Coupons, Coupons, Coupons

By Author: Dave Balch
Total Articles: 6
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Coupons can be a great way to promote, increase, and improve
your business. They can be used to entice new customers,
move hard-to-sell merchandise, "time-shift" your customers
by getting them to come in during traditionally slow times,
or as a stand-alone product when sold as gift certificates.

And, what could be simpler? Print a piece of paper and it's
done. Right?

Maybe.

Coupons can get much more complicated than you might think.
What restrictions do you want to impose? Good on certain
days? Certain hours? Is there a minimum purchase required?
What about 'rain-checks' if the promoted merchandise is
temporarily unavailable?

What about the structure of the offer?
Buy-one-get-one-free? Percentage discount, flat
dollar-amount discount, or special one-time only price?
Should the coupon expire?

Lots of questions, but how should you go about making all of
these decisions?

Start at the beginning: before you do anything else, decide
exactly what you want to accomplish with your offer. Do you
want ...
... to increase sales, get new customers, introduce a new
product or service, use the coupon as a product in and of
itself (as in "gift certificate"), or ??? It is imperative
that you make this determination first because all of the
other coupon-related decisions depend on it.

When you finally do come up with the parameters of your
offer, be sure that it is reasonable and easy to take
advantage of. I remember seeing a restaurant coupon for $2
off the bill, but there were so many restrictions that I
almost laughed out loud. You practically had to be an
attorney to decipher the offer; it was good during certain
hours on certain days of the week, for parties of 4 or more
(adults only, kids don't count), meals must meet certain
minimums, and so on. It was ludicrous. They apparently
wanted to stimulate business, but I can't imagine that
ANYone EVER took advantage of the offer. (It may be
significant to note that the restaurant in question failed.)

If you are selling gift certificates, they cannot expire.
Someone has given you money for a product or service that
you have not yet delivered; to allow that to expire is
unethical in my opinion, unless you return the money to the
purchaser after the expiration date.

Accounting for them, however, can be a problem. A friend of
mine received landscaping gift certificates for several
years. She accumulated them until she had a big project to
do, and the nursery that issued them was mortified that they
were going to have to honor them all at once. If you think
about it, though, they got a better deal because they had
use of the money for all of that time, and the buying power
of the money they received has diminished over time; a $100
certificate, for example, issued 5 years ago won't buy as
much today as it would have then. Gift certificates should
be carried on your books as a liability. That way, you
don't realize the revenue or take the profit until the
certificates are redeemed.

Some people have the feeling that gift certificates are too
much trouble because of the liability and accounting, but my
feeling is that you should do what's best for your customer,
not what's best for you.

Coupons and gift certificates are good tools. Use them, but
be smart about it.


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(c) Copyright 2002, Dave Balch.