Digital coupons are quickly becoming the preferred method of saving by many consumers. While companies certainly obtain benefits when offering discounts to customers, there are also some negative effects as well. Here are some of the pros and cons associated with offering digital coupons. 

Pros

Conversion Increase

There’s no question that offering coupons to consumers will ultimately lead to an increase in orders. As long as you do it correctly, your bottom line will grow. An article written by Lisa Epstein for investopedia.com states, “The key to maximizing the advantage of coupons in today’s digital world is using coupons as a way to build your customer base. Coupons can become a crucial part of your social media marketing provided you use them strategically. For example, one of the best ways to turn coupons into a long-term marketing strategy to encourage repeat customers is to require them to provide their name and email address in order to get the coupon. That way you can build an email marketing base to encourage their return when offering new products or for other marketing campaigns.” When you send out frequent emails regarding your company, you’re reminding consumers of your presence. This tactic can easily help you grow your business.

Easy Implementation and Tracking

Most e-commerce hosting platforms make the creation and implementation of coupons incredibly easy. It’s a simple matter of a few clicks. The tracking of digital coupons is also fairly straightforward. For example, you can make coupons available exclusively through specific channels, place tracking codes on coupons, and require customers to input their information before they can save.

Cons

Invite Non-Loyal Customers

Digital coupons can unfortunately be a one time incentive for many buyers. These are called non-loyal customers. Additionally, coupons can sometimes cause loyal customers to hold off on their purchases in hopes of finding savings. Investopedia.com states, “Even your regular customers can get in the habit of waiting for coupons, which cannibalizes income that was already being generated before you introduced the coupon program. So you need to consider when and how to offer those coupons to avoid impacting your regular customer base.” Sales and discounts need to be strategic.

Decline in Average Order Amount

Offering discounts means bringing in less money. This may seem like an obvious statement but many people fail to calculate how coupons will affect their bottom line. The above mentioned article also states, “Coupons will always result in reduced profits on the item or items included in the coupon campaign, but the cost of purchasing that product will not change. When considering the value of a coupon campaign to your business, you must find a way to determine if the discount will end up improving your bottom line in the long term.”  

There are positive and negative effects when offering digital coupons. Look specifically at your business and its needs. In doing so, you’ll be able to determine whether offering savings will be good for your business.