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Coupon Marketing: How Do Coupons Work for Small Businesses?

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It’s a statistical fact that most people like coupons. According to market research company A. C. Nielson Co., 60 percent of consumers actively search for coupons and 95 percent of consumers look at coupons favorably.

We like coupons, and so should small businesses. Coupons are a cost-effective and measurable way to recruit new customers, sell more products, and reactivate those customers you may have lost to competitors.

Coupons work by interfering with the cost-benefit analysis consumers perform before making any purchase decision. Customers will only visit a store and buy products when the benefits of doing so outweigh the costs, including the time and money spent making a purchase.

In this article, we’ll look at five ways coupons help boost traffic to small businesses. However, it’s important to note that central to a coupon’s effectiveness is how it lessens the cost and increases the benefits of visiting a store or buying a product.

Remember, coupons are always designed for the consumer.

5 Ways Coupons Work for Small Business

  1. Recruit New Customers – Coupons offer discounts to customers. When someone comes across a coupon, the discount or offer is what attracts. Coupons are most successful when they reach people who would not otherwise visit your business or use your services.

Going back to the cost-benefit analysis, new customers will be much likelier to visit a store that lowers the cost of doing so.

Businesses can’t discount every product at all times, so coupons are a great way to strategically discount.

  1. Entice New Movers – New Movers are an extremely important market segment for small businesses. Because they’re new to an area, they must form new business relationships.

It’s a winner-take-all scenario. The first business to reach the new resident is the most likely business to gain a loyal customer. Better yet, businesses that offer a discount have an even better chance.

Offering coupons in retailers that New Movers are likely to visit — supermarkets and convenience stores like Dollar Generals — have much better chances of being seen by new movers, and therefore, gaining more loyal customers.

Read more about New Mover marketing in this blog.

  1. Pull Competitor Traffic – Discounts and special offers are the most effective way small business can channel a competitor’s traffic. While there are several mediums that communicate discounts, most are only accessible to larger businesses.

For example, commercials and ads on TV and in newspapers are often too expensive and time-consuming for small businesses to produce.

Coupons clearly and easily allow small businesses to communicate competitive offers that can steer more customers to use a particular business. With coupon advertising, small businesses also gain more control over where their discounts are distributed.

Hyper-local businesses must have this control. Otherwise, the discount is lost on the wrong audience.

  1. Re-activate Former Customers – Similar to channeling competitor traffic, coupons also function to reactivate customers. Sometimes customers will stop using a business simply because they’ve forgotten about it.

Coupons work to remind these former customers about your products, and moreover, they provide an extra incentive for them to visit your store again.

After reactivation, it’s fairly likely they’ll become current customers — even without a coupon. A simple reminder and offer can go a long way in customer retention for small businesses.

  1. Sell More Expensive and Related Items – Last, but certainly not least, coupons can help your business sell more products. Many times, when a customer visits a store because of a coupon he or she purchase more than just the product discounted on the coupon.

This is especially noticeable for restaurants and places that serve food. For example, when a restaurant offers free or discounted entrees, in almost every case coupon redemptions result in more purchases—wine, appetizers desserts—for a better dining experience.

Diners will reason that the money that would have been spent on an entrée can now be spent on extras. This can even result in greater spending with a coupon discount than without.

For more information about coupon design and offers for restaurants, check out this blog Restaurant Marketing: How to Design Coupons and Offers that Work.

Ready to Begin Coupon Advertising?

Register Tape Network partners with thousands of retailers in 33 states and has helped several categories of businesses diversify their marketing to gain a stronger presence in their communities. Here are just a few notes from our many satisfied customers.

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