Don't Discount Coupons

"A prudent person foresees the danger ahead and takes precautions. The simpleton goes blindly on and suffers the consequences." Proverbs 27:12

Today’s economy is looking pretty brutal, and all signs indicate that it is not going to clear up anytime soon. A looming election, a drawn out war, rising home foreclosures and climbing oil prices all paint a pretty ominous picture for the near future in the economy. What are you doing to prepare yourself for weathering the storm? What are you doing different today to make sure that when this economy snaps out of its doldrums, you will not only still be open, but you will be poised to flourish? Are you convinced that what you have always done will pull you through?

Now, I am not calling for radical remodels or a wholesale departure from what has brought you success in the past, but rather a quick self examination to see if there are small things that you could be doing to strengthen your position. As the holidays arrive amidst this troubled economy and the public has less to spend and more to spend it on, what are you doing to make sure that you get your share of those disposable dollars? Have you thought of any ways to draw consumers to you, or to find ways to streamline your operations so that you can find some extra profit dollars in your existing business model?

I was reading the newspaper this morning and 2 coupons fell out of it. Ironically, they were both for restaurants. It set me to thinking about coupons and their effectiveness for operators. I am normally not a big fan of coupons for restaurants….I feel that a restaurant should stand on its own merits and should not have to sacrifice profit in order to keep people coming through the door, but in this economy, I have begun to rethink the value of coupons. We are all dependant on people spending money with our businesses, the cash flow is imperative to sustain business. We need to keep people coming back to us. In a tightening economy coupons can be an effective measure to draw people into your establishment. A number of national chains are obviously starting to implement coupons in their marketing schemes (the 2 coupons were issued by chains), and from what I have read, they forecast continuing to use them until the economy recovers.

What kind of coupons should you use? I would love to hear some feedback from you all about what has and hasn’t worked in the past. I am not a big fan of the $5 off your next purchase coupons. I think they just end up cheapening your product. Instead, I like the give / get type of coupons….the I win and you win variety. I think the spend $25 and get $5 off coupons are the most effective (insert your own dollar values). It insures that the consumers aren’t necessarily cherry picking you and using the coupon to your greatest disadvantage. It gets them spending a decent amount of money before they get to use their coupon, and if they are willing to spend that kind of money to take advantage of the coupon, more often than not they will order an extra course “to take advantage” of the coupon. The whole “what the heck, it is basically free, so let’s order dessert” mentality exists. You get additional sales all around.

Another successful coupon tactic is the frequent buyer card. I, for one, will almost always do whatever it takes to take advantage of a frequent buyer situation. (I frequently laugh at myself for some of the decisions I make to try to capitalize on these opportunities – like driving 15 minutes out of my way to fill up with gas) I know I am not alone in that mentality, I see it all over the place. What awesome drawing power this could be for your establishment. People will return again and again if they see that they can get a future benefit for doing so. Give them a new reason to come back. Let’s say you offered $10 off after the purchase of 5 entrees….don’t you think that you have made enough to cover that $10 coupon without to severely denting your profitability model? How bout $25 off a catering after the purchasing of 3 $200 caterings? Think that might lock up some additional corporate sales?

In order for a coupon to be truly effective for an operator it must provide the consumer with incentives to spend MORE money at your establishment. When you can create volume spending, you have more room to make up the loss in profitability that a coupon can represent. The idea is to lure them into your business, and draw them back again in the future. If you can do that without giving away the farm, you have provided yourself with an effective tool to weather this economy.

Thanks for reading and have a great Thanksgiving!