Saturday, September 23, 2006

Friday, September 22, 2006

Coupon Math

For those of you trying to build a great brand and the idea of coupons comes up, here is some good old arithmetic to learn you.

Alleged Coupon Math

Come up with promotion + Come up with graphics for ad + Buy ad space = More Sales, More Customers, More Sales from More Customers More Often. If you want to get business, you should advertise. (Written by anyone selling ad creation services or ad space)

Actual Coupon Math

Spend money so that your customers can give you fewer profits and come back again only if you spend more money so that they can give you fewer profits (x Infinity) = Your brand's value decreases because by couponing you are telling customers that you don't believe that what you sell is worth the full price. And you look desperate.

There are a few things you can do to build your brand and attract customers to your brand. Couponing is not one of them. Your coupon might as well say, "the next time you are at the bank, give them this coupon and they will transfer money from me to you. I really didn't need the profits anyways. Now that you don't respect my brand's value, I'll be lucky to ever see you again. Come again soon! Enjoy your free money. I paid money to tell you to take my money."

Advertising is not for the new, it's for the old. The established. You advertise to maintain a strong brand position in the customer's mind. Whatever you do, don't advertise. Nobody respects an advertiser who hasn't already earned your respect. You probably cannot find a company that built a respectful, profitable brand by couponing. Don't add yourself to that list unless you want to execute your brand.