How To Offer Coupons Effectively

Coupons are good if they promote both customer trials and loyalty. You cannot always guarantee this will happen, but you do want to avoid coupons that basically allow discount seekers to use your coupons as long as you’re cheaper than the competition.

I would suggest your next coupon be a Buy 1 Get 1 Free or BOGO; free is always more enticing than $1.00 off or .50¢ off. Here is a comparison of what you might expect in terms of cost:

16oz. Mocha @ $3.50
Cost = ~.75¢
Profit= ~$2.75

.50¢ off:
Cost= ~.75¢
Profit= ~$2.25

BOGO:
Cost= ~$1.50
Profit= ~$2.00

The BOGO offer costs you about .25¢ more, but very rarely will someone consume both drinks. More than likely, they will share this with a coworker, friend or family member. Why does that matter? Now two people are drinking your product instead of one, and since it’s being delivered by someone they know, it’s like word of mouth advertising plus a sample. That’s well worth the .25¢ difference. This also prevents someone coming in to use a coupon and then going back to the chains once they run out of coupons.

I would also suggest a bounce-back coupon. This could be the same as your BOGO above. I would only give this away periodically to help you build your daily customer counts. Also, I would only give these away after 9:30 am or so, and only to customers who did not present a coupon already on that visit. Lastly, make sure they are given with their change, to avoid them using the coupon on that visit – make it clear to your staff that it is for their next visit.

Next month, you may want to consider a slight variation on the BOGO- that is to hand them out after noon and make them valid only from open to 11am. The point of this is to get your afternoon customers into the habit of making you their morning coffee choice as well. And if they know they cannot come in the morning, maybe they will give the coupon to someone else who would.

You see, it is always about trying to get them to come back!

Always keep in mind that some of the best marketing is cheap. Standing by the road with a sign is one way, coupons are another. I’m not a fan of mass media like newspaper, TV or radio for a local cafes and coffee houses. Broadcast is too vast, too expensive and you really do not get a good hit rate in your immediate area, which is where most of your customers are. More than likely, anything that hits more than three miles from your store is a waste.

Let me know if you have any questions about my logic here. I’ve seen too many people spend money on advertising, only to have no returns come from it. Marketing yourself locally with coupon strategies is often cheaper and more effective.

Thom Swain
Stockton Graham & Co.