The Benefits and Risks of a Coupon Marketing Strategy | Retail Training Services (2024)

Coupons and similar marketing tools can be an effective way to build your business. According to Advertising Age, 87 percent of all shoppers use coupons and according to the A.C. Nielson Co., 60 percent of consumers actively look for coupons.

Benefits of Coupon Marketing

1) Increases Your Marketing Area – Coupons, if used properly, have the effect of expanding or increasing your market area as many customers will even travel significant distances to redeem a valuable coupon.

2) Entices New Customers to Try Your Business – According to a recent study 33% of customers say that the will wait for a product to go on sale before they purchase. Coupons provide you a tool for putting items on sale!

3) Reactivates Old Customers –The same study showed that over 15% of retailers’ sales are from “loyal” customers…but where did the other 85% go? Use coupons to lure them back into your store!

4) Drives the Sales of Related Products– Many of your products have accessory or “add-on” products that can make your transaction and your business more profitable. Tie coupon campaigns to the purchase of two items in order to drive margin!

Avoid the Risks of Using Coupons

Using coupons to drive incremental business is an old trick, and many retailers are using it to build revenue. But pursuing revenue without profit does not make sense. You will need to avoid the dangers that can be associated with a poorly planned campaign. These include:

1) Using Coupons or Discounts as Your Only Marketing Strategy– retailers need to focus on building their brand through the value of their service and the customers experience in the store first. Otherwise you will only be competing on price and that is a losing strategy with Amazon and Wal-Mart dominating that space.

2) Teaching Customers That Coupons/Discounts Are Always Available – If you use coupons on a regular basis, you may be teaching your customers that they should hold off on the purchase of items until the next coupon arrives in the mail. All you need to do is watch the TV programs about extreme couponing to know that this behavior really exits.

3) Selling Discounted Merchandise Only– If you are only selling the discounted merchandise, you are failing to take advantage of the core reason for providing the discount…to drive profitable foot traffic into your store!

Simple Rules for Retailers

Coupons and other discount retail marketing programs have their place and they can drive incremental revenue and profits when used properly. So follow these simple rules for maximizing your return on investment:

1) Bundle Your Offer to Build Margin– Coupons must be used to generate profitable foot traffic. Therefore give the customer a discount when they purchase a product PLUS a profitable accessory at full price (and margin). Another example could be a buy two – get one 30% off offer.

2) Capture Customer Information– If you use coupons to build your trade-area or to get new customers to try your business then make sure that your investment pays off by capturing the customer’s information so you can encourage them to return to buy items at full price. Email and text messaging campaigns are great and can effective tools for marketing, but you need the customer’s information first.

3) Use Coupons to Drive Loyalty– Success in retailing is often a matter of winning loyal customers and keeping them away from your competitors. Therefore if you can use coupons with your existing customers in order to maintain and grow your base at the expense of your competitors, you will be more likely to grow.

Do you want to learn more about how you can improve your retail store operations? Contact us for a free one-hour consultation!

– David Goodwin is the Principal of the Retail Advocacy Group. As a 30 year veteran of the retail industry he has operated hundreds of retail locations and has hired, trained, and performance managed thousands of retail sales representatives and retail managers. You can learn more about instructor-led, e-learning, and other training solutions for retailers at

I am a seasoned expert in retail operations, with over 30 years of experience in managing retail locations, hiring and training sales representatives and managers. My expertise extends to various aspects of retail, including marketing strategies, customer loyalty, and maximizing return on investment. I have a deep understanding of the dynamics within the retail industry and have successfully implemented strategies to drive revenue and profitability.

Now, let's delve into the concepts mentioned in the article on coupon marketing:

1. Importance of Coupons:

  • According to Advertising Age, 87 percent of shoppers use coupons, indicating a widespread consumer interest.
  • A.C. Nielsen Co. reports that 60 percent of consumers actively seek out coupons, underlining the significance of coupons in the purchasing decision.

2. Benefits of Coupon Marketing:

  • Increases Marketing Area: Coupons, when used effectively, can expand your market area as customers may travel significant distances to redeem valuable coupons.
  • Entices New Customers: A study reveals that 33% of customers wait for a product to go on sale before purchasing, making coupons a tool to put items on sale and attract new customers.
  • Reactivates Old Customers: Coupons can be used to lure back the 85% of customers who may have become inactive, as demonstrated by the study.
  • Drives Sales of Related Products: Tying coupon campaigns to the purchase of two items can drive margin by promoting accessory or add-on products.

3. Risks of Using Coupons:

  • Using Coupons as Sole Marketing Strategy: Retailers are cautioned against relying solely on coupons, emphasizing the importance of building a brand through service and customer experience.
  • Teaching Customers to Wait for Discounts: Regular coupon usage might instill a behavior where customers delay purchases, anticipating the next coupon, potentially impacting regular sales.
  • Selling Only Discounted Merchandise: Focusing solely on discounted items can lead to missed opportunities to drive profitable foot traffic.

