With the coupon craze showing no signs of slowing down, many business owners are starting to consider couponing as a legitimate promotional tool for their business. In order to make your decision a little easier, I've decided to put together a short list of pros and cons of couponing.
The first thing you should realize is that coupons are not meant to be a quick fix. At the very base level, coupons are a form of advertising – you're paying a certain amount of money to attract customers. Depending on your business model and goals, using coupons might be a valid strategy or not. How to know that for sure? Here's the lowdown.
Pros of Coupons
1. Coupons are a good way to attract first-time customers, which helps you grow your client base in the long term.
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Coupons can help you get more email subscribers. As a matter of fact, coupons are often a key part of an email marketing strategy. If you can convince your customers to provide their email address in exchange for a coupon, you can always encourage them to return by offering new products. Additionally, you can use those emails for other marketing campaigns.
3. Though this is not their main purpose, coupons can result in a quick cash infusion.
4. Couponing can be a handy way to unload your inventory.
5. Coupons may be used to unlock some features of first-time trials, which helps people get a better idea of a product they're interested in buying at full price.
6. Drawing in potential customers with initial offers will likely lead to additional sales for non-discounted items.
Cons of Coupons
1. Coupons may reduce your profits in the long run. In order to make this strategy work, you need to be aware of the margin required to protect your investment. For example, let's say that a T-shirt you're selling for $5 is costing you $2 to buy it plus another $1 in overhead costs. In this case, giving out a $2 off coupon is a bad move, as you won't make anything on the product