NEW YORK (MainStreet) Consumers flock towards coupons to save money, but a new survey says coupons also bolster a retailer's brand's image.
According to RetailMeNot, 68% of respondents in a survey of 500 consumers, strongly believe digital coupons help a store's brand http://www.mainstreet.com/article/smart-spending/new-foursquare-can-help-you-save, while 64% said coupons help seal the deal when contemplating making an online purchase.
"How we research, plan and shop is evolving beyond the e-commerce site to include our mobile phone and tablet, yet the basic premise of coupons has remained the same," said Jill Balis, senior vice president of Marketing for RetailMeNot. "A great offer can drive incremental revenue, reduce shopping cart abandonment and result in happy repeat customers."
Mobile coupons are becoming mainstream, as more and more retailers accept coupons by scanning the barcode shown on smartphone's screen, instead of processing a physical coupon.
The survey found mobile coupons help introduce consumers to new brands as 47% of respondents said they would try a new brand if given a mobile coupon.
"Retailers issue coupons, because it gets the customer's attention," says retail expert Jan Rogers Kniffen, CEO of J. Rogers Kniffen WWE. "Advertising about the store isn't enough to shock the consumer and make them think about shopping, but giving them a coupon is."
In early 2012, retail giant JC Penney announced a new pricing structure that took away coupons and replaced them with everyday low prices. CEO Ron Johnson, formerly responsible for the success of Apple's retail stores, was the mastermind behind the new strategy.
Taking away coupons proved to be a financial disaster for J.C. Penney, as total sales fell 20.1% during the company's first quarter of 2012. The company continued to see a decline in sales as shoppers fled the store. Johnson left in April 2013 and J.C. Penney returned to issuing coupons soon after.
"Ron's vision was successful, as he brought in a Millennial customer who liked everyday low prices, but the problem was he lost his base customer four times the rate of the new customer," Kniffen says. "The Penney customer is a coupon customer and for his strategy to work, he would have had to start from ground zero."
Retailers need to walk a fine line with coupons, Kniffen says. Too many coupons could cheapen the brand, but coupons are necessary to build loyalty and remind shoppers to hit the stores.
- Written by Scott Gamm for MainStreet. Gamm is author of MORE MONEY, PLEASE.