Every customer loves getting a discount, or at least the idea that they are paying less than the listed price. Coupon codes are a great tool when you are looking to haul in new customers or trying to get them to reorder. The problem is that they cost money. If not well thought out or executed, they can eat into your bottom line and even cause some serious harm down the road. Therefore, coupon codes mistakes can be deadly as far as your business success is concerned.
If misused, they can be ineffective and have far-reaching negative effects. Here are 5 common coupon codes mistakes you must avoid:
1. Offering a steep discount
This is obvious enough. Discounts eat into your margins and offering too steep of a discount can prove fatal. While a large discount can do well to pull in extra customers, you have to figure out where to apply it. Customers can simply rush in to get the heavily discounted item but then quickly run off to other stores, never to return. Things can get tighter if you are fulfilling your own orders because you will have to incur an extra strain on shipping and logistics.
2. Unlimited discounts
This, together with offering too steep of a discount, is one of the most common coupon codes mistakes. If you are going to offer store-wide discounts, you will need to put a limitation on their number of uses. Unlimited discounts across the store might lead to a lot of gross sales but very little revenue.
If you also offer too many discount coupon codes, you may run out of stock too quickly. Things could get worse if your discounts were primarily aimed at pushing out the old stock. You might be forced to restock some of the old inventory.
3. Discounting money cards
This is rather a dumb idea. You should always avoid issuing discounts on items like gift cards. If you offer a discount on a gift, say, 20%, these same customers will purchase a lot of the gift cards from you. They will then come back to use them at your store to buy, guess what, discounted items in your store. Gift cards are real money and therefore, it makes no sense discounting them.
4. Not knowing your customer acquisition costs
This is simply the cost of landing a customer. It is a foundational aspect of running any commercial enterprise. All your coupon codes strategies ought to be designed around your customer acquisition costs. You are simply not going to acquire customers at any cost, are you? In a nutshell, it is all about determining what you will gain and what you will lose when you decide to give coupon codes to your customers.
5. Not giving sufficient discounts
Some of the most deadly coupon codes mistakes have to do with issuing more discounts than you should. However, it is also possible to give too little discounts that do not excite potential customers to bring you business. It may have to take a little bit of experimentation and marketing research on your part. But you must find a perfect number that works for both you and your customers.
What are other deadly coupon mistakes? We’d love to hear your thoughts. Share with us in the comments section.