What are the common pitfalls to avoid when offering coupons and discounts to your customers?

1 Pitfall 1: Discounting too frequently or too deeply

Retailers often make the mistake of offering coupons and discounts too frequently or generously, without considering the effect on their margins, cash flow, and perceived value. This can lead to customers expecting lower prices and waiting for the next deal before buying, degrading brand image and loyalty. Additionally, customers may become less sensitive to price changes and more focused on discounts, which could make it harder to raise prices or sell at full price in the future. To avoid these pitfalls, retailers should set clear and realistic goals for their coupons and discounts, analyze costs and margins to determine an optimal discount rate and frequency, target coupons and discounts to specific groups such as new or high-value customers, limit availability and duration of coupons and discounts while communicating them clearly and urgently to create a sense of scarcity, and track and measure results to adjust accordingly.

2 Pitfall 2: Offering irrelevant or unattractive coupons and discounts

Retailers often make the mistake of offering coupons and discounts that don’t match their customers’ needs, preferences, or expectations, resulting in wasted resources, low conversion rates, and dissatisfied customers. Examples of such irrelevant or unattractive coupons and discounts include those that are too small or too conditional to be useful, ones that are not aligned with customer interests, tastes, or behaviors, or those that don’t fit with the brand identity. To avoid this pitfall, retailers should conduct market research and customer analysis to understand their customers’ needs and wants. Segmenting customers and personalizing coupons and discounts to their profiles is also key, as is testing and optimizing offers. Finally, retailers should track the results of their coupons and discounts to ensure they are providing real value and benefits to their customers.

3 Pitfall 3: Ignoring legal and ethical issues

Retailers can be exposed to risks of lawsuits, fines, penalties, or reputational damage if they offer coupons and discounts without considering the legal and ethical implications of their actions or without complying with applicable laws and regulations. Examples of such issues include false or misleading advertising, privacy and security breaches, fraud or abuse, and discrimination or favoritism. To avoid this pitfall, retailers should review and follow relevant laws and regulations, be honest and transparent with customers, respect and protect their privacy and security, prevent and detect fraud or abuse, and be fair and respectful with customers. Furthermore, retailers should disclose all terms and conditions of coupons and discounts, obtain permission before collecting customer data for coupons and discounts, use verification methods to ensure the validity of coupons and discounts, and monitor their usage.