Thinking About Discounts #2

The point of discounts, as with any form of advertising is to entice customers to use your service or shop at your business.
Sometimes offering a discount to new customers allows them to try your service or products for a lower price. If customers like the service or product enough, they will happily come back to your business again and again. An even better outcome is that they will tell their friends about it!

Discounts can be given for multiple reasons. For instance, there are discounts for signing up for an e-mail list, for being a new customers, for spending a certain amount of money, for having a birthday, for buying products from last season. There are multiple methods of discounting and each one will bring in a different customer base.

If you are already comfortable with your customer level and you just want them to shop more frequently, discounts offer them a reason to return. I rarely shop at a grocery store across town, because I have plenty of stores to choose from on my side of town. Occasionally, the grocery store across town offers a discount that I just can't pass up, so I travel that much further to pick up those items. I'll also do the rest of my grocery shopping while I'm over there for convenience. This is a discount to bring in an already existing customer base.

Some businesses need new customers. While living at a set of apartments, I encouraged one of my friends to rent in the same complex. When she did rent, I received a discount on my rent and she received a discount on her first month's rent. This referral discount brought in a new customer, while also rewarding an existing customer. This kind of discount encourages word-of-mouth advertising.

When you decide to use a discount, take a minute to think about the purpose of that discount. If your goal is to bring in new customers, reward the customers you already have or sell off a product more quickly, you'll have different discounts available to each category.

A Week of Coupons #4

It's not a Daily Deal - it's a never ending discount. What is it?

This is a perfect example of a discount that can sometimes last too long. Restaurant.com can be a great site to advertise for some restaurants, but not everyone can benefit from this kind of coupon. This is a coupon that has a long-term affect on a restaurants brand name because the contract is for one year. That means you can't control the distribution of this coupon and in the end it becomes more than a coupon - it becomes an expected discount to your business.

So where should you advertise a coupon?  There are hundreds of places. Type "coupon" into your favorite search engine and you'll find dozens of places on the first page alone.

You can also advertise coupons in your local newspaper, a direct mail piece, a well-placed bulletin, in a Val-Pak or other, similar places.

What we recommend is a mix. Develop a coupon with a sensible expiration date, a reasonable discount and find a few places for distribution. Make sure you include an online site, or promote it on your Facebook or Twitter pages, and look into a direct mail option.

If you do decide to use an online site like Groupon or Living Social, just make sure you're ready for the increase in customers!

Coupons, Discounts and Promotions - The Five Questions You Should Ask

The five questions you need to ask before your business starts a coupon, discount or promotions effort.

Coupons, Discounts and Promotions - Questions

Do I need to run a coupon, discount or promotion?

- Example – Jeffrey’s Restaurant and Bar, in Austin, TX, had been in business for 35 years. While the business was relatively stable, the owner, Ron Weiss, was starting to see a decline in sales. In 35 years of being in business the restaurant had never once issued a coupon or discount. Ron decided to take a chance and offered a Groupon deal. The deal was a one-time discount of $35 for $75 in gift certificates for the restaurant. The coupon was good for 90 days, during the restaurant’s slower time of the year. The restaurant takes half of the Groupon sales and Groupon takes the other half. Ron and his staff stayed unbelievably busy over the next 90 days and while he didn’t make money on the offer, he did gain a lot of new customers. (MP Mueller, NYPost.com, “Is Groupon Good for Small Business?)

How will this affect my business or brand?

- Example – PearlParadise.com owner, Jeremy Shepherd saw that sales were declining as the economy worsened. Sales of his pearly jewelry, above $1,000, were usually his major source of revenue and if sales continued to be off through his December busy time his company would be in trouble. After examining sales charts, Jeremy saw that jewelry under the $1,000 was still selling well. So Jeremy decided to discount his strands of Tahitian Pearls from $700 to $300, calling the jewelry line, “Luxury For Less.” By offering only one line of pearls at a discount price, Jeremy was able to keep his main brand from looking like a discount jewelry store, but still increasing sales for his company. (Ryan McCarthy, Inc., “How Low Can You Really Go?”)

Can my business afford this?

