What Is Coupon Marketing?

Coupon marketing is a strategy retailers use to attract customers and increase sales by offering discounts and promotions through coupons. Coupons can be physical or digital. Physical coupons are redeemed in-store, while digital ones are redeemed online via websites or mobile apps.

Coupon marketing generally boosts sales by increasing customer traffic, helping clear old stock, and introducing new products. The distribution is done through various channels, depending on whether the coupon is physical or digital. For example, newspapers, mail, email newsletters, social media, retailer websites, coupon websites, coupon extensions, or mobile apps.

Key Takeaways

• Coupon marketing is a strategy that retailers use to boost sales, encourage customer loyalty, and attract new customers by offering discounts and promotions through physical or digital coupons.
• Physical coupons are tangible paper vouchers, typically found in newspapers, magazines, mailers, or in-store displays. Digital coupons are distributed electronically via email, websites, mobile apps, or social media.
• The primary role of this strategy is to encourage customers to try a product that they otherwise wouldn’t due to price or other reasons. It also creates a sense of urgency, which can generate immediate sales.
• A coupon strategy provides businesses with valuable data about customers’ shopping habits and preferences.
• Physical coupons have the advantages of tactile experience, potentially higher redemption rates, and local reach. However, they are more costly and difficult to track.
• Digital coupons are cost-effective, have a broader reach, are easily shareable, and allow better tracking and data collection. They primarily target a more tech-savvy audience and hold a slight risk of fraud.
• Coupon strategies promote products and boost customer engagement by creating special deals or buying incentives.
• Benefits for customers include discounts and savings, higher affordability, exclusive deals, and better budget management. Benefits for businesses include increased sales, new customer acquisition, increased customer loyalty and retention, increased customer engagement, better tracking and analytics, increased brand exposure, and simpler inventory management.

The Role of Coupon Marketing

This strategy helps retain existing customers by rewarding their loyalty and attracts new customers via great deals, discounts, and other offers. Coupon marketing encourages customers to try a product they might not otherwise try due to price, and it can also help to create a sense of urgency to spur immediate sales.

In today’s digital era, coupon marketing has evolved to include digital coupons. These are often distributed via email, a company’s website, or a mobile app. Digital coupons can typically be tracked and analyzed, providing valuable data to companies about their customers’ shopping habits and preferences.

Physical vs. Digital Coupon Marketing

Physical and digital coupons are two forms of coupon marketing that businesses can use to attract customers. Both types have their unique benefits and challenges.

Physical Coupons

Physical coupons are typically printed on paper or included in print materials as a coupon marketing strategy. You can find them in newspapers, magazines, mailers, flyers, or distributed via in-store displays. They’re tangible, can be distributed locally, and are often used by businesses aiming to entice customers within a specific geographical area.

Physical Coupons Advantages

• Tactile experience: some customers enjoy the tactile experience of receiving, clipping, and using physical coupons.
• Higher redemption rates: physical coupons may have higher redemption rates, particularly among senior customers who are more used to this form of marketing.
• Local reach: they’re ideal for local businesses trying to attract customers who live or work in the surrounding area.

Physical Coupons Disadvantages

• Higher costs: physical coupon marketing is more expensive. Physical coupons are also more difficult to distribute than digital coupons.
• Limited tracking: tracking the success of physical coupons can be challenging unless customers provide the coupon at the point of sale.

Digital Coupons

Digital coupon marketing distributes coupons electronically via email, mobile applications, social media, or websites. Customers use digital coupons during the checkout phase of online orders. It’s as easy as inputting a code made from letters and numbers into a box, usually called “promo code.” The code might also be automatically added when a customer clicks an affiliate marketing link.

Digital Coupons Advantages

• Lower costs: digital coupons are far more cost-effective for businesses as they eliminate printing and distribution costs.
• Broad reach: they can reach a wider audience and aren’t limited by geography.
• Easily shareable: customers can easily share digital coupons with their friends and family, potentially increasing their reach.
• Data collection: digital coupon marketing facilitates better tracking and data collection, allowing businesses to understand customer behaviors and tweak their marketing strategies accordingly.

