The coupon code

​Couponing seems to have reached massive proportions, thanks to a variety of factors: With the recession prompting everyone to seek out bargains; the growing presence of daily deals sites such as Groupon and LivingSocial; and the instant gratification of email, texting and social media, more consumers than ever are getting into—and passing along to friends—coupons in some form or another. Shoppers saved $3.7 billion with coupons in 2010, according to the Annual Topline U.S. CPG Coupon Facts Report—a 5.7% increase from 2009. Meanwhile, with TV shows such as Extreme Couponing and the ever-growing list of sites devoted to obtaining coupons for local and national merchants, discounts will undoubtedly continue to rise. “Coupons have become extremely popular, and the current recession has helped them rise in status to something consumers enjoy talking to each other about,” explains Blake Shipley, founder and CEO of CoupSmart in Cincinnati. “The potential for a deal provokes an instant reaction.” 

However, if you’re a pizzeria owner, whether you currently offer coupons by the truckload or refuse to discount at all, you should become more aware of ways in which coupons can best benefit your business. We talked to several marketing experts to find out how to structure and track your coupons, and decide what type of coupons are right for your business. 

 

“Coupons are great for getting new customers in the door, but a potential pitfall is overpromising and under-delivering. If your coupon is going to draw in a large customer base all at once, employees must be ready for that rush. For freebies, place a limit on the coupon or make the deal time-sensitive. Consider the time of day and week; if you have thousands of customers in your database, send text message coupons on slow days only, for example. “QR codes on coupons are extremely easy to use and track; numerous websites have the ability to generate codes and track the analytics. You can then determine which codes will be used for which types of materials—flyers, box toppers, etc. Also, get to know what your customers want by asking them what specials/deals they prefer; use social media sites to post questions and interact with your customer base, and respond to their suggestions.” 

–Kelly Mazurkiewicz, creatologist, Motion Marketing & Media, Lansing, MI

 

“Keep in mind the FAN objectives: increased frequency, higher average sale, and attracting new customers. What are your major objectives? For box toppers, takeout bags and in-store, you want to increase frequency and average sale, so these will need different coupons than new customers. To increase average sale, promote add-on items (appetizers, salads, desserts) and higher-priced items. Get people to buy higher-priced per-consumer entrees: If a family of four splits a $14 pizza, each person spends $3.50—less than if they buy four sandwiches at $6 apiece. Plus, if your menu is extended, you want to get them in for different items, so that they might come twice monthly for your pizza and another time for your sandwiches or pasta. New customers, on the other hand, should be driven toward trial with a universal coupon (good any time/day on any menu segment), such as $5 off any order. For lazy customers, give deeper discounts for 60- or 90-day than you do for 30-day. 

"Keep in mind your food costs and your marginal contributions. If you sell a $14 pizza with a 30% food cost, you make $9.80; however, ribs might have a 50% food cost, but if you sell three orders at $18 apiece, you’ve made $27. Also know your demographics—you don’t want to offer huge meal deals in areas where the average household is a single person. To current customers, distribute catering coupons. Finally, dollar-off (in any amount) coupons are better than percentage-off; they’re easier to figure out and seem like a better value. To track results, put a code on every coupon, always in the same place. The code can have six digits: the fi rst two for the vehicle or medium (“10” for lazy customers, “11” for new homeowners, “62” for box toppers, etc.), the next two for when it went out (01-53 to correspond to the week of the year) and the final two for the offer (such as “03” means $3 off). This way, you can track which message got the best results in which medium, when the best response was, and where people are looking.”

–Adam Mrowka, founder, Impact Worldwide, Lake Zurich, IL60 PMQ Pizza Magazine – The Pizza Industry’s Business Monthly

 

“Coupons can draw a vibrant customer base to your business. The key is to ensure that you offer a deal your business can afford and that you can control (i.e., reduce fraud); otherwise, you risk discounting yourself out of business. Tally up the number of redeemed coupons each campaign generates to see what works best; keep spreadsheets to track this over time, and train staff to keep the redeemed coupons. Some emerging technologies automate this process and are now tracking coupons on an individual level (i.e., the exact person who viewed, printed and redeemed a coupon). Ultimately, the coupon you offer depends upon your goals, but, most importantly, keep it simple and compelling. Your customers need to understand it, and it needs to be worth their time to act on it.”

–Blake Shipley, founder and CEO, CoupSmart, Cincinnati, OH 

 

Operators’ Opinions

We posted a thread about coupons and deals sites in PMQ’s Think Tank forum (PMQ.com/tt) and got this feedback from operators:

“Coupons are a necessary evil in my area. Unfortunately, I feel the need to coupon heavily to a) get people in and b) keep up with competition. As far as Groupon goes, did it and hate it. I definitely value building customer base and attracting new ones, but not at a loss; Groupon is a promotion at a pretty heavy loss.” –anselmospizza

 

“Coupons are almost a necessity in my area. I try to get around that fact by a) turning the coupon into a package deal, forcing the customer to spend more than the norm to get a discount; or b) discounting or giving away a free item that is typically not ordered (like a dessert item or low-cost item). I do not give discounts directly off my pizza, and I almost never give away free breadsticks, as 50% to 60% of my customers order them already. While I do not believe Groupon is the way to build a successful business, it is still a useful tool if you use it in the correct manner. To me, it’s advertising—plain and simple. I’ve done it twice now, 16 months apart, and I consider both times to be a success. While some (or maybe even a majority) of the Groupons sold went to bargain shoppers, their ability to reach roughly 200,000 email addresses far exceeds my ability to reach even a fraction of that. While I break even on the food costs, and incur a small increase in payroll during the initial Groupon week, that’s no different than the costs I incur doing a 10,000-piece mailing and getting a 2% to 3% response rate. Groupon is not for everyone. If you are a busy store running 75% to 80% of your max capacity or even max out on the weekends, why bother? But for those who are still growing (or are in the slow season) and can handle the influx, I say go for it.” –SirSilk

 

“When couponing, look at three factors: customer capitalization, inventory cannibalization, and brand degradation. The first factor refers to whom you send to; if you have 1,000 customers on your list and send coupons to 500 of them, and 10 come in; and, of the other 500, five come in, you can assume that half of that first group might have come in anyway, and a 50% rate is not beneficial. The second factor refers to timing; if you’re giving out coupons and your restaurant is already packed on weekends, that coupon may be costing you customers who would have paid full price but don’t want to wait 90 minutes for delivery, for example, due to customers visiting with coupons (track the times and days coupons are used). In these cases, you might want to make coupons good only on specific days or times. And the third factor relates to brand degradation, which is hard to measure. If you’re competing on price, you should be couponing all the time; and to obtain new customers, coupons should be more aggressive.” –Edward Nevraumont, cofounder, Restauranteers, Seattle, WA

 

“If you use a daily deals site, capture the contact details of those who redeem the offer so you can market to them directly after the deal is over. Also, to expand your customer base, offer ‘bring a friend’ discounts or gift certificates that can be given to first-time customers. Incentivize staff to ask ‘Are you on our email list?’ so that you can get information for sending out future deals. Also, do the math before you offer any discount or deal—can you afford it?” –Philippa Gamse, author of 42 Rules for a Website That Wins, Capitola, CA

Tracy Morin is PMQ’s managing editor.