4. Simple Rules for Retailers:

  • Bundle Offers for Margin: Coupons should be used to generate profitable foot traffic. Offering discounts when customers purchase a product along with a profitable accessory at full price can build margin.
  • Capture Customer Information: Retailers are advised to capture customer information when using coupons to expand their trade area or attract new customers. This information is essential for targeted marketing campaigns.
  • Use Coupons for Loyalty: Coupons can be a tool to drive loyalty by engaging existing customers and maintaining a competitive edge over rivals.

In conclusion, successful coupon marketing involves a strategic approach, avoiding pitfalls, and adhering to simple rules to maximize the return on investment. For further insights into improving retail store operations, the article suggests contacting the Retail Advocacy Group for a free one-hour consultation with David Goodwin, the Principal of the Retail Advocacy Group.

The Benefits and Risks of a Coupon Marketing Strategy | Retail Training Services (2024)


What is the benefit of coupon marketing? ›

Coupons can be used to strategically encourage customers to buy a new, more profitable product to help boost your profit margin. Also, coupons can create loyalty with existing customers by using the discount as a reward to ensure they continue to buy from your store.

What is a coupon marketing strategy? ›

Coupon marketing is a clever tactic used by businesses to entice customers to make a purchase by offering discounts or special deals. It's a win-win situation – customers get to save money, while businesses get to increase sales and customer loyalty.

What is the disadvantage of using coupons? ›

Even though couponing can save you money, there may be some downsides: Not always the best deal: Just because a product is discounted doesn't mean you're getting the best deal. Coupons for brand-name items may still leave you paying more than buying the store brand, for example.

Which of the following are pros of using coupons? ›

The Pros of Using Coupon Codes
  • Attract new customers and increase revenue. Consumers are naturally pessimistic and distrust brands before purchasing from them. ...
  • Gain market share. ...
  • Re-engage current customers. ...
  • Capture data and enable marketing personalization. ...
  • Track affiliate and influencer campaigns.

Are coupons an effective marketing strategy? ›

Coupons and similar marketing tools can be an effective way to build your business. According to Advertising Age, 87 percent of all shoppers use coupons and according to the A.C. Nielson Co., 60 percent of consumers actively look for coupons.

What are the effects of coupons? ›

1. Using coupons often motivates shoppers to make purchases they don't usually go for, increasing their spending overall. 2. As consumers grow accustomed to discounted products, they become more sensitive to items at their normal price.

What is a coupon in marketing with an example? ›

Coupons provide an effective way to quickly increase sales, whether you're offering broad discounts or targeting specific items. For example, when a company wants to generate extra revenue before the fiscal year ends, they can issue a 10% discount coupon to encourage more purchases.

How do coupons help businesses? ›

Coupons are a cost-effective and measurable way to recruit new customers, sell more products, and reactivate those customers you may have lost to competitors. Coupons work by interfering with the cost-benefit analysis consumers perform before making any purchase decision.

How do coupons increase sales? ›

When a coupon reduces the cost of ownership, consumers become willing to buy more of your product, faster. They recognize the value and are more willing to use your product. They become less concerned about waste and more interested in value. Marketers end up selling more in a shorter period of time.

What are some disadvantages or risks associated with discounts? ›

Disadvantages Of Offering Discounts Too Often
  • You risk damaging the reputation of the brand.
  • You risk getting into a price war with the competition and being seen as a commodity.
  • Discounting can end up hurting your profit margins.
  • Potential customers may question the quality of your product/service.

What are some of the risks associated with online coupons? ›

Warning Signs of Coupon Risks & Abuse
  • Overly Successful Coupon Codes. It is generally a plus if your coupon code is generating lots of traffic. ...
  • Anomalies in Website Behavior. ...
  • High Incidence of Coupon Failure or Rejection. ...
  • Extra High Commissions for Certain Affiliates. ...
  • Resorting to Code Cancellation.

Do companies lose money from coupons? ›

Do Stores Lose Money by Couponing? In general, stores do not lose money from offering or accepting coupons. In fact, they are more likely to profit. Coupons encourage people to shop by offering an incentive: free merchandise or lower-cost goods.

Do coupons make customers more or less loyal? ›

For certain consumers, coupons are very motivating, and they may pay a visit to your business. However, these customers may be more loyal to the coupon than to your business. According to Donald Burns, discounting your product can actually end up devaluing your brand.

Would using coupons positively impact sales? ›

Multiple studies have shown that price discounts positively influence consumers' intentions to make a purchase. In particular, quantity discounts and coupon discounts have been found to be the most effective strategies in boosting sales.

Why do consumers like coupons? ›

Many people are set in their ways, but the psychology of coupons can change that. One survey found that 80 percent of consumers were willing to switch brands or businesses because of a coupon or other offer. The opportunity for value drives this behavior, as does the chance to try something new.

What is the purpose of couponing? ›

Couponing is a practice of systematically collecting coupons from newspapers, online ads, product packaging, product flyers or e-coupons on coupon websites and coupon apps and using them effectively to save money on groceries and other regular purchases[i].

What are the benefits of digital coupons? ›

Technology ensures coupons are used only once, therefore reducing denials and misredemptions. Digital coupons are more convenient from a customer standpoint. They're cost-effective and efficient since they're delivered digitally. Businesses demonstrate they value their customers be rewarding them with a coupon.


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