Coupons and promotions: use and effects on brand loyalty


Rebates, coupons and promotions are until further notice still what consumers look most for online. Promotions work in email marketing, offline and obviously on social media as well. They are even the primary reason why people start following brands online.

The business model of several third-party permission-based email program providers is entirely built around promotions, and daily deal sites are booming for a reason. The fact people follow brands that offer discounts or other incentives, doesn't obviously mean that the relationship strengthens and turns into a loyal one. 

On social media, for instance, people start following brands for rebates and other tangible advantages but to maintain that "follow" relationship and turn it into a stable business relationship, beyond the rebate aspect, you need more than an eternal flow of coupons, or sweepstakes for that matter.

Coupons are hot but don't burn your fingers

As a brand, you probably want to build your promotions within a campaign and a more global "story" instead of constantly focusing on price, in order to avoid brand and price erosion. 

Lower price points and discounts help sales but in the long run your brand suffers, and you need to compensate for that, losing the money you made with a too aggressive promotional approach. 

Furthermore, customer loyalty is in the end what we often strive for, and that takes more than coupons. Finally, do we really want to make existing and loyal customers upset by offering more interesting promotions all the time without any coordination?

Although common sense might say that brand loyalty (not to be confused with a solid consumer relationship) needs more than discounts, data by and Harris Interactive seems to show the opposite.

82% of US online shoppers claim they are more loyal to businesses that regularly offer discounts than to businesses offering these rather occasionally.

Discounts are hot and so are coupons. However, don't burn your fingers with a too obvious approach.

Behavioural targeting and segmentation

Obviously, nowadays there are more possibilities than ever to use promotions in a more segmented and personalized way. Promotions based on online behavioural (behavioural targeting), interaction channels, etc. A perfect example of the latter are for instance in-store or mobile coupons.

Finding a balance in all these promotional activities, requires at least an overview of different promotional touch points with consumers, in order to avoid an overload of messages with discounts or coupons, that often even might be different.

Finding that right balance in coupons and promotions is about finding a smart mix of inbound and outbound, while maintaining a "quid pro quo" in order to get value for the value you offer. Don't hesitate to use social and viral mechanisms and gradually request more about your coupon fans in order to add other elements to the relationship.

Discounts don't only play a role in building loyalty or the start of a social relationship: they can become a crucial element in further developing that relationship beyond loyalty. The survey found that, despite the clear love of discounts, only 27% of online shoppers use coupon sites and 22% daily deal sites such as Groupon. This means there are opportunities for your brand.

In the end, what do consumers prefer? A daily deal or regular incentives for the products and brands we need or like to buy?  Use coupons and promotions in a smart and valuable way, depending on behavioural analysis and non-conflicting or brand-eroding cross-channel activities and be creative, using mobile coupons, QR codes and very well targeted and segmented campaigns. And build loyalty using them to build loyalty beyond them. 

The report further shows some interesting data on the use of coupons during holidays (check the infographic here). The key takeaway: don't only use promotions in a smart way but also use them outside the typical times of the year.

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