Pros and Cons of Couponing

While couponing can get you discounