Everyone loves a coupon. Whether it’s a free shipping voucher for a new customer or a loyalty discount for a long-time fan, coupons can make customers feel appreciated and more encouraged to buy from your business. It can even be the final push a prospect needs to finalize a purchase. The best part? Even small businesses can benefit from coupons. Keep reading for everything you need to know about forming a coupon marketing strategy for your business.
Does coupon marketing work? Coupons are a tried-and-true way to advertise your small business to customers both old and new because they provide an incentive to try your business, usually in the form of discounts or freebies. For example, some common coupons are percent-off discounts or free shipping vouchers. Both are incentives to encourage recipients to try a business.
That’s the simple core of why coupon marketing works. It’s an easy, enticing incentive. Who doesn’t want a discount or a freebie? And the best part is coupons can fit into nearly every stage of your marketing strategy, from building your brand presence to encouraging customer loyalty, as I’ll go into further detail below.
Types of Marketing Coupons
There are two main categories of coupons: print coupons and digital coupons. Print coupons are the traditional ones you might remember tearing off from postcards and product catalogs in your mail, and digital ones are usually in the form of scannable QR codes or specific codes that are a combination of letters and numbers.
Print coupons are often (but not exclusively) for a general audience, so they can be used by anyone who receives them. Meanwhile, digital coupons are usually (but again, not exclusively) unique and can only be used by specific people—for example, members of a loyalty or discount club. It’s why you’ll more likely find print coupons for brand awareness or new customer campaigns and digital coupons for loyalty or engagement campaigns (more on this below).
Aside from these two distinctions, coupons can also be categorized by their function, some of which are as follows.
- Percentage discount coupons: Probably the most common type of coupons, these offer a certain percentage off your purchase, like a 20% discount. They’re common because they’re versatile. They’re effective whether you’re enticing new customers to try your business or rewarding your most loyal ones for retention.
- Free shipping coupons: If you own an ecommerce store, these might work particularly well for you. True to their name, free shipping coupons give recipients free shipping on their next purchase.
- BOGO coupons: Short for “buy one, get one,” these coupons give customers an extra product as a freebie with each purchase of the same product. They’re especially effective if you have a specific product that’s popular with consumers.
- Fixed amount coupons: These offer customers a specific fixed discount on their next purchase, for instance, a $5 or $10 discount. Like percentage discounts, they work for any stage of the sales funnel and as both unique and general coupons.
- Free gift coupons: These work similarly to BOGO coupons, except your freebie isn’t a specific item but another “mystery” gift that keeps customers intrigued. These can work particularly well for loyalty programs or seasonal campaigns.
While these are the most common types of coupons you’ll find today, there are no set rules for coupons, so they can be anything you want, like points for a loyalty program. They don’t even have to be exclusively for products. You can even offer coupons for services or content. There are dozens of coupon marketing ideas and examples to inspire your strategy.
Coupon Marketing Pros & Cons: Are Coupons Right for You?
If you’re still on the fence about incorporating coupons into your marketing strategy, first consider your primary marketing objectives. Will coupons help you achieve your goals? Coupons have been proven effective at directly influencing consumer behavior, nearly doubling buying intent. 80% of consumers even say a discount coupon would encourage them to check out a new brand.
But it all ultimately comes down to how you leverage them. Here are some of the biggest pros and cons of coupon marketing to keep in mind.
| PROS | CONS |
|---|---|
| They’re effective for any stage of the customer journey, from growing brand awareness to building customer loyalty. | Coupons require lots of careful planning, budgeting, and monitoring to ensure they’re profitable. |
| They don’t require lots of complicated equipment or expertise to set up. | They usually only bring in one-time customers, not long-term ones who’ll keep coming back. |
| They’ve been proven to encourage purchases, no matter what type of coupon you use. | It can be difficult to track their effectiveness—especially for print coupons. |
| They’re versatile. They can be print, digital, and offered via direct mail, email, websites, or text messages. | The market can be very saturated with coupons, making it more difficult to stand out. |
| They’re an easy way to upsell and cross-sell products. | They’re not always sustainable. Using coupons too often can eventually lead to more losses than gains. |
Coupons are versatile, which can be both a good and bad thing. Before getting started on your coupon marketing strategy, ask yourself these questions about your business.
- Do I already have a steady brand and online presence? If your business is completely brand-new, coupons should not be the first thing on your to-do list, even if you want to acquire new customers. Before starting a coupon strategy, your business should already have a brand identity and online presence, and then it’ll be ready for new customers to learn about it.
- Do I have the budget margin for coupons? Coupons are a marketing strategy that will directly affect your overall budget, especially for the likes of discount or fixed-amount coupons. Plus, for physical coupons, you must consider printing costs. You must also track your budget throughout your campaign to know your overall return on investment (ROI).
