I'm writing this post in response to this common misconception:

In their essence, coupons are a good-if not great idea. They offer price reductions for the customer, and stimulate sales for the seller, and after all, who doesn't want that?

But if you really think about it, one might ponder why, if the seller is still making a profit, and they have more sales because of it, why do we have coupons at all? If they weren't making a profit, they wouldn't have released the coupon at all.

I wrote those particular words, but first heard about this concept at Trader Joe's grocers. This is a perfectly valid argument (and I really like Trader Joe's), but my response is that there are literately a thousand ways coupons can be tailored to work for your business. Even if you offer exceptionally low prices, if one of your competitors offers a 10% off coupon, there's a good chance your customers will choose the competitor instead. 

Although the constant low prices approach seems as though it would make more sense, human psychology usually calls for coupons. Because this concept is somewhat hard to describe, I will present several examples to better give you an idea of what I'm talking about. Within them I've added some tips as to how you can use coupons to their fullest extent.

Technique 1: "I have a coupon, let's go there instead."
Particularly in this economy, this is an expression heard on a regular basis. In order to save a buck, people often keep an assortment of coupons that they look at before purchasing anything. If they have a coupon to your competitor's business but not yours, they are more likely going to go with your competitor. Even if its a minor discount, offering a coupon can be the determining factor when your customers are trying to decide which business to buy from. 

Technique 2: Coupon Time Frames and Holiday Coupons

Ah, that pesky expiration date that you see on almost every coupon you receive. Aside from preventing the chaos of circulating too many coupons at once, the goal of a coupon with a close approaching expiration date often is to pressure customers into using it. Say there's an item you are considering buying and you see you have a coupon expiring soon. You're more likely to go ahead with your decision and buy it, knowing that you'll get a better deal if you go ahead with the purchase now. 

This strategy is typically used around holidays, birthdays, etc. to try and entice customers to spend money at their business when they are likely going to splurge. 

Technique 3: Coupons in Ads 

Newspaper ads, magazines, newsletters, and sometimes even digital ads have coupons to to try and entice the customer to try your business. If you treat the customer well and the product offered is high quality and affordable, that customer will likely return. This can be a long term investment if implemented correctly. A big discount is recommended for this.

Technique 4: The Thank you Approach

Often times, when buying a product, you are rewarded with a coupon. This approach further entices customers who have already bought to return and buy more products in the future. These typically do not have expiration dates, as a customer who just bought something typically will not buy another item soon after. Web hosting company Godaddy.com is well known for taking this approach.

Technique 5: The I'm sorry Approach

There comes a time when every business makes a mistake. They accidentally overcharge, forget to give you a receipt, link to a broken page, or fail to offer customer service that is up to par. To show their remorse, businesses sometimes offer a coupon in order to keep the customer. This coupon typically is a long term investment, and is a much larger coupon than most others. You might lose all your profit with this type of coupon, but you may keep the customer for future purchases.

Petsmart and Claim Jumper are both known for implementing this type of coupon.

Although at first, coupons can seem to have no use, their net effect can result in more sales, and happier customers. It's all a matter of opinion, but in mine, coupons can, if implemented correctly, can prove to be a worthy marketing tactic.