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Discounts and Coupons: Are they good for business or hurting your brand?

It seems counterintuitive to think that frequent discounts and coupons that bring customers in the door could actually be hurting your brand or store. Some elite brands never offer discounts or have sales but for most of us, sales are a great way to boost profits. In fact, discounts are an effective way to attract new customers, but will a sale turn a first time customer into a repeat one?

The short answer is no. Coupons and discounts tend to attract customers with less brand loyalty, according to Loyalty Management Magazine. One just has to look at some of the many Groupon disaster stories to see that deep discounts don’t always pay off long-term. Even worse, when coupons are so readily available (ie: 20% off any item)  shoppers become averse to paying full price and will not make a purchase without a coupon in hand.

There are times when discounts can work for you. Evaluate your customer base to determine which ones you want to reward for their business with special deals, freebies and coupons. For example, customers enrolled in loyalty programs may come in more to take advantage of these specialized offers, while potential first timers may receive a less attractive coupon to gauge their interest in your brand. These “litmus tests” can help you categorize your customers and determine how to issue coupons and deals more effectively.