- Do I have a dedicated team to oversee my coupon strategy? Coupons aren’t a one-person operation. You must plan your campaign mechanics, design your coupons, distribute them (whether physically or digitally), and keep track of their redemptions afterward, which can often be too much for one person to handle—especially if you’re also running a business. Building a coupon strategy with a full team is easier than going solo.
- Do I have enough inventory of my product? If you sell products, you don’t want to be the business that offers coupons for them only to immediately run out of stock. Coupons help drive sales, so make sure you have enough of the product you’re planning to promote.
How to Use Coupons in Your Marketing Strategy
As mentioned above, one of the biggest benefits of coupons is their versatility—they can fit into nearly every stage of the marketing funnel or customer journey, whether you’re just starting to build your brand awareness or solidifying relationships with your most loyal customers. Below are some of the best ways you can leverage coupon advertising as a marketing strategy.
One of the most classic uses of coupons is for introducing your business to new customers. The earliest stages of marketing are often the most challenging—I know that from experience. But coupons are always a familiar and reliable incentive to pique people’s interest in your business, particularly through discount or free shipping coupons.
This is because customers feel as if they gain “rewards” by redeeming coupons, which makes them less hesitant about trying new businesses. For instance, you can offer discount coupons in person at a trade show or to first-time visitors of your website as a popup or splash page. You can also list coupons on sites like Rakuten or Groupon. All of these are ways to introduce new customers to your business.
If you’re looking for ways to keep your current customers engaged, coupons are a great solution. Almost no one will say no to a coupon, whether it’s a percentage discount, a free shipping voucher, or a gift card, especially when they least expect it. For instance, if a customer receives a $10 gift card in their mailbox, it’ll automatically make them think of your brand in a positive way and can even encourage a repeat purchase.
Coupons can also be helpful if you’re running a promotional campaign you want to build buzz about, say a holiday or anniversary sale campaign. You can offer discount coupons directly to your existing customer base via email, text, or direct mail.
Have you ever abandoned an item in your cart when shopping online, only to finally complete your purchase because of a checkout discount or a free shipping voucher? That’s one of the best examples of an online coupon marketing strategy. As mentioned, coupons have been proven to directly influence buying behavior—it’s probably its most effective use by far.
When prospects are at the very end of the customer journey, sometimes the final push they need is as simple as a discount, a free shipping voucher, or a free gift. While these are also effective as print coupons, they’re far more so as digital ones because they let you track customer behavior, such as what products your coupon was used on and how soon it was used, which can even help you with upselling efforts or cross-selling later on.
Another less common but steadily growing form of digital coupon marketing is affiliate marketing, where third parties help promote your brand by offering discount codes exclusively to their communities. In exchange, they earn a small commission for every sale they make.
It happens to every business: a customer makes one purchase and then never interacts with your brand again. How do you win them back? A good coupon at the right place and time can help. Emails are particularly a good way to target lapsed customers and get them to reengage with your business—especially with the help of a discount or free shipping voucher.
The drawback with win-back coupons is they work best as digital coupons because they’re the only way you can track your lapsed customers. The good news is you can automate your emails to send to specific customers who haven’t interacted with your business in a certain amount of time (e.g., two months) and then track if your coupon code was used.
Finally, you can leverage coupons to encourage brand loyalty among your customers. For instance, offer a 20% discount voucher to customers who’ve already purchased from your store two or three times as a reward for their loyalty.
You can even set up tiered discounts in a loyalty program where customers can earn higher discounts with every spend or by collecting points. It’s a gateway to building a more long-term relationship with your customers.
The key to making this strategy work is to plan your loyalty program carefully so that it leads to growth and not deficits. Brand loyalty coupons are effective because of their exclusivity, so carefully evaluate how your customers can qualify, how they can earn and redeem coupons, and other logistics.
Getting Started With Coupon Marketing: 7 Tips
Now that you’re ready to start building your coupon marketing strategy, below are some tips to put you on the right track. As you already know, coupons can offer a wealth of benefits for marketing your small business—if you leverage them the right way.
- Decide your primary objective. This is the first thing you must do because your objectives will guide the rest of your strategic decisions. Will you use coupons to bring in new customers, or maybe to reengage old ones? These decisions will lay the foundation for the rest of your coupon strategy.
- Build your strategy and make calculations. Once you have your objectives, then comes the rest of your strategizing. Coupon marketing is all about a good strategy. Decide on your budget, campaign period, distribution and redemption methods, how you’ll track your success (increased sales, ROI, landing page visits, and so on), and of course, the type of coupon you’ll use.
- Choose the best distribution method for your objectives. This is an important decision that will depend on your objective. For example, if you want to acquire new customers, you might offer your coupons as pop-ups on your website or on coupon sites like Groupon. Meanwhile, if you’re building brand loyalty, you might send your coupons via email or direct mail to reach specific customers.
