunities for them.
Moreover, it creates happier customers. A study done by the Center for Neuroeconomics Studies at Claremont Graduate University has shown that when customers receive a promo code their level of oxytocin, the hormone responsible for happiness and the feeling of trust, actually increases.
It sounds like a win-win situation. But there is more to it.
The Cons of Coupons and Promo Codes
Coupons and promo codes may just decrease your profit. Sometimes it will lead to minimal gain, but other times, it will lead to a loss. There is a lot that goes into building a business. From buying and handling goods to shipment or delivery or even employees’ salaries. Sometimes a cut in the selling price doesn’t generate the right amount of revenue needed to pay for all these necessities.
It can also lead to a reduction in the value of the product or service you are offering. The customer, once they buy something at a specific value, might not want to pay more for it in the future. This would make the seller fall into the trap of always giving out coupons and promo codes to get sales thus, losing profit in return.
So, Are Coupons and Promo Codes Good For Your Business?
When done correctly, yes. Coupons and promo codes are just right when done in a sharp, clever way and with the right business. It also might depend on the aim of the campaign you are launching. Make sure to put some thought into it beforehand and think about the pros and cons and what it would uniquely mean for your business.