-Example – It is important to ensure that your business can not only handle the influx of customers who will come in during the promotional time period, it is also important to accurately calculate whether this is a cost you can afford. In order to calculate this you must first know the following: the cost of your goods or services, an estimated purchased amount for each coupon, discount or promotions customer, an estimate of the quantity that will be redeemed (this is more of a guess – to be safe, estimate an 80% redemption rate for coupons), the approximate number of return customers or new customers who come in after the coupon (figure about 10%), the cost to run this coupon and the percentage of existing customers (assume 40% for this example).

For instance say you sell widgets for $40. It costs you $25 to make this widget. So you make $15 on each widget.  You run a coupon for 50% off your widgets.  The coupon costs you $1,500 to run and you send 3,000 of them out.

So you get about 2,400 coupon redemptions and each customer buys your widget for $20. You don’t make any money on these sales, but you do break even. You then calculate that 60 of the customers who used the coupon were new to your business and likely to tell a friend. That is 1,440 new customers and if 10% tell a friend you’ve got about 140 new customers. If you’re making $15 profit on each widget, you’ve made $2,100. Subtract the $1,500 you’ve spent and you’ll end up coming out ahead of the game with $600 over the long-term.

What method and discount will work best for my business?

            It is always good to have a good mix of coupon tactics to appeal to your diverse customer base. Use the space to write down your ideas for your business.

How should I distribute my coupon, discount or promotion?

            Polling your customers on the types of coupons, discounts and promotions they prefer can be a great starting point for your business. It is also a good idea to look and see what competitors are using. What ideas do you have for your business?

How will I measure my campaign?

            The best way to measure your campaign is to educate your employees on the importance of keeping track of coupons or promotions. You won’t be able to accurately calculate your total costs without this data. How will you encourage employees to be diligent?

Have more questions? Give us a call or send a message! We're always here.  To see the entire PowerPoint presentation click here!

What Are You Leaving Behind?

Today is officially the last day that Kodachrome will be processed. The chemicals are gone, the processing machine will be sold for scrap and the official end of a photographic era will be mourned by thousands.

The last Kodachrome photo lab is located in a tiny town in Kansas. This little lab never thought it would be the last of an era, but it has become just that. This story of the last of something, the end of an era reminds me of the thousands of businesses who shut their doors every day. Most of these businesses shut their doors without notice or any sort of fanfare. These businesses won't have happy endings. The only thing that will be left for them will be an empty store front and the paperwork they collected from the office.

The only thing the public will see are the blank spaces and forgotten advertisements. That's right... long after your business closes, your adoring public will still remember what used to be there. They'll see the ads printed on boxes, in magazines, newspapers and aired on television; they'll see the name, the logo, the slogan of your forgotten business. Some may even wonder what happened to your business, whether it is still around. Or will they?

It all depends on what kind of legacy you leave behind. If you decide to neglect your advertising for another year, you may end up on the shelves of those long forgotten. Do something great though, advertise your business and you may find that you have loyal customers who will mourn your passing. And even though everything must come to an end someday, you can still look back on those ads, at that time, and realize you did everything you could to make your business successful.

You didn't stand on the sidelines and hope people noticed you - you got out there, played the game and made sure people remembered you. Or better yet... maybe you're still playing.

Selling Dreams - The Airstream Way

In the 1950's to the 1970's the Airstream camper was developed and advertised in "exotic" locations as a way to sell the idea of a dream. Travel with Airstream and see the world.



Of course ads in the 1970's were a little different than ads today. You see a lot more text and of course you had to write to Airstream to have your color catalog mailed. Despite the time differences, these trailers remain part of the traveler's mystic - an object of desire. These trailers still represent the idea of freedom, of travel to places you've never seen. Airstream even included the idea of traveling with their trailers overseas - "Here in America or overseas... Airstream is the only way to go!"

This is a great example of an ad campaign that had legs - a great concept that branded an amazing product and carried through the ages. This shows that a concept, done well can indeed sell for years, or even decades.

You can see the other vintage ads here.  And you can see the latest Airstreams here. 

Airstream Living
Airstream: The History of the Land Yacht
Airstream Trailer 1/18