Digital Coupons Disadvantages

• Tech-savvy audience: digital coupons primarily target a younger, more tech-savvy audience. Some digital coupon marketing campaigns may need to pay more attention to senior customers.
• Fraud potential: there is a slight risk of fraud or misuse of digital coupons. For example: duplicate uses, counterfeit coupons, barcode manipulation to increase discounts, unauthorized distribution, or phishing scams.

What Is a Coupon Marketing Campaign?

A coupon marketing campaign is a strategic initiative where businesses distribute coupons to potential or existing customers to promote products or services, boost engagement, and increase sales. 

The campaign can have various objectives, such as:

• Introducing a new product
• Clearing out inventory
• Increasing brand awareness
• Encouraging repeat purchases

The campaign coupons can offer various benefits, such as discounts, buy-one-get-one-free deals, free samples, or exclusive promotions. Campaigns can be executed in various ways, including limited-time offers or loyalty programs.

Steps for a Successful Coupon Marketing Strategy

A successful coupon marketing strategy includes specific steps to determine the most effective distribution channels of coupons. The ultimate goal is to attract more loyal customers and drive sales. Businesses generally:

1. Identify potential customers
2. Create a target audience
3. Analyze shopper behaviors 
4. Create a strategy based on this data
5. Start the distribution campaign

Coupon marketing goes back to the 19th century, but digital coupons have changed the game. Mobile coupons and promo codes are increasingly popular as they make it easier for customers to access deals on the go. Successful large-scale coupon campaigns require companies to distribute coupons digitally too. 

A successful coupon marketing strategy should also:

• Clearly define the objective: what’s the one thing that must be achieved?
• Understand the audience: what’s relevant for shoppers? What deals do they want from coupons?
• Provide genuine value: the provided discounts or deals must be compelling enough to spur customers into action but not so high that it negatively affects profitability.
• Have simple distribution: whatever the method, it should align with the brand’s overall marketing strategy and the preferences of its audience.
• Analyze results: businesses need to look at the effectiveness of the coupon marketing campaign based on metrics like redemption rates, increase in sales, and customer feedback.
• Improve over time: based on analysis, retailers may need to adjust elements of the coupon campaign.

How Does Coupon Marketing Work?

Here’s a general breakdown of how coupons are marketed:

Coupon Creation

Businesses create coupons that offer customers discounts, special offers, or incentives. Coupons can be physical vouchers, digital codes, or virtual coupons.

• Physical vouchers are made from paper and cut out from magazines, newspapers, etc.
• Digital codes are traditional coupons converted into digital format. They’re found on retailer websites, via email newsletters, on social media platforms, or through dedicated coupon websites.
• Virtual coupons are a type of digital coupon, but their usage is much more specific. They are typically tied to a loyalty program and are automatically loaded onto a shopper’s loyalty card account.

Coupon Distribution

Coupon marketing uses various distribution channels to reach the target audience, such as print media, online platforms, mobile apps, and in-store.

• Print media: coupons are printed in newspapers, magazines, brochures, or direct mailers.
• Online platforms: coupons are shared on websites, social media platforms, coupon websites, and email newsletters.
• Mobile apps: businesses may use dedicated mobile apps to distribute coupons and let customers redeem them.
• In-store: coupons are handed out at the point of sale, included in product packaging, or distributed by store staff.

Coupon Redemption

Customers receive and use their new coupon. Use depends on the nature of the coupon.

• Physical coupons: present the printed coupon at the point of purchase to receive the discount.
• Digital codes: enter the coupon code during the online checkout process to apply the discount.
• Virtual coupons: access and redeem virtual coupons through mobile apps or online platforms. Virtual coupons are generally part of loyalty programs and are automatically added to your customer account.

Coupon Tracking

Businesses track and analyze coupon usage data to measure the effectiveness of their coupon marketing campaign. This includes monitoring the number of coupons distributed and redeemed and the resulting sales or other types of conversions.

