Yay! One of our client’s just called and says they are ready to dive into some marketing! They want to do either a return coupon promotion, or loyalty program or something of the sort. Okay great! We ask, “How much do you want to offer your returning customers?” And their response (after a very long pause – as if this decision is really hurting them), “Ten percent.” Silence. Crickets, I tell you. Who in the hell redeems a 10% off coupon? NO ONE. And this client is serious…and tells us he can’t wait to track the coupons that will be pouring in. (And, of course, he is using THIS program as a test to see if we are successful marketers!)
Here’s the education lesson – In today’s economy, companies should give 10% just because. It should be the kind of discount that you allow your employees to give to a great customer – or someone celebrating their birthday – or a customer who has had a really bad day. It’s not valuable – even off of a VERY expensive item. A consumer does not carry around a 10% off coupon just chomping at the bit to redeem it. As a marketer, we know clients are worried that we’re so good at what we do that a million customers will come in and completely wipe you out clean! Yeah. Just not gonna happen. If we’re good (which we are), we’ll be able to help you to manage expectations. And if your profit margin can’t handle giving a customer 25% off an item perhaps there are other things to consider (like time to close shop).
We do think that offering a loyalty program or discount to get customers to visit more often has its merits. However, psychologically, a dollar off amount will go much further. Consumers hold those and think of them as real money. So even giving customers a $5.00 off their next purchase is more valuable even if the percentage is less than 10 when all is said and done. One client was brilliant in handing out several hundred $5.00 gift cards (no minimum purchase required – no expiration date). The research returned from that client was that most customers who brought them back spent an average of $50.00 in the store. That’s a great return!