Is Couponing Dead?

Retail is in transition. Our local high street has been moved online.

Shopping has changed an awful lot in the 21st Century, and there’s no sign that customers are going to be reversing the trend of internet shopping any time soon – online retail sales in the US are set to total $4.5 trillion by the year 2021.

Is Couponing Dead?

Source

Is there any hope for traditional couponing amidst this seismic shift? Surely paper coupons are as dead as a Dodo; set to be cast aside by their quicker and easier to produce electronic counterparts.

Or are they? The statistics seem to suggest that there’s life in old-fashioned physical coupons yet. According to research conducted by Valassis, usage of paper coupons by has increased by 30% by users that already bargain savvy, and 32% of all shoppers are still partial to collecting coupon clippings from newspapers or other printed sources, according to the US-based Retail Feedback Group.

So are the reports of traditional couponing’s death premature? Further research points to an uncertain future thanks to distributor uncertainty – NCH Marketing Services reports that overall paper coupon redemption fell by 27% in 2017 owing to businesses aiming to shift their focus on to digital methods. But the Newspaper Association of America believes this is an error by coupon marketers, and claim that Sunday newspapers remain the number one source for coupon users to collect their clippings, with 61% of surveyed consumers agreeing.

What’s clear is that there’s plenty of uncertainty over the future of online coupons from industry professionals, so let’s take a look at three major points worth speculating.

1. Return on investment

It may seem counter-intuitive, but digital coupons typically have a lower return on investment (ROI) than their paper-based counterparts. According to coupons solutions company, Mandlik & Rhodes, digital coupons’ ROI is around 18% lower than paper.

This considerable gulf in profit margin is down to the much higher redemption rates of digital coupons. However, overall, there’s been a decline in redemption rates since 2011.

Is Couponing Dead?

Source

However, discount codes and vouchers are much easier to redeem online, which certainly helps to attract more customers, but the sheer density of people purchasing your products means that you’re making larger losses due to the smaller margin between sale cost and production cost.

This presents a dichotomy that will do doubt split some business marketing departments. Decision makers will need to ask themselves if it’s worth creating a widespread digital coupon marketing campaign that’s guaranteed to win customers and spread brand identity, or create a print campaign that’s more likely to earn customers while keeping an element of awareness for audiences that are exposed to the coupon without redeeming it.

This fact suggests that there’s still life in traditional forms of couponing, especially for businesses that are operating on a tighter budget and keen on winning and appealing to a new customer base.

2. Building brand awareness

Despite there being little doubt that paper coupons perform well as a tool for building brand awareness, it simply cannot compete with the power of digital’s exposure.

While paper coupons can potentially have a reach of up to a few million people if placed in the Sunday edition of the New York Times, for example, social media means that this figure is dwarfed by a good viral offer.

There are currently around 2.5 billion people worldwide registered on social media platforms, and the viral hotbed of Twitter has already seen a tweet raising brand awareness reach over 3.5 million ‘retweets’ – when US restaurant chain, Wendy’s, challenged a teenager to get 10 million retweets in return for a year’s supply of chicken nuggets.

Although a digital coupon hasn’t reached such figures, appealing discount codes regularly gain large levels of attention, and Twitter’s friendliness towards businesses means that certain content can be promoted onto the newsfeeds of a targetted audience, as with other major platforms like Facebook and Instagram. Making the potential for a good digital coupon marketing campaign very lucrative if executed effectively.

It’s plain to see that this is a challenge for traditional couponing to overcome if it’s going to keep the interests of big businesses alive. Practically paper discounts still make sense, but if you’re an ambitious company with a focus on the world market, then the old-hand methods are clearly limiting for your reach. However, this could be an asset for local businesses looking to make a push for new customers, and small-scale publication makes for an even more cost-effective way of appealing to your niche audience.

3. Production cost

Surely digital coupons are much cheaper to produce and send out into the world right? A simple code and a promoted tweet or feature on a coupon affiliate site is all it takes isn’t it?

Surprisingly, print coupons are often cheaper to produce and distribute than through going digital. This is because of the lengthy processes of hiring social media guru third parties and digital marketing strategists to get your approaches right and maximize the sort of reach that your campaign deserves.

The cost of printing and shipping coupons happens to be a relatively inexpensive process, and when you’re confident of targeting the right audience, can be a much more effective way of cutting costs while bolstering your customer base.

You could be forgiven for accepting that the all-encompassing changes that the 21st Century is ringing in have placed the writing on the wall for old-fashioned paper coupons, but in reality, there’s still plenty of life left in the traditional format – especially for smaller businesses looking to target a specific customer base.

For the foreseeable future, businesses are best suited to considering both approaches deeply and assessing whether both could work in tandem. The coupon business is entering something of a golden age, and the public is showing no signs that they’re tiring of either form just yet.

Is Couponing Dead?