Marketing technique that offers a win-win situation

Discount coupons that offer real value are not only beneficial to consumers but to traders as well. Retailers in the UAE say such a marketing strategy indeed works in their favour, as it drives traffic to their stores, increases sales and builds customer loyalty.

"It definitely helps as it's an added incentive for the consumer, creating a win-win situation for both parties. From a brand perspective, discounting ensures depletion of stocks and (at the same time), the customer gets a good deal on the purchase, too. It's a way of driving higher purchase frequency," Reen Bedi, marketing manager at Shoe Mart, said.

Faisal Shabbir, marketing manager for international brands at Shoe Mart, said that their voucher campaigns have increased their sales by 15 to 20 per cent. "Our promotions have done well in the past and continue to show good consumer response," he said.

The same goes for Splash, a fashion retail brand, which recorded higher sales after launching its voucher campaign. "In our campaign, we offer Dh25 worth of gift voucher for every Dh100 spent, which is way below our average transaction value. It's tantamount to 25 per cent discount. It encourages the customer to come back when new collections are launched every month," Raza Beig, chief executive officer of Splash, said.

Devayani Dayal, marketing manager at Beautybay, agreed that vouchers are a great way to retain customers as they encourage repeat visits. "Given the current situation, generating repeat business is very important …When a customer is rewarded with vouchers that have no strings attached, this builds goodwill and customer loyalty," Dayal said.

Repeat visits

During Ramadan, when vouchers were circulated among its customers, Beautybay recorded a steady increase in gross sales and average transaction value.

"Generally, we noticed that 80 per cent of vouchers issued were redeemed on the spot, while the remaining 20 per cent resulted in repeat visits and larger receipt values," Dayal said.

"A voucher encourages the customer to come to the store. Once they are in the store, they get an opportunity to find out about our brands, new collections and various promotions going on at the store… It definitely sparks interest to purchase something," Oofrish Contractor, head of marketing at Liali Jewellery, said.

Colin Beaton of Watt International agreed that price savings resonate with consumers especially in difficult economic times, thus coupon programs offer high probability of increased traffic, brand awareness and encourage the trial of new products and services.

"They're effective for day to day purchases, convenience, or frequently shopped items such as groceries or fast food where customers are conditioned to search for deals and special offers.

"Retailers lure customers into stores with deep discounts on lost leader items with the hope that the customer will also purchase other items at full price and that driving traffic with coupons will build loyalty for that retail brand," Beaton said.

Revenue but no profit

However, the downside to vouchers is that it means low takings for business establishments. They do little for profitability as they generally offer goods and services at or below cost.

"The key success factor is converting shoppers' expectations from only buying at deep discount to buying at full price. Large numbers of customers who only buy using coupons provide revenue but no profit," Beaton explains.

How often do you use discount coupons? Do coupons encourage you to shop at certain outlets that you wouldn’t have normally considered? Tell us