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The Future of Couponing – from Affiliate Marketing Tool to Sales Enabler

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While in the western markets, both consumers and brands have mastered the art of couponing, Indian counterparts are now starting to warm up to the concept. Couponing has been a very popular strategy used by western brands to generate sales, whereas, consumers have made it an integral part of their shopping routine. The use of coupons to generate sales is based on the concept that coupons attract consumers to a particular product and entice them to buy.
Being a price sensitive nation, India has a huge fascination with discounts and takes immense pride in the power of bargaining. Discount deals, loyalty offers and bulk buy pricing are common business practices that beget demand for new stock, clear inventory, attract new customers and reach targets during a slow sales period. However, these techniques are being used as “affiliate marketing tools” or “support functions”, whereas they have the potential of being one of core “sales enablers”, if positioned right. Coupon platforms, that have been successful in seeding the concept of couponing in India, have the potential to be business enablers, than just affiliate partners.
Couponing players prove to be a high Return on Investment (RoI) distribution channel as the intent of purchase is high compared to the conventional sales promotion platforms. The players cater to two set of target audience – existing customers and new customers. When a brand’s existing customer comes to a couponing website or app, user is looking at saving money while making a purchase. The availability of a discount or offer on that brand helps seal the deal and further adds to brand loyalty and customer stickiness. As per a report by Inc., it costs a business about 5-10 times more to acquire a new customer than it does to sell to an existing one — and on average those current customers of the brand spend 67% more than a new one.
Couponing platforms are also more cost-effective and ROI driven than traditional channels when it comes to customer acquisition. A new customer, who comes to a couponing platform, is clear about wanting to get the best deal for a particular category of product, if not a particular brand. If a brand’s offer is exciting and relevant enough, the customer is likely to choose it over its competitors. The best part about using couponing platforms as sales channels is that the brand is only charged if a purchase is made and not merely for its presence on the platform, unlike other sales promotion tools. The “low cost” promotion becomes an additional benefit as the presence leads to brand recall, even if the transaction is not made. In the fiercely competitive retail market, the couponing players serve as an optimum marketing and promotion platform for mid-size and small brands that are striving to not only survive but also compete with large brands.
Couponing as a strategy if used correctly can add to brand loyalty while increasing the basket size of consumers. In order to maximize the returns from these couponing platforms, brands need to strategically plan the positioning of the coupons/deals. The deals have to strike the right cord with the consumer psychology, shopping preferences and context of purchase.
With redemption of coupons, brands can decode the psyche of consumer buying and behavioural patterns. The wise use of these insights will guide future offers to achieve better results. The idea is offer deals that make the customer feel that he/she is reaping maximum benefit on a relevant purchase.
Every coupon/discount should be designed to meet an agenda. Every deal should serve a purpose for the brand as well as the consumer. Offering a certain amount off on a product for a limited period encourages customer to try out a new product/service at an affordable price. Percentage offs are best used when the brand needs to clear off old inventory. Another way of upselling of products is to bundle complimentary products along with the purchase. Bulk discounts or offering extra benefit on higher amount of purchase are used to increase the average order value and quantity. In order to make the deals more personalized and lucrative, curated offers based on customers’ past shopping transaction or directed towards a certain customer category can be created. Offering discounts on the second product based on the purchase of first, is a creative way of cross selling relevant products. Capitalizing on seasonal or topical purchases through deep discounting helps brands sail through cut throat competition.
Consumers seek best value from each purchase they make and this ties it back to their overall experience with the brand. The experience then forms the basis for brand loyalty and customer retention. Amidst the ongoing online-offline war, the consumers expect a combination of value, price, relevancy and accessibility from brands. Couponing players play the role of a business channel that enables brands to offer this desired mix of elements to consumers. The concept of couponing fits perfectly well with Indian consumers’ psyche and requirements of the dynamic market hence has the potential to become a business tool that forms an integral part of the sales and distribution network of a brand.
About the Author: The author is COO of CouponDunia, one of the India’s largest marketplaces of discount coupons & offers that consists of regularly updated coupons from top Indian online merchants such as Flipkart, Amazon, eBay, Myntra, Jabong, MakeMyTrip, GoIbibo, and Bookmyshow among many others.

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