How small businesses can use coupons to drive local sales?

How Small Businesses Can Use Coupons To Drive Local Sales
For over a century that coupons have been in existence, they have been a key driver in increasing sales and building brand loyalty. Coupons are not the same, and they vary in many ways. If you want to increase sales using coupons, please read on.

Why Should a Small Business Use Coupons?

Coupons are commonly used by small businesses to increase sales for some reasons. Namely;

Coupons Can Help in Attracting Customers
Coupons are an excellent method for customer acquisition. The clients could be entirely new, but the coupons is a good way for them to visit your premises. By them visiting your business place, they may get attracted to the products and services that you are offering, and this may end up being a sale.

Maintaining Loyal customers
There are those clients who have always shopped at your business premises for a long time. Coupons can help to increase these customers’ loyalty to your business.

Rewarding Loyal Customers
Existing customers need to be rewarded now and then so that they can feel appreciated. Coupons can be an effective way to reward them and ensure that they keep coming back.

Coupons Can Help in Growing Sales
There are some businesses that are known to peak at a particular time and experience low or no sales at all at other occasions. Coupons are a good way to encourage clients to buy from such businesses even when they do not necessarily need the product or service at a particular time. The urge to purchase the item may be as a result of a low price that is being offered by the coupon. This marketing strategy often works most times.

But on the other hand, the business person has to factor in the discount that they are offering at the time so that they do not end up making losses. The entrepreneur also has to factor in the costs associated with the marketing of the coupon so that they have a clear picture of the whole investment.

Coupons Vs Sales

Coupons Vs Sales
– Sales do not discriminate whatsoever, any client entering the business premises gets the same product that’s on sale.

– When making sales, small business owners cannot tell how the customer got to know about their products or services. It could be that they saw a billboard or were referred to by friends.

– Coupons, on the other hand, can help a business owner predict how the customer found out about their products or services. This is because its owners can trace the path used by customers using coupons to reach their businesses.

– As such, business owners can gauge on the effectiveness of the various marketing strategies that they have been using.

– With the use of coupons, money lost can be traced easily, on each coupon. Loyal customers are rewarded and at the same time budgets are efficiently managed to ensure that losses are not incurred.

For small businesses whose aim is to grow and thrive by maintaining and retaining customers, the best marketing strategy to use might just using coupons.

How to Calculate Coupon Costs

Every small business has to evaluate the effectiveness of their marketing strategy and the costs associated with the activity if they are to succeed financially. When dealing with coupons, businesses need to take into consideration these costs;

Direct Marketing/Advertising Costs
These costs are the costs that you incur directly when running the coupon marketing activations. They may include printing costs, running a print ad, etc.

Indirect costs
Indirect costs can simply be described as the funds lost whenever a customer chooses to use a coupon. As such, it’s important that a business determines the profit margin to expect from the coupon marketing model used.

Let’s look at this simple case study below

We’ll use a gift shop that offers ceramic dog figure as our example here. The shop sells each item at $75. The wholesale cost is $30. If the owner decides to offer a coupon that offers a 20% discount, this will mean selling the dog statue at $60 and thereby losing $15. However, $60 is still a good price especially considering that the shop still makes two times the wholesale price.

Other additional costs might include marketing, say the shop runs a print ad in two different newspapers in town with an aim of increasing traffic. The total cost of this adverts is $1000. Remember this is an out-of-pocket cost that needs to be recouped from any sales.

Assuming the average customer spends $100 per sale and the net profit from that sale is $50, $1000 used for advertising will be recovered once the business makes 20 sales. Remember that out of the 20 sales, the business loses $15 per each sale in the shape of coupons. As such, the business ends up losing $300 in total. This therefore means that the business will need to make an additional six sales to recoup the amount. In total, the gift shop will need to make 26 successful sales to break even.

Is this coupon business worth pursuing for the gift shop owner?
Well, that depends on a few factors chief among them being owner’s expectations and targets for their business. For example, the business will find it worth especially if the aim was to identify the primary source of traffic. This way, the owner will know the channel to disconnect and which to keep investing on.

It is also vital that business owners analyze their historical sales data so as to assist them in understanding the trends and what to expect any other time they set up a coupon marketing model in future.

How To Attain More Success With Coupons?
– Set practical goals for your coupon marketing campaigns and stick to them. For example, your goal for the strategy could be to attract more customers to your business, learn the most appropriate marketing channel for your business, or to understand the approximate number of products your market is capable of consuming at a time.

– It’s also vital that you be rational and calculative when setting up a coupon marketing campaign. Of course, you don’t want to underestimate or overestimate your coupon sales. Try to strike a balance.


Coupons are oftentimes very effective when used for marketing and other related business purposes. However, it’s vital that business performs due diligence if it’s to attain worthy results using this strategy.

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