14 Dec How To Run a Killer Coupon Program
With the off-season in full swing, many spa retailers are turning to promotions to reduce inventory and plan for 2018. Coupons are a tempting way to increase revenue and move stock, but they can cost your bottom line if done incorrectly. However, if done the right way a coupon program can boost long-term profitability and consumer awareness. Learn what it takes to implement an effective coupon strategy in your store.
Coupons Still Matter
Though many facets of retail have changed in the e-commerce era, the success of coupons remains a constant. Millions of consumers still take advantage of the various rebates and discounts businesses of all sizes offer, which begs the question: why are coupons so effective?
Retail analysts provide a litany of theories as to why consumers are drawn to coupons. Some suggest it’s physiological: coupons cause the brain to produce hormones that reduce stress and heighten endorphin levels in consumers. That may be true, but there is also a practical reason why consumers use coupons: they love getting a deal. Shoppers feel more financially savvy when they use coupons. They believe that have an edge over other consumers because they were able to get a better price.
Finally, coupons have seen a resurgence in and because of the digital marketing age. Retailers are no longer limited to clip-out paper coupons and flyers. Instead, they can reach new consumers through targeted SEO content, PPC advertising, and email promotions. In fact, digital marketing has made coupons more popular than ever.
Plan Ahead for the Coming Year
As with any marketing campaign, coupon incentives need to be planned well in advance. Ideally, you should spend the off-season planning for next year’s promotional offers and taking inventory. When you give yourself more time, you can coordinate rebates with manufacturers, predict slow periods, and identify sales targets. As a result, you can implement smarter, more strategic promotional offers that increase awareness and revenue without depleting your bottom line.
Offering discounts at the wrong time can do more harm to your business than good.
However, the off-season is also a good time to offer promotional discounts to off-load inventory. Speaking with Spa Retailer, Christian Ryan, owner of Premium Wholesale Home & Leisure, Kitchener and Mississauga, Ontario talks about how his store uses discounts to its advantage. “Starting in August, we advertise that 2017 floor and in-stock models are now reduced as part of our marketing initiative,” Ryan explains. “We identify in our inventory list what spas are eligible for this promotion and offer savings for these specific models. In our advertising, we have a floor-model coupon [which we] use in the store and at sales events.”
To gain the most from your coupon offerings, you need to align them with your store’s sales goals. Offering discounts at the wrong time can do more harm to your business than good.
Balancing a Profitable Promotional Strategy
Coupons are a double-edged sword. On the one hand, they generate revenue and consumer awareness. On the other, they cut into your profit margin. The key to an effective promotional discount is the balance between benefits gained and profits lost. If you’re thinking about a coupon strategy in your store, here’s a few considerations to keep in mind:
- Understand Your Full Cost Picture – Before you offer any discounts, you must first determine if you can afford it. When planning any coupon campaign, be sure to run costs and profit projections for your entire product line. This will inform where discounts can be applied with minimal profit loss.
- Reduce Excess Inventory – You’re well aware that overstock can be costly to your business. Coupons are a great way to cut losses and clear out your showroom to make room for new products.
- Identify Lifetime Customers – Many retailers use coupons to attract new business. This can generate a boost in short-term revenue, but reduces the bottom line. As a result, the payoff is in gaining lifetime customers. Your promotional offerings should target consumers who are likely to return and pay full price in the future.
- Promote New Product or Service – If you plan to offer a new brand or product line, use the opportunity to incentivize sales. Manufacturers will often coordinate rebates with retailers, such as introductory financing rates. Ideally, this increases product awareness and encourages returning customers to upgrade.
When you work with your manufacturer, you can alleviate the financial burden of coupons. Manufacturers frequently offer discounts or rebate programs for their new products or back stock. Like you, they need to move excess inventory. Rebates incentivize consumers to spend, which cuts manufacturer losses. In this scenario, the spa manufacturers take the direct hit to the profit margin, while generating income for your showroom.
You can coordinate manufacturer rebates with special deals to facilitate your own promotional efforts and clearance events.
Describing his experience with manufacturer promotional offerings, Cole Taylor at Southern Leisure Spa & Patio in Dallas, TX recounts, “Our most successful coupon campaigns have been in conjunction with the Bullfrog rebate promotions. We always experience a big jump in sales when [the manufacturer] offers a rebate to the consumer.”
Additionally, you can coordinate special deals to facilitate your promotional efforts and clearance events. Manufacturers have the same incentive to move hot tub units as you do, so they’ll offer special rates to coincide with your event to co-op the costs. Typically, these should be planned well in advance.
Digital Marketing Campaigns
In the digital marketing age, getting the word out about your coupon program involves more than a print ad in the newspaper. Today, the name of the game is targeted online advertising, social media outreach, and keyword optimization.
If you’re new to the world of digital promotions, here are a few basic techniques to gain a wider reach and better response:
- Email integration – The easiest way to encourage return customers is to contact them directly. If you don’t already have one, create an email list of your past consumers and send your coupons directly to their inboxes.
- Social media presence – The power of social media platforms like Twitter and Facebook are not to be underestimated. With billions of social media users, you’re posts can spread across a wide audience. You should create social media coupons and discount codes which generate traffic toward your business. Furthermore, encourage users to share your content for additional incentives.
- Search engine optimization – SEO is an increasingly prevalent marketing tool that helps your business reach more consumers. Using search engine data, you can generate sponsored content that reaches target consumers. For instance, if a customer enters “hot tubs Orlando” into the search bar, your content containing those terms appears in the results. Taylor stresses the importance of targeted online advertising in his store: “We do a lot of PPC advertising on Google (AdWords), so that is the first place we really promote coupons and rebates. Making sure the offer is visible from multiple areas of our website is important too.”
Tips for a Better Coupon Program
The key to any successful promotional campaign is coordination and effective execution. Here are few final tips to consider before starting your next coupon program.
- Identify Your Target Consumer – Before you start slashing prices, you want a clear idea of your target customer. Are you looking to draw new business? Do you want to reward returning customers? Once you know who the coupon is for, you can offer a smarter deal with targeted promotion.
- Inform Your Sales Team – When you’re ready to launch your next coupon campaign, “make sure your entire sales staff is well aware and that everyone is on the same page as to what the offer is,” Taylor writes. “Customers can become frustrated if they come into your store and the sales staff is not well informed on all the aspects of the promotion.”
- Deck Out the Showroom – Finally, to help spread the word, put some finishing touches in your store. Taylor suggests that “banners and balloons in the showroom and around the exterior of your store are also great tools for drawing attention and letting the customer know that something special is going on.”
When done correctly, coupons have the potential to increase traffic and sales in your business. Besides an enticing deal, preparedness is essential. Don’t risk your bottom line; take the time to determine if your cost picture can accommodate promotional incentives and coordinate with your manufacturer. You want to give your customers a great deal–but at the end of the day, your goal is to sell more hot tubs and increase revenue.