The Benefits of Coupon Marketing

Coupon marketing offers several benefits for both businesses and customers. Here are the most important advantages:

😃 Coupon Marketing Benefits for Customers

• Discounts and savings: the primary benefit of coupons is that customers get to save money. Coupons provide flat discounts, percentage-off deals, or special promotions.
• Easier to try new products: customers get to try new products or services that they might be hesitant to try at full price. Discounted offers make new products more appealing by lowering the risk of trying something new.
• Higher affordability: coupons make products and services more affordable and accessible, especially for customers on a tight budget.
• Exclusive deals and rewards: coupons often provide customers with exclusive deals and rewards unavailable to the general public. This enhances the overall shopping experience.
• Better budget management: coupons can help customers manage their budgets more effectively for regular and bulk purchases.

🏢 Coupon Marketing Benefits for Businesses

• Increased sales: coupons can drive immediate sales by enticing customers with discounts and special offers. Coupons create a sense of urgency and motivate customers to take advantage of limited-time deals.
• New customer acquisition: coupons can attract new customers who might need to become more familiar with the brand. Through compelling discounts, businesses can capture more people’s attention and encourage them to try their products or services.
• Customer loyalty and retention: coupons can help build loyalty by rewarding existing customers for their repeat business. Coupons foster a sense of appreciation and encourage customers to continue choosing one brand brand over its competitors.
• Increased customer engagement: coupon marketing can drive customer engagement through interactions with the brand. Customers may actively search for coupons, subscribe to newsletters, follow social media accounts, or download mobile apps to access discounts.
• Better tracking and analytics: coupons provide measurable data on distribution, redemption, and sales. This allows businesses to track the success of their coupon campaigns, analyze customer behavior, and make data-driven decisions to optimize future marketing efforts.
• Increased exposure: coupons can increase brand visibility and awareness as they are often shared among friends, family, and on social media platforms.
• Simpler inventory management: businesses can use coupons to move older or excess stock quickly.

Coupon Marketing FAQs

What Is Coupon Marketing?

It is a promotional strategy in which discount coupons are used to generate customer interest and incentivize purchasing. These coupons can be distributed through various channels such as email newsletters, social media, store websites, or coupon websites. This marketing strategy uses physical coupons, digital coupons, and virtual coupons.

How Effective Is Coupon Marketing?

This marketing strategy can be very effective if done correctly. It can increase customer engagement, attract new customers, and encourage repeat purchases. It also provides valuable data about consumer behavior, such as their spending habits and preferred shopping times.

What Are the Best Coupon Marketing Strategies?

Thinking in “best vs worst” terms is not productive, as coupon strategies depend on customer demographics and preferences. Some target groups find physical coupons most useful, while others are only interested in digital coupons. Popular coupon types include:

• Digital coupons: usually distributed via email newsletters, websites, or social media.
• Mobile coupons: delivered through SMS or mobile apps.
• Virtual coupons: generally tied to loyalty programs and automatically added to customers’ loyalty cards or accounts.
• Print coupons: often distributed through newspapers, magazines, or direct mail.
• In-store coupons: provided in-store, often at the point of sale or receipt.

What Are the Benefits of Coupon Marketing?

There are numerous benefits for both businesses and customers.

Customers will find advantages such as:

• Discounts and savings
• Easier to try new products
• Higher shopping cart affordability
• Exclusive deals and rewards
• Better budget management

Businesses will profit from coupons through:

• Increased sales
• New customer acquisition
• Customer loyalty and retention
• Increased customer engagement
• Better tracking and analytics
• Increased exposure
• Simpler inventory management

How Do Businesses Track Coupon Marketing Success?

Businesses tend to use unique identifiers for each coupon. These identifiers let them know when a coupon is redeemed. Retailers also use customer relationship management (CRM) systems to track the number of new customers acquired, the increased sales from existing customers, and the overall return on investment (ROI) from the campaign.

Does Coupon Marketing Devaluate Products or Brands?

While there is a risk that constant heavy discounting can lead customers to devalue a product, coupon marketing does not harm brands when executed strategically. It’s important to offer discounts and coupons as a part of a balanced strategy, such as during a new product launch, holiday seasons, or to clear out seasonal inventory. This way, customers see them as a benefit or reward rather than businesses trying to sell off low-value products.