Why Coupons Work and Why 86% of Consumers Use Them

Last year, over 50% of American indicated they would tighten their spending during a recession according to a survey by Harris Interactive. Over 38.6M consumers used online coupons in 2008, a increase of 39% from 2005 (Simmons) with online users accounting for 24% of the close to 150M consumers using coupons! A more recent study only shows the numbers have intensified! A 2009 study found that 87% of consumers prefer to shop at retailers that offer coupons, and 89% said they’re more likely to use coupons in a recession (Packaged Facts).

Coupons On the Rise!
In 2008, when it came to the use of coupons, 86% of consumers said they had previously used coupons or discount codes. Over a third said that they would increase the use of coupons during a recession. More women (43%) than men (31%) would use coupons according to the survey. In a separate survey conducted by ICON (in April 2008), 67% said they are much more likely to use coupons during a recession. Surprising, younger consumers were more likely to use coupons. According to a yet another poll, 61% of consumers report using more coupons now than ever before. 78% percent are using coupons to avoid changing their lifestyles or cutting items from their shopping lists. The bottom line, regardless of whose numbers you look at, it is a given fact that now, more than ever, consumers are being pulled into using coupons!

Coupons and Purchasing Decisions
A significant number, 63%, said they would not make a discretionary purchase if a discount or deal was not available.  As I pointed out previously, almost all consumers prefer to shop at any establishment that offers coupons. Market research shows that coupons increase purchases by consumers who may not have tried a product otherwise. Studies have also shown significant incremental sales from coupon campaigns, and find that exposure to a coupon (especially one with a high value), even in the absence of redemption, generated incremental sales volume.

Online, Digital and Mobile Coupons
Retailers are using new interactive and online media, including online coupons, mobile marketing/coupons, viral marketing, and all forms of Internet advertising to reach younger, more affluent, consumers who prefer these marketing channels. For example, in the ICON survey, 58% of respondents believe their coupon use would increase if they could download a coupon from the Internet and have it automatically connected to a loyalty card. Major food companies are shifting spending from more traditional advertising to online, mobile and social media as a result. Companies like Unilever, Starbucks, Kroger, Carl’s, Jiffy, are already testing mobile coupons with good success including higher redemption rates. According to Jupiter Research, nearly three billion mobile coupons will be issued to mobile users and just under $7 billion discounts redeemed by 2011 and eMarketer agrees that is prime time for mobile coupons with handset penetration north of 80%. You can expect SocialGrub to deliver coupons directly to mobile devices in the near future as part of this “hyper-local” mobile trend.


Coupons and Viral Marketing
Most of you know that I am a big fan of viral marketing. One of the biggest features in SocialGrub is the ability to share offers and coupons! By distributing coupons via social networking forums like Facebook and Twitter, SocialGrub amplifies the impact of a coupon campaign. Sharing, email and posting features allow the consumer to assist retailers in finding like-minded purchasers! Mobile coupons can further amplify the viral effect (Carl’s/Hardees found out the hard way). The next release of SocialGrub (in August) will provided added incentives for users to share coupons with friends. FSW mentions some great viral restaurant marketing strategies including the use coupons and “refer a friend” promotions and also talks about potential risks as well as success stories!

Leveraging Coupons
Coupons are indeed a proven way to increase sales for small businesses. The Constant Contact and smallBiz talks about a number of great ways to distribute and leverage coupons including:

  • grow loyalty programs (award coupons after customers spend a certain amount). This technique can also increase brand loyalty.
  • rewards existing customers for return business (coupons at checkout to encourage repeat business)
  • acquire new customers via incentives for “on the fence” shoppers
  • lure first time customers to try your products or services
  • increasing add-on sales as part of an upsell
  • incentivize consumers to sign up for your newsletter or Twitter feed, or become fans of your Facebook page!
  • more…

Everyone is Using Coupons
Web sites that offer coupons and offers have had a 14% increase in traffic year after year (Hitwise). Coupon sites were the fastest growing online category in November 2008 (eMarketer) as well as the overall second most popular category online (comScore). Over 38.6M people used online coupons in 2008 (Simmons) and the number of people using only online coupons grew 51%.

Is Your Business Using Coupons?
There is a misperception out there that coupons and discounts simply destroys value and cheapens a brand. This is hardly the case! Business analysts, like eConsultany, agree that “couponing is a proven model that drives sales and that’s why all sorts of businesses.” Companies from price-driven Burger King to high-end brands like Ritz Carlton offer coupons or “promotional offers” to increase sales or grow their market. The question isn’t really “if”, but “how”!  More to come on the subject!

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