January 22, 2018 Coupon Marketing: How to Convert One-Time Buyers into Loyal Customers
Although estimates of the number of consumers using coupons range from 81% to 96%, all industry studies agree that most consumers respond to coupon discounts. A study from Vallasis, a company that studies shopping behavior, points toward coupons as a tactic for influencing brand and store choice. Since most consumers like to save money and like to think of themselves as “smart” shoppers, coupon marketing can generate excitement and motivate first-time purchases.
Motivating a consumer to make an initial purchase is key to establishing any business, but it’s the consumer who comes back — again and again — to buy from you, who keeps you in business. Repeat customers value what you have to offer, trust you will deliver consistently, and, ideally, enjoy engaging with you and your team. These repeat customers are the ones who become brand ambassadors who will use word-of-mouth to help you build your brand and your reputation.
Importantly, these customers also help your company’s bottom line, since repeat customers spend 67% more and have larger transactions, according to a study by Bain & Company about loyalty in online marketing.
Coupons can get a consumer to buy once, but then what happens? Can coupons help convert one-time buyers to loyal customers? The answer is, Yes. Here are some ideas for ways to use coupons to build a loyal customer base.
1. Encourage repeat purchases by offering discounts on the next purchase
• Increase incentives over time
You can start with a small discount of 5-10% off. If this doesn’t garner a repeat purchase within a set time (a week or two), you can move up the offer scale to 15-20%. You may want to use a 25% cap as a lucrative, last-chance offer.
• Customize offers
Consider personalizing offers to reflect the customers’ purchase frequency. You can do a series that includes a reward after an initial purchase, a “Hello again” message and a “Wow, we appreciate your business” larger discount after a third purchase.
• Create a rewards programs
You can also acknowledge the number of purchases made with a rewards program that discounts future purchases. By increasing the number of “points” a person received with each purchase, you may be able to speed up the frequency of purchases. For example, a second purchase may earn 25 points, a third purchase 75 points, and a fourth 100 points with 200 points delivering a 15-20% discount or some type of cash incentive.
2. Use coupons to encourage returning after an extended period
If first-time purchasers don’t respond to your “next purchase” program. Here, too, you can get creative with how the offers are structured.
• Come-back offers
A “We’ve missed you-coupon” with a motivating discount can re-establish connections with customers. Try to trigger this type of program to the purchase cycle for your product. If the product has a long life-cycle, consider tying the offer to a complementary product. For example, a sofa purchase can be linked with a “Come back coupon” for decorative pillows or lamps and a message to “Bring new color and style to your room.” Shorter life-cycle products can have offers wrapped in reminder messages, such as “It may be time to re-order – here’s 10% off your next purchase.”
• Seasonal celebration tie-ins
Holidays and seasonal changes can also be opportunities to encourage another purchase. A purchaser of spring apparel who hasn’t returned might get a discount offer as summer approaches, for example. A first-time purchaser of baked goods in December can get a reminder coupon prior to Valentine’s Day.
One key to making come-back and seasonal offers effective is to build segmented lists of people who’ve taken advantage of your previous offers. For example, you’d have one list of people who responded to your Christmas offers, and you’d send them a follow-up message for Valentine’s Day. Or you’d have a list of people who took advantage of your Spring offer so you’d touch base with them in the Fall.
3. Using coupons to reward business-building activities
After a first purchase, a coupon can help convert one-time buyers into loyal customers. With this tactic, you reward customers for being brand ambassadors as they support your business.
4. Follow your brand
After a first purchase, you can encourage customers to follow your brand or company on social media and reward “follows” with a discount on their next purchase. For those who follow you on multiple platforms after a first purchase, you can sweeten the offer by providing additional specials.
5. Sharing product information
Similarly, you can deliver a coupon if first-time customers share information about your brand or their purchase with friends and family. Multiple shares could earn them discounts on new products prior to broad release.
6. Publishing product reviews
Ask for a product review after the first purchase and, if your customer publishes it online (or gives you permission to publish), deliver a discount toward a future purchase.
7. Delivering positive word of mouth (WOM).
With more than 90% of consumers relying on friends and family for recommendations, rewarding first-time purchasers who bring you new business can help build lasting relationships. Including a “Where did you hear about us” question during a transaction will help identify customers purchasing based on another’s recommendation. This can trigger a “Thank-you-for-recommending-us coupon,” which you send to the person who did the referring.
More than 90% of consumers rely on friends and family for recommendations. As you develop your plan for converting one-time buyers into loyal customers, here are some general guidelines to consider:
- Think about ways in which you can randomize or stagger the tactics you use. Varying the timing and structure of your offers will help your brand remain a bit unpredictable and keep customers tuned in to see what’s next.
- Include expiration dates on your programs to convey a sense of urgency that inspires customers to react quickly to the rewards. Try to link the expiration date with usage or shopping frequency.
- Use unique coupon codes to help you measure results across platforms. Having different discount codes or coupon codes will help you determine where your offers generated the best response, and which offers were most compelling. This data will help you improve your programs over time.
Getting creative with your tactics, and following these guidelines, will help you avoid having your customers being conditioned to wait for their next discount. Instead, the coupons used in your program will become retention tools for building loyalty.