Article 47: Is your Discounted Coupon Sending out the Message You Intended?

Here’s the thing.  The current economic climate dictates that consumers need additional incentives in order for them to remember to not believe everything they read or see in the media and spend a few dollars.  There have been very few times like the current where consumers are holding on to what money they have in hopes that one day soon, and I mean very soon, the economic sun will come out and they will get the official go ahead to spend. 

Until either an artificial light is used or that elusive sign comes we all have to work a bit harder and smarter in order to keep business flowing.  There are several ways to stimulate the people who purchase your product or service but those solutions are for another article.  This message has to do with those who are using advertising media to promote their company and offering some type of discount.  This is definitely a good solid strategy, if used correctly.  However, many times the message you are sending is not the one being received.

Case in point, we have all seen percentage discount offers.  They range from 10% all the way up to 100%.  Now it’s safe to say that anything from 50 -100% is easy for the consumer to understand.  Literally they are being asked to pay half for something or purchase one thing and get a second for free.  The consumer is savvy enough to get those deals but not everyone has the budget or desire to make those offers.

So if they aren’t offering those big discounts what are they doing?  They are going, in most cases, with a lesser discount offer, 10 – 30%.  It may go higher than 30% but by and large if you aren’t going big, 50%+, than you are working the other end of the spectrum.  Here is the dilemma, you want to incent your customer and know you need to do something but anything above 30% just seems too costly.  So you end up, as many do, putting out a flyer, advertisement or message on your marquee which shows a low percentage discount (10%-30%).  I say low because even though it is all relative to the product most consumers have been trained to only give a glance to anything below 50%.

Like I said above the consumer is very knowledgeable and knows what % sounds like a good deal.  They can’t always equate that with the product or service but their eyes tell them if they should pay attention or not by the percentage they see.  Now don’t get me wrong any type of discount is welcome, especially by your regular customers, but it is the new or less frequent customers we are really trying to attract, so what type of message are we sending with a 10-30% discount offer?  For the group you are trying to attract you are basically coming across with a half hearted effort.  You are doing something because everyone else is but you really don’t want to but because of business peer pressure you feel you have to.   That’s the sad truth of the matter.  Now, don’t shoot the messenger.  I’m just keeping it real. 

People don’t necessarily take into account that a 10% at a restaurant is not the same 10% discount at an air conditioner sales/service center.  One is $1-$2 savings versus $100-$500+.  Big difference but if you are stating those larger savings as a percentage, and many still do – I see it every week, then you are doing yourself a disservice.  Even restaurants, which is a very competitive industry right now, who are doing less than a buy one get one are potentially pricing themselves out of the discount offer market.  The message you are sending is come try us and we’ll give you a little something for the effort. 

A better strategy if you cannot make those bigger offers is to create the perception of value like Applebee’s has by offering 2 meals for $20, a selection of 6-8 higher profit margin items, with a free appetizer, selection of 4 higher profit margin items, with the purchase of 2 soft drinks.  Now you are getting the consumer and their plus 1 for what appears to be $10 meal.  However, in actuality the meals you are offering in the 2 for $20 probably purchased individually costs maybe $.50 to $1.00 less per entrée per regular menu pricing, so you’re making a bit more here to start.  Then you add in the fountain drinks which cost about $.06 per glass but charging the customer $2.19/ea, so now you recoup even more.  You combine the amount you are making with the higher margin entrée/drinks you now have more than covered the appetizer cost plus you have customers who have the perception of getting a great deal for about $10/ea.

Last pet peeve about coupons is those, and it is mainly restaurants, which put restrictions on when they can be used.  Many times they will say; valid Mon – Thurs. only.  Well all of us are aware why that caveat was put there.  It’s because those are slower days and the companies are trying to drum up businesses when “They” need it versus when “We” want it.  The problem with restriction is that it sends the wrong message to the customer.  It says you can get a deal only under my terms.  Take it or leave it.  I’ll tell you more times than not they will leave it because no one wants to be dictated to on where/when they can spend their money, especially when they know they are in economic control.

A better approach is to offer specials on specific days.  Like “Tuesday is buy one get one free Rib platter day” or “Come in on Monday for “All you can eat pasta”.  Now what you are doing is providing an offer on a specific day which accommodates the consumers need for control without overtly specifying when they can come visit you to take advantage of the offer.  They win and you win because now you have more customers on the days you need, nobody gets dictated to and you ultimately end up getting what you wanted when you wanted it.

So before you go out and make another claim to drive business to your location take a few minutes and step out of the business owner hat or better yet get someone who is neutral and honest and have them evaluate the offer.  The key is objectivity and to get that you really need an outside professional to provide you with the most honest feedback.  It may not be want you want to hear but it is better than the silence you will experience if no one thinks it is a worthwhile proposition. 

The sound of crickets is only a welcomed one when in the country - In business it is the worst noise around.  Get your business going in the right direction by making good solid win-win offers and you will guarantee a no cricket zone for your company!

Jeffrey A. Mohr – Founder
Rdestiny, LLC – Business Consultants