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Coupons can be a great way to promote, increase, and improve your
business. They can be used to entice new customers, move hard-to-sell
merchandise, "time-shift" your customers by getting them to come
in during traditionally slow times, or as a stand-alone product when sold
as gift certificates.
And, what could be simpler? Print a piece of paper and it’s done.
Right?
Maybe.
Coupons can get much more complicated than you might think. What
restrictions do you want to impose? Good on certain days? Certain hours?
Is there a minimum purchase required? What about ‘rain-checks’ if the
promoted merchandise is temporarily unavailable?
What about the structure of the offer? Buy-one-get-one-free? Percentage
discount, flat dollar-amount discount, or special one-time only price?
Should the coupon expire?
Lots of questions, but how should you go about making all of these
decisions?
Start at the beginning: before you do anything else, decide exactly
what you want to accomplish with your offer. Do you want to increase
sales, get new customers, introduce a new product or service, use the
coupon as a product in and of itself (as in "gift certificate"),
or ??? It is imperative that you make this determination first because all
of the other coupon-related decisions depend on it.
When you finally do come up with the parameters of your offer, be sure
that it is reasonable and easy to take advantage of. I remember seeing a
restaurant coupon for $2 off the bill, but there were so many restrictions
that I almost laughed out loud. You practically had to be an attorney to
decipher the offer; it was good during certain hours on certain days of
the week, for parties of 4 or more (adults only, kids don’t count),
meals must meet certain minimums, and so on. It was ludicrous. They
apparently wanted to stimulate business, but I can’t imagine that ANYone
EVER took advantage of the offer. (It may be significant to note that the
restaurant in question failed.)
If you are selling gift certificates, they cannot expire. Someone has
given you money for a product or service that you have not yet delivered;
to allow that to expire is unethical in my opinion, unless you return the
money to the purchaser after the expiration date.
Accounting for them, however, can be a problem. A friend of mine
received landscaping gift certificates for several years. She accumulated
them until she had a big project to do, and the nursery that issued them
was mortified that they were going to have to honor them all at once. If
you think about it, though, they got a better deal because they had use of
the money for all of that time, and the buying power of the money they
received has diminished over time; a $100 certificate, for example, issued
5 years ago won’t buy as much today as it would have then. Gift
certificates should be carried on your books as a liability. That way, you
don’t realize the revenue or take the profit until the certificates are
redeemed.
Some people have the feeling that gift certificates are too much
trouble because of the liability and accounting, but my feeling is that
you should do what’s best for your customer, not what’s best for you.
Coupons and gift certificates are good tools. Use them, but be smart
about it.
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