Coupons Benefit More Than the Consumer: How Retailers Can Maximize Returns
According to a recent Forrester Research report, U.S. online retail sales grew 12.6 percent in 2010 to reach $176.2 billion and are expected to reach $278.9 billion in 2015. As e-commerce has grown, so too has the number of consumers shopping online. This online surge provides an opportunity for retailers to offer strategic deals and coupons, increasing sales and ensuring customer loyalty.
Coupons, deals, discounts — however you say it, bargain shopping remains a hot topic. Even with an economy that’s showing signs of recovery, consumers are just too savvy and technologically connected to pay retail prices. According to a recent Harris Poll conducted by RetailMeNot.com, 82 percent of online shoppers are more loyal to businesses that offer regular discounts than businesses that offer occasional discounts. The benefits associated with coupons go beyond just the consumer. Retailers can gain positive returns by offering deals. In fact, coupons rate as the number three driver of retail business behind SEO and a company’s house list. Below is a list of the benefits for retailers that offer discounts, as well as some best practices to maximize their return.
1. Remain competitive and encourage consumer loyalty. No longer content to just search for the lowest prices, today’s consumers actively search for coupons to maximize their savings. One of the best ways to reach these bargain-hunting shoppers is by offering exactly what they are looking for — a deal. If a retailer consistently offers deals, especially those targeted at return customers, in all likelihood, those customers will come back. The converse of that is also true. If a retailer doesn't offer discounts, or the discounts are inconsistent, they will likely not be top of mind for most consumers.
2. Target brand-loyal consumers. Many consumers are looking for a specific brand or item, regardless of retail outlet. Retailers can target these consumers by offering brand specific deals or coupons. Including the brand name in the coupon code allows consumers to find the deal faster, especially true when working with coupon and deal websites. This works beyond just brand names. A well-designed coupon focusing on one particular product or service can generate a short-term boost in traffic to most retailers.
3. Reach new customers and lure former customers back. Posting discounts and deals on a coupon website is an additional channel for retailers to reach new customers who might not have visited the retail site directly. In addition, coupon sites are a way to reach lapsed customers who come across coupons and deals from stores they used to shop. Putting the customer’s needs first with a discount goes a long way when it comes to building relationships that will last.
4. Sell off excess inventory and get rid of closeout items. By offering discounts on certain products, it can be a good opportunity to liquidate last year’s items, free up warehouse space, and get consumers to purchase items that they might not have been drawn to prior to the coupon being offered. Inventory gets lower and lower on certain types of products, but retailers can play this up and encourage customers to see the importance of buying now, hopefully adding to the demand.
1. Offer discounts year-round. Issue more discounts throughout the year as opposed to just releasing them during seasonal periods. Consumers have come to expect discounts and will seek them out.
2. Focus deals on items that have a higher margin. A consumer will never say that a coupon offered too great of a discount. On the flip side, high percent-off coupons can have a negative impact on a retailer’s bottom line. By offering discounts on higher-margin products, retailers can protect their margins while still offering an attractive deal for the consumer.
3. Test different types of coupons. You should be willing to test different coupons and see what works best: higher-dollar-off thresholds to increase AOV (average order value), different percentages, free shipping, etc. Before current coupons expire, offer new deals to make sure that there is a consistent flow of deals guaranteed to work.
In this day and age, retailers have no reason to fear discounts or coupons. By keeping coupons and offerings fresh, exciting, and placing them in strategic locations like coupon-sharing sites, retailers can increase consumer loyalty while their customers rack up the savings — a win for all involved.