Sending coupons, offers, or special promotions to your customers is a seemingly great way to increase business and spike in-store visits, right? But just how popular or effective are promotions when it comes to driving revenue, and which ones actually work?
eMarketer expects $104.11 million will be spent purely because of mobile coupon redemption between 2014 and 2016. That’s reason enough for businesses to send deals to customers, but sending any old coupon won’t do.
Let’s say you run a boutique, and just sent customers a coupon for 10% off a purchase of $100. You’re expecting more traffic in your store as a result, but instead of crowds you get crickets. Nothing. No increase in traffic or additional revenue. What gives? Why won’t customers redeem your deal?
There are several reasons why promotions fail. We’ll explain why some promotions flop and give you the solutions to create must-redeem deals.
Reason #1: The deal isn’t worthwhile
Customers expect promotions that are worth their time. Sending a 5% off coupon when your main price points are $15 or $20, probably isn’t going to drum up additional business. Saving 75 cents isn’t worth the effort.
Solution: You don’t have to offer 50% savings, or big discounts that hurt your bottom line, but you do have to figure out what’s of value to your customers. This requires some research and testing.
If generic percentage deals aren’t working, customers may respond to other offers. We scanned all of our data and found the following offers had some of the highest redemption rates:
- A free gift with a purchase
- BOGO (buy one, get one free or a percentage off)
- A service upgrade
- Added/bonus loyalty points
- Offers on specific/popular items or services
Also be sure to segment your offers to different audiences. Not all customers should be treated the same, nor sent the same exact offer, unless it’s something like a seasonal sale. If a customer hasn’t been back in 30, 60, or 90+ days (This depends on your business – for a service-based business like a hair salon, this stretch of time would be longer), you may want to offer a more aggressive reward to get him or her back in the door. A regular customer will appreciate an offer, but may not need as large of a discount, as they’re already coming back anyway.
Reason #2: The deal isn’t connected to your main product
For a promotion to work, it must be synonymous with your brand or product. For example, if you operate a coffee shop and run a promotion for a free fountain drink, there’s a disconnect. Let’s say you run burger joint, a free drink with purchase may seem correlated, however, if people rave about your fries, consider a “buy a burger and drink, get one fry free” offer rather than a free soft drink – It’s more enticing and aligned with your customers’ desires.
Solution: Promotions should be relevant to your product, or at least the products people desire the most. For a coffee shop, $7 off a bag of beans or three free refills with the purchase of a mug are on-target deals.
Apply the same logic when you’re creating promotional giveaways or contests. The prize should relate to your business. A clothing boutique, for example, shouldn’t give away an iPad. It has nothing to do with its brand or product. Instead, give away a $50 in-store gift card or a free fashion consultation.
Reason #3: Customers don’t care about the promotion
Sometimes customers need a reason to act, a little coaxing, if you will. Let’s say you own a restaurant and just sent customers this deal: buy one entrée, get one free.
After doing some research, you know it’s a worthwhile deal to your customers and it’s certainly connected to your main product, but customers still aren’t redeeming it. Why? Customers need a reason to use it.
Solution: When creating a promotion, ask yourself, “Why would a customer redeem this?” Give them a reason to care. Try solving a problem or making an emotional connection with the promotion.
For example, your restaurant could say, “Don’t have time to cook dinner after a long workday? We’ll make dinner for you. Buy one entrée, get one free on Mondays.” You’ve solved the dreaded, “What’s for dinner?” problem for your customers, and you may increase foot traffic on a normally slow day.
Tapping into an emotion works too. For example, “Give your favorite childhood toy to your kids this holiday season. Save 15 percent on toys from the 70s.” It sparks a sentimental emotion that encourages a purchase.
Reason #4: Redeeming the coupon is too difficult
Customers are limited in the patience department, so any promotion that’s difficult to redeem will fail. If customers have to fill out a long form to get the deal emailed, or find 72 lines of exclusions that make the deal difficult to use, customers won’t claim it.
Solution: Don’t make customers jump through hoops. Streamline the redemption process. In one click, customers should be able to print the coupon or pull it up on their smartphone to use in-store. If you want customers to fill out a form, ask for basic information only. You can collect more data later. Focus on ease of use.
By understanding why some promotions fail, you can avoid these pitfalls and ensure that the next promotion you create is a redeemable winner.
For additional help sending the right promotions, check out this article, “The Surprising Truth About When to Send Your Promotions.”
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