How Coupons and Promo Codes Can Transform Retailers’ Business
Today’s retail environment forces companies to seek ever more innovative means to improve the customer experience, increase sales, and build brand loyalty. Toward those ends, the coupon and promo code have become even more central to the arsenal, with each reimagined as a strategic tool rather than a mere incentive in recent years. How are these two vital digital discount delivery mechanisms being used more effectively and intelligently to achieve a range of goals across an array of key performance indicators? Let’s understand in this blog!
1. Boosting Sales Through Urgency
Creating a sense of urgency leads to immediate sales. There are several ways to produce that urgency, but we’ll focus on the ones that involve discounting and the experience they create in consumers’ minds.
When a retailer offers a 10 percent discount for the next 24 hours, we’re really attempting to push consumers toward hitting that ‘buy’ button. Although there might not be an end to the impulses that could get us there during any given sales period, the one that seems to work best for producing right-now sales is the fear of missing out (FOMO), which, of course, we experience in conjunction with a discount.
2. Fostering Customer Loyalty
3. Attracting New Customers
Retailers exist at their most basic level to serve existing and new customers. Each new customer is a prospect, and the best way to prospect is for the customer to purchase. Yet many potential customers face significant barriers in making that first purchase.
4. Clearing Out Old Inventory
Retailers face a dual danger when the amount of unsold product is excessive, especially when what they have left over is of the seasonal sort. One means to ensure that sort of inventory doesn’t linger too long and start eating into a retailer’s bottom line is to give it a good swift kick with coupons and promo codes.
For example, an apparel retailer might conduct an “end-of-season clearance sale” that offers clearance items for 50% off or better. The purpose of this sale is to create space in the store for new merchandise that needs to be displayed; in many stores, the displays themselves take up almost as much room as the merchandise. The rationale behind this sale is quite simple and, if we are truthful, is often the real reason behind most sales; this clearance sale is necessary to maintain a current product catalog.
5. Encouraging Larger Purchases
Retailers can use coupons to make customers spend more. They can set requirements that are at least substantial enough to use a coupon and then make the parameters of the deal work in their favor.
For instance, a retailer can issue a coupon that says, “If you spend over $50, you can use this coupon to get $10 off your purchase.” First of all, that’s a decent discount. But what that coupon is really doing is sort of shaking the customer down for two extra items that they must “find” in order to make the coupon work. By that logic, you could think of the “found” items as a purchase that the coupon provides.
6. Tracking Marketing Effectiveness
Promo codes are of exquisite quality and enable marketing performance tracking. Unlike many forms of advertising, when a business distributes a promo code, it knows exactly how many individuals utilized that code during what time frame.
When their business analytics software has that kind of information, it can start making choices, choices that lead to more revenue, which is… what businesses are all about.
7. Enhancing Customer Engagement
Coupons and promo codes take discounts to a different level. The monetary enticements are twofold in their appeal: they reduce a product’s price and make it more desirable.
Like discounts, coupons, and promo codes increase a product’s desirability by creating an appearance of scarcity. That is, very few people have the offer (or promotional item), and those who do can enjoy an exclusive discount.
Promo codes given for singular and special moments, like a customer’s birthday or the anniversary of their first purchase, boost the already healthy emotional connection between the customer and the brand. Such considerate gestures can only heighten engagement and satisfaction to levels that almost mandate a long-term loyalty association.
Coupons and promotional codes are publicized on social media, which helps to promote the brand and build up overall public awareness of it.
Use the various platforms available and even partner with influencers to do this. The effect is best seen during the holidays and peak shopping times. No matter the time of year, though, this is an effective “out-of-home” way to eyeball your brand and put it front and center in people’s minds.
These deals create a ripple effect, boosting a brand’s visibility to possible new consumers. This is why some retail outlets buddy up with websites and apps that distribute coupons (to people who apparently can’t stop themselves from buying stuff). If those people see the discounts and make some purchases, they may encounter a brand they hadn’t previously stumbled upon.
9. Improving Customer Retention
When did you last give an existing customer a discount or an exclusive promo code? If you can’t remember, well, remember this: According to some secret tips that have been passed along to us, this is one of the more frequent recommendations for retaining those old customers.
The kind of discount or special promo we are talking about here is no more than a friendly nudge to your memory of us as a place where you’ve shopped and might shop again.
10. Driving Online Traffic
In the vast online marketplace, there are certainly ways to make your store more visible that don’t involve plastering it all over social media.
Email campaigns, SMS marketing, social media ads, and other digital channels can drive considerable traffic to a brand’s website when those channels deliver enticing coupon offers.
Conclusion
There are many reasons why retailers find discounts effective. Among these are the motivations of boosting sales, attracting new customers, retaining customer loyalty, and handling inventory.
By “handling inventory,” we mean getting unnecessary, unfast-moving, or untimely items out of the store. Retailers accomplish this in a number of ways, but discounts are the simplest.
Retailers are making ever-greater efficiencies from their coupon and promo code programs, so they seem to be leading the pack in satisfying consumer demands that continue to evolve.
