Evan Carmichael explains how to use coupons to grow a business without wasting money. Test small first. Use coupons to attract new customers through partnerships with complementary businesses, or to get existing customers to try new products. Track repeat purchases and conversion rates, or the coupon will just attract one-time bargain hunters.
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Coupons can be an effective way to grow your business, but you've got to make sure that you're making money from it and you're testing them. Hi, I'm Evan Carmichael, your friend in all things entrepreneurship, and today I'm answering a question from one of our readers, James, who wanted to know if he should use couponing for his business and what the pros and cons were. So thanks for the question, James. I know as entrepreneurs we're always looking for different ways to grow our businesses and experimenting with different things. With any marketing in general that you're doing for your company, you wanna test it, make sure it's delivering results on a small scale before you expand. A big mistake a lot of times that we make is we get so excited about a new marketing idea that we put a lot of dollars into it and it doesn't work and we end up out a lot of money. So you wanna make sure whatever you're trying, do it on a small scale, test it, see if it's working. If it is, you keep doing it, spend more money on it, expand the program. If it's not, kill it, try something else. For coupons, so there are a couple ways to do it. Usually it's either one, to bring in new business. So you have a discount, I don't know what you're selling, but a discount on your product or service. A way you can use it is to partner with other businesses. So A friend of mine runs a Little Gym franchise where they help kids come in and teach them gymnastics. And he'll partner up with local businesses around him and allow them to give a coupon to their customers for a discount at the class. The idea with this is you get a coupon for your first class. So you can come in, either get the first class for free or get the first class at a discounted rate. And then hopefully they'll love it and they'll sign up for the program and he'll have them in there for year after year after year after year. You may be losing money on that first class, but you're gaining new customers. So that's one way to do it. The second way is to encourage existing customers to buy more or try new products or services you might be offering. So for example, the salsa school that I'm involved in will often, as a new introductory workshop, so if they're, usually they're selling salsa classes, but they might have a new type of dance that they want to introduce. It could be West Coast Swing, or it could be Cazomba, or it could be Cha-Cha, whatever it is. They might put on a special deal. If you sign up for this salsa class, you can also get this kizomba class or West Coast Swing class at a discounted rate. And it's to encourage people to try it, to see if people are interested in it, if they like the class, if they like the instructor. And if they do, it all works out, then they'll come back for more, and they'll keep coming back and keep coming back. And so even though you lose a little bit of money on that first class, again, the idea is that they keep coming back over and over and over again. You want them to try whatever your product or service is. So those are the two most common methods. One, get new people in, and two, get current people to try out whatever new product or service that you have. The danger here is that you spend a lot of time and money fulfilling these coupons, and they're not going to continue buying from you. And this is the biggest fear that a lot of people have had with coupons sites like Groupon where they get bombarded with business, new customers come in, but they only buy that deal and they never come back. And a lot of Groupons that people have, have purchased, that's exactly what happened. You know, the businesses get slammed, all these customers come in at the same time over a short period of time, they're just buying that deal which is at a steep discount, and then they never come back again to that business. And so that's a loss. Right, if you're losing money on your first transaction and then the customer never comes back to you again, that's a big loss to you. Hopefully you've made a good first impression with them, maybe they'll refer somebody on to you, but that's not the type of client that you want to attract. So you want to make sure that in your marketing you're going after the right people, ideal potential clients for you, and that the deal makes sense, that you're giving up something, you know, there's some value there, but you're not losing your shirt over it. And you have to start tracking and measuring conversions. Are these people coming back to your business and buying more and more and more from you? If they're not, look at the offering, look at who you're targeting, and maybe it makes sense to revamp it a little bit, see if there's another way to make it work, or maybe the couponing strategy is just not a right fit for your business. And you only can figure that out through testing. So, maybe a lot of information on couponing, but those are my opinions on the pros and the cons. I hope you'll test it out and see if it works for you. For those of you watching, if you liked the video, please give it a thumbs up below. I'd love to see those come in, and I'd love to hear what you have to think. If you want to leave a comment under this video, I always read those and I usually respond. So thank you, and I'll see you on the next episode.
