The Dangerous Side of Deals

With the rise of websites and e-mail marketing, more and more small businesses are offering hefty discounts and coupons in an effort to drum up business, or simply to create a reason to communicate with customers. These businesses carry the notion that delivering coupons will motivate customers to make a purchase (in the often naive hope that sales volume will make up for lost profit.) However, are coupons really what drives customers to purchase?

Take a moment and consider the now bankrupt Borders Group. Members of their rewards program, Borders Rewards, would receive frequent e-mails with hefty discounts (often 25%) as an incentive to stop by Borders and buy some books. These large discounts obviously reduced the profit Borders made on each book sold with a coupon. The thing is, when I got an e-mail from Borders, I was just happy to hear from them and see what new books were out - I didn't need a coupon to motivate me to buy a book from them. Maybe they should have just offered free cookies? The take away is - don't undercut yourself by offering excessive discounts when you don't need to. Just drum up a conversation and remind people you're there - sometimes that's all it takes.