- Stick to one coupon campaign at a time. Coupon campaigns can be a lot to handle, so I always advise first-timers to start with one campaign at a time, whether you’re doing a win-back campaign or building customer loyalty. Then use your insights from your campaign to create better ones in the future.
- Track your campaign metrics. This is simpler with digital coupon codes, but it’s also possible with printed ones by adding a tracking number on every coupon that you can list down later on when they’re redeemed. Tracking your coupons is important because it lets you know how successful your campaign was, if there are any areas of improvement, and if your coupons ultimately generated revenue.
- Create a sense of urgency. A key aspect that makes coupons effective is the sense of urgency they create—they’re only available until a certain date. When planning your coupons’ mechanics, decide on a redemption end date, and clearly state it on your coupon. It’s one of the most reliable ways to improve coupon redemption rates.
- Design your coupon well and write irresistible copy. Design always plays a key role in any marketing material. No matter what you’re offering, your coupon won’t get anyone’s attention if it isn’t well-designed, whether it’s a printed coupon or a splash page on your site. Also, when writing a copy, offer benefits, not products or services (i.e., “Save $5 on your next purchase” instead of just “$5 coupon for you”).
Good design is central to an effective coupon. If you’re making printed coupons, VistaPrint has always been one of my favorite platforms for designing marketing materials. There are hundreds of well-designed templates you can start with, plus a beginner-friendly drag-and-drop editing platform.
Where to Distribute Coupons
Where you distribute your coupons also plays a central role in your campaign’s overall success. While traditionally, you might remember receiving coupons in your physical mail (and it’s still an effective way of distributing them), today, there are a handful of more suitable ways, especially with digital coupons. Choosing the right method will come down to your overall objective and the audience you want to reach.
- Direct mail: This is one of the most well-established coupon distribution methods, and it’s still effective today. Coupons are a staple in direct mail, whether in postcards, flyers, or catalogs, and people still actively search for them in their mailboxes. Direct mail is especially effective if you have a physical location and want to increase in-store traffic or bring in new customers.
- Email: Since the dawn of the digital age, emails have been one of the most popular ways to distribute coupons. This is due to their convenience and ability to reach both mass and targeted audiences. Emails are also versatile, but they’re especially useful for sending digital coupon codes to encourage ecommerce purchases or for offering member-exclusive discounts, say for a loyalty program.
- Text message: Text messages are most effective for sending coupons to specific customers (aka unique coupons instead of general ones), especially if you have an ecommerce store, because customers can easily complete purchases on their phones. However, the drawback with text is you can only send coupon codes.
- Website popups: If you’re looking to attract new customers, a popup or splash page on your website advertising a new customer discount might be all it takes to get a visitor to make their first purchase. This works seamlessly if you have an online store on your site. Aside from discounts, you can also offer free gifts or free shipping vouchers. You can even offer coupons as an incentive to encourage newsletter signups.
- Newspapers and magazines: Did you know that the earliest coupons were circulated via newspapers and magazines in the early 20th century? If you’re targeting an older demographic, print media is also a reliable option to distribute your coupon, especially if you have a physical location. However, since you’ll need to place your coupons as a newspaper ad, costs can sometimes be higher.
- Coupon sites: While these are more appropriate once you’re already a little established in the industry, coupon websites like Groupon and Rakuten are an effective way to gain new audiences and brand credibility. They’re also often free to join and only charge once you start placing ads.
- In-person: Finally, the easiest and most accessible way to offer coupons is by handing them out in person. That doesn’t mean it has to be boring. You can hand them out at trade fairs or small business expos as part of your marketing swag or even include them in receipts to incentivize repeat purchases.
Frequently Asked Questions (FAQs)
Yes, coupons are an effective marketing strategy when done well, i.e., with the right planning. Coupons have been proven to increase buyer intent, motivate prospects to try new brands, and even encourage reengagement and brand loyalty among current customers. They’re effective for every stage of the marketing journey because they give customers the feeling of being rewarded with each purchase.
The best way to get your coupon in front of the right customers is by choosing the right distribution method based on your objectives. For example, if you want to attract new customers, you might post digital coupons on sites like Groupon or Rakuten or offer them as a popup on your website. Social media is also an easy way to advertise coupons, for instance, by holding giveaways or partnering with influencers and affiliates.
Some ways to increase coupon redemptions are giving customers a sense of urgency by setting an expiry date, making your coupons easy to redeem (i.e., don’t give too many steps), giving a sense of exclusivity to people who receive your coupons, and timing them with an event like a seasonal holiday, grand opening, or product launch. You can also send redemption reminders to customers via email, SMS, or social media.
Bottom Line
Starting a coupon marketing strategy for your small business can seem challenging, but it can definitely be well worth the rewards when done right. Ultimately, coupon marketing all comes down to planning your campaign carefully and choosing the right coupon types and distribution methods that serve your objectives. After launching your campaign, track your results, and use your insights to craft better campaigns in the future.
