This isn’t some sort of journalistic expose that will bring any industries to their knees, but it is something the coupon & deal industry doesn’t want you to know. Coupon clippers hold no loyalty to your brand. In fact, many businesses are getting tired of the coupon customers.
I’ve seen similar signs at many businesses. From Entertainment books, and Money Mailers, to the internet deal sites like Groupon. One restaurant I spoke with said they have become hostages of their direct-mail coupons. They tried buying space in a coupon mailer to get new customers, and they did get customers with those coupons. When they stopped advertising with that mailer company, the customers disappeared as well. They went back into the mailer, and it eroded their profits until they were forced to move to a smaller, cheaper location.
It’s not just the old-fashioned paper coupons that can hurt your business. Merchant Circle’s latest Merchant Confidence Index survey found that “55 percent of people who have run a daily deal campaign said they would not do so again.” One small business owner explained the sales pitch he received. The promise was that new customers would discover their business through the deal, then would love the product and come back to pay full price.
It doesn’t happen that way.
Coupon users are subscribed to the “deal” service. Whether it be an email, text message, or in the case of direct mail there are customers who faithfully open the envelope rather than sending it straight to the recycle bin. These customers have a loyalty to Groupon, Living Social, and Money Mailer, not to the advertisers inside. They check the daily deals for something that looks like a great deal to them personally, and make their purchases based on the advertiser at that time.
In fairness, this is not to say there is no value of the deal websites and services. I ran a special offer with one site for a client which resulted in a significant lift in sales, with no noticeable erosion of profits. However, it has to be done right, and for the right reasons, not simply because a salesperson told you it was a great promotional tool. Think of Groupon and similar services like a power tool, they can be helpful when used properly, but they can also slice off a limb if you’re not using them carefully.
When customers need a similar product next time, they will go wherever the next deal is offered. They are, and will continue to be loyal to the coupon, not your brand.
