Digital coupon usage is on the rise, and small businesses should take notice.
This year, 111.7 million adults are expected to redeem a digital coupon or code in the United States. That number is expected to grow to 124.4 million by 2016, according to eMarketer.
Understanding how to create compelling offers and motivate customers to buy via digital coupons can help boost both online and offline sales, say experts.
"Digital coupon usage is definitely going to increase over the next five years," with the growth largely driven by smartphone and tablet users, says Krista Garcia, senior retail analyst at eMarketer in Manhattan.
While digital offers are gaining momentum, that doesn't mean their print counterparts are obsolete. Freestanding inserts, or FSIs, (those coupons that come in the Sunday newspaper) represented 91.8 percent of all coupons distributed in 2014's first quarter and accounted for 44.4 percent of all redeemed coupons, according to Travis Lewis, president of Inmar Promotion Network, an arm of North Carolina-based promotion processing and management firm Inmar.
Still, Lewis notes, "Digital coupons, if deployed strategically, are excellent tools for acquiring new customers as well as building long-term brand loyalty."
KNOW YOUR AUDIENCE
This is a key, says Craig E. Yaris, president of digital marketing agency Social Ribbit in Plainview. Understand who the people are in it and what they're purchasing, so you can hone your offer, he says. "Just blanket couponing nowadays isn't going to work."
Appeal to those in your audience with offers they actually want to receive, says Steven Wilson, president of Strategic Marketing Works in Babylon, a marketing agency that has a strategic alliance with Social Ribbit. "Offer different types of coupons depending on the audience," he says.
CONSIDER A/B TESTING
Test one coupon on a small segment of your audience, and another on a different small group before choosing which one to roll out on a larger scale, Wilson says.
Lorin Bocian, marketing manager for the universe knows inc., in Plainview, which sells inspirational apparel and gifts, has tested different offers. For instance, the company has found that offering a free bookmark with a purchase isn't as much of an incentive to customers as a free inspirational mug, says Bocian, who is a client of Social Ribbit.
"You want to make sure whatever you're giving them is enough of an incentive to buy," she notes, adding she's found offering 15 percent off an item gets greater response typically than a 10 percent-off offer.
The store has done both specified dollar amounts and percentage-off coupons, says Bocian.
DEAL IN DOLLARS
A recent infographic by Vouchercloud reports that 31 percent of coupon users are most interested in deals that offer a specific dollar amount off their purchase rather than a percentage. And 93 percent are very likely to use coupons they receive via email, according to the infographic (see it at bit.ly/1tDJi5F).
"I definitely think that email is one of the top ways people like to get digital coupons," says Yaris. Just don't overwhelm them, he notes. "Sometimes less is more."
BE READY TO DELIVER
Also, make sure that with any offer you have the capacity to support it.
"As with all coupons, appropriate budget allocation for digital coupons is critical," says Lewis. Businesses can monitor ongoing digital coupon redemption activity and compare actual redemption against what they forecast, he notes.
If you're new to digital couponing, start small and don't jump in with any extreme offers, adds Garcia. "Don't make any promises you can't deliver," she says.