The number of businesses offering deals is limitless, which makes it known that coupon users exist in all markets. These are customers who shop around for the best deals and choose a restaurant, salon, etc. for the cheapest price. Businesses fall trap to the traffic and quick sales of these daily deals but struggle to convert coupon redeemers into loyal customers whether they enjoyed their experience or not. Studies show that deal seekers are loyal to the deal and not the brand more often than not. In other words, if your business cuts down on its coupons, new customers will simply stop shopping there.
Sales gimmicks and coupons can bring in the wrong kind of customers to a business. These customers, while seeking ‘steals’ or low prices, are ironically very picky customers and hold high expectations. In today’s social media fueled world, word of mouth marketing has exponentially increased the effects one bad review can hold. Data indicates a correlation between discount users and higher levels of negative reviews.
You’re also training loyal customers to wait for your deals. The frequency of visits will be reduced as regular customers will suddenly stop coming in freely and will opt to wait for the deals—which also lowers your businesses profit margins when they do come in. Through the coupon illusion, if the deals were to stop, it would take a long time to build back your loyal customer base.
A solution to offering the coupon illusion would be for businesses to focus on building a strong client base of loyal customers. Loyalty starts with identifying and connecting to the right consumer group for your brand in a local market.
The power of gaining new loyal customers begins with targeting consumers that have a high propensity to become loyal. Consumer groups such as new movers or new parents are consumer groups that are likely to change habits and brands. In fact, the Yankelovich Group states that new movers will change their toothpaste brand 40% of the time after a move.
Welcomemat Services subscribes to a theory called gifting—or inviting someone new to try your business. This creates a sincere relationship in which the consumer is willing to pay full price for the service or product provided. Gifting can also have an amazing effect on loyalty as it creates a sense of obligation or reciprocation from the gift recipient leading to long-term customers.
Loyalty rewards programs are useful to help stay top of mind with both new and regular consumers. This allows a business to reward, or thank, its customers for their continual business with personalized offers and services. 64-percent of customers are reported to have increased the frequency of visits with brands utilizing rewards programs.
In a world of daily deals, it’s important to remember coupons are simply an illusion to get customers in the door. Marketing dollars should be invested in building loyalty platforms to build and retain strong relationships.