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Coupons Make the Cut

By Carol L. Schroeder -- Gifts and Dec, 10/1/2008 12:00:00 AM

Q: Our store has never tried issuing coupons before. Do you think they are an effective way to advertise?

A: Coupons may not be appropriate for some upscale stores, however for those who do use them, they offer a rarity in advertising — the chance to find out if a promotion is really working. We keep a file of all coupons returned, jotting down the amount spent. So I can tell you that for our store, coupons definitely do help draw customers in.

Coupon usage is on the increase due to the challenging economy, so this might be a good chance to give it a try. In a recent survey, over 65 percent of consumers polled said they plan to use coupons more during the recession. And while the majority of the coupons redeemed are in grocery stores, there is definitely a place for a good coupon offer in specialty shop retailing.

One popular form of coupon is the “bounce back” offer that you give to shoppers who make a purchase, promising a discount on a purchase in the following week or month. Another common coupon is for a percentage off on a certain item or line that you are promoting. You might also consider offering a percentage off an entire purchase over a certain amount. If that amount is slightly higher than your average sale, it should help boost your sales-per-customer. Keep coupon discounts in mind when setting your retail pricing. If you are only taking keystone markup, you may be giving away your profit margin if you offer too deep a discount.

It is important to proofread all coupons very closely to make sure that there is a clear ending date stated, including the year. Remember, having a short window of opportunity for a coupon to be used creates a sense of urgency. We also state that coupons are limited to one per person, and may not be combined with other offers.

There has been a huge increase in consumers printing coupons from the Internet, and many e-newsletter programs include a feature allowing you to include coupons. Just make sure that you have a way to limit the reproduction or use of your coupon. Starbucks learned the hard way: In 2006, Starbucks sent an email offering a coupon for a free Starbucks iced coffee to a group of employees in the Southeast, with instructions to forward it to friends and family. The promotional coupon ended up being widely posted on the Web, and Starbucks had to rescind its offer long before the end of its long five-week validity period.

Author Information

Carol L. Schroeder is the author of Specialty Shop Retailing: Everything You Need to Know to Run Your Own Store, published by John Wiley & Sons. Send questions toorangetreeimports@mac.com.

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