When companies want to promote their business, many use online discounts and coupons instead of the usual above-the-line media or outdoor advertising. The reason is simple – it’s quick, it’s measurable and it has the potential to really take off and encourage sales. What is the most effective way to run an online discount or coupon campaign in an already saturated market such as social media? What are the factors which contribute to the success or failure (or even backfire) of a promotion?

Business Promotion and marketing

One sure-fire way to get your marketing department salivating is a promotion that has the potential to tick all their objective boxes – encouraging sales, raising awareness of the company, promoting social media interaction and collecting customer information. Online discounts (especially through social media) can do just that. In 2012, 88% more revenue was spent on online promotions than ten years earlier.

A recent article in the Financial Times referred to ‘Discount Britain’ – as high street stores slashed prices for early autumn sales. According to a Nielsen study, 33% of all food and grocery products purchased in supermarkets are discounted or on promotion. The consumer is becoming more aware of coupon use; there is no ‘shame’ in it any more, with a reversal of snobbery – more fool you if you pay full price!

Most of the evidence says that a discount from an original reference price (such as a previously advertised price or recommended retail price) will attract consumers the most. There were dozens of studies into this in the 1980s. These were collated (1993) and it was found that these discounts affected customers’ behaviour significantly in 72% of studies.

This is called heuristics and means that customers will do very quick mental arithmetic or use a shortcut in their head to try and work out what the discount will mean for them, without actually working through all the information represented; quite simply, there’s too much to deal with at once.

­­­­­Multi-buy promotions and BOGOF

When it comes to the multi-buy promotion, the majority of consumers simply can’t decipher the actual savings compared to if they simply bought one item. They are more likely to overspend to take advantage of a limited time bulk buy offer.

A buy one get one free (BOGOF) promotion represents good value for many customers, but they are often just as attracted to a coupon offering a buy one, get one 50% off – concentrating on that second high percentage discount rather than the fact they will be buying the first at full price.

A study by Wansick et al (1998) compared single unit promotions and volume purchases. The former increased sales by 125%, but the multi-buy offer pushed sales up by 165%. Interestingly, a study from Manning & Sprott (2007) showed that the most effective bulk buy bundles were the higher volume ones; bundles of 8, rather than 4 or 2.

Promotion time frames

Typically a social-media or online promotion will run for 30 days. The advent of popular online voucher and coupon websites such as vouchercloud might give much shorter timeframes to take up offers. This sense of urgency appeals to the consumer. Statistically speaking, the best day to run a Facebook campaign is on Tuesday, for Twitter it’s Friday and the most YouTube interaction happens on a Monday. According to Yesmail, 84% of Twitter campaigns were run during normal working hours, even though most consumer engagement is early morning (5am to 8am).

Sometimes, however, discounts can backfire and devalue the product on offer; this is especially true for the higher end products and services. This customer is the type that doesn’t want their favourite product having ‘mass appeal’! The key is to be true to your brand, don’t devalue it, don’t oversell it or try and transform it. Work out best and worst case scenarios in terms of take-ups on the offer (can you afford for a 150% take-up on a discount?). There’s no such thing as over-preparing for an online campaign!

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