Pros and Cons of Coupon Marketing

Coupon codes are one of the go-to marketing tools for online stores in addition to making customers enjoy affordable shopping. Although coupons are almost always guaranteed to make a customer happy, it’s not always the case for online stores if they fail to develop a solid coupon marketing strategy. Given that an ill-managed coupon campaign can put a business at risk, let’s have a look at the pros and cons of using coupon marketing for online stores.

Coupon Codes: The Star of Marketing Trends

It is almost impossible nowadays to spend 5 minutes on the internet without coming across a coupon code. Although the advantage of using coupon codes for consumers can be debated, it is obvious that they have become an indispensable marketing tool in today’s e-commerce ecosystem.

Until recently, coupon codes were only available on special occasions like the holiday season. Offering fewer coupon codes meant that stores were able to manage the campaign better, but it also meant that the customer would get an actual bargain, which is not always the case these days. So, it would be fair to say that customers were more likely to use coupon codes since they knew that the code would get them an actual discount.

How Stores Feel Pressured to Give Coupons

While it was really difficult to get your hands on a coupon a few years ago, it is now nearly impossible to avoid them. Consumers are able to find a coupon code whenever they need them, so they don’t even have to wait for the end-of-season or holiday season. The fact that coupon codes have become so popular is also putting a certain amount of pressure on online stores and brands to keep it going.

The pressure to offer more coupon codes not only reduces the actual value of coupons from a customer point of view, but it also leads stores to implement coupon marketing strategies that are not sustainable. So, online stores who buy into the pressure and use coupon marketing without a solid strategy suffer the long-term and short-term effects, including financial loss. Let’s take a closer look at the pros and cons of coupon marketing for online stores.

Advantages of Coupon Marketing

According to one of Europe’s leading coupon publishers Once Coupon A Time, a solid coupon marketing strategy with realistic targets and consistent methods can offer a lot of advantages for an online store like boost in sales during off-season, attracting new customers, retaining the existing customer base, depleting stocks, promoting new products, etc.

In addition to these advantages, running coupon campaigns on a regular basis will enable online stores to collect data about their customers and create a solid database to be used for marketing and strategy-building purposes. For instance, making it compulsory to become a member to use the coupon code will give the store access to their customer in the future, which means they will be able to maintain the communication through a variety of communication channels. These advantages can really contribute to the success of a business, if and only if they have a well-planned and sustainable strategy. Unless they develop a realistic and sustainable coupon strategy, they run the risk of losing money because a bad coupon campaign will bring more loss than profit.

Risks of Coupon Marketing

If a coupon campaign lacks efficient planning and is not supported by a solid marketing outlook based on reliable data, it will call for risks. Organizing a coupon campaign to boost sales in the short term without considering long-term profit/loss will cause an online store to lose money, let alone make profits.

In addition to the profit/loss balance, the duration of a coupon campaign can also put things at risk. Given that coupon campaigns are costly, keeping them available for long periods of time means a larger cost item for the store. So, a coupon campaign needs to have strict and well-planned rules and expiration dates, otherwise people will be likely to abuse them, and the business will run the risk of saying goodbye to making profit.

Another common pitfall for online stores is timing. If coupon marketing is the only marketing tool you use to boost sales, and if you take every opportunity to organize a new one, even your most loyal customers will start to doubt your business and its reliability, which can reduce your profit margin.

Obviously, coupon campaigns are one of the most on-demand marketing strategies and they can be really useful for online businesses on the condition that they develop a well-planned coupon strategy based on reliable data. The advantages might be attractive, but the risks can be equally harmful to your business. So, the first step should be to set your goals and create a long-term plan, taking into account your cost tolerance, profit/loss balance, and timing.

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