The Dangers of Couponing

By Jeff and Marc Slutsky | May 24, 2010

A while ago, I called one of the national pizza chains to have a pizza delivered. They asked for my phone number and I heard the person working her keyboard. I ordered the pizza and then she asked me, “Do you have any coupons today?” Since I didn’t, I felt like everybody else in the world was paying less money for that pizza than me, which makes me feel real “special.”

That’s one of the dangers of offering special discounts via the mass media to only a segment of your marketplace. You end up alienating some customers because they were first informed of the special pricing but then denied it because they didn’t have the coupon.

While this can be very helpful in generating short-term sales, it can be a problem for you down the road. If you should continue to offer deals for any protracted length of time, the danger is that you’ll condition your customers to wait for the deal before they will buy from you.

Many of our clients have expressed concerns about shrinking profit margins as a result of a loss of pricing credibility. Coupons and sales are effective. When you use any type of off-price tactics, be sure you protect your price credibility in the process.

A good way to protect your price credibility and still attract buying customers is to use a cross promotion.

• Transfer responsibility of the discount. When you run a coupon, the consumer knows you paid money to offer a deal on your product or service. However, if you were able to get another organization to distribute your offer to its customers or members on your behalf, it helps to transfer the responsibility of that offer to your cross promotion partner. Make sure on your promotional piece to say “compliments of” the organization handing them out.

• Free advertising. Another advantage of this cross promotion approach is that you get your advertising piece distributed to your customer for free. This is a great way to supplement your existing advertising budget without adding additional cost. Even the actual printed piece doesn’t have to be that expensive. Since it is being handed out at the register with a purchase or as a bag stuffer, you don’t need full-color to get the customer’s attention – like you would with a direct-mail campaign.

• Targeted. Another advantage is that you can target the types of customers you want by demographics. For example, if both a grocery store and a self-service laundry want to reach the same target audience. It makes sense for them to promote each other.

• Geographic. Most retail businesses get their customers within a certain area surrounding their business, perhaps two to five miles – and coin laundries are certainly no exception to this rule. So, if you want to focus you efforts on a certain part of your city or town, you simply need to set up a cross promotion with a partner located in the area where you want the concentration of your effort. This also comes into play when you have multiple locations in a market but want to get more aggressive with one of them.

(Jeff and Marc Slutsky will present their “Street Fighter Marketing” strategies at the next Illinois Coin Laundry Association meeting, to be held August 19 in Rosemont, Ill. For details about this upcoming event or to reserve your space, call Karl Keefer at (630) 327-9329, or e-mail karlkeefer@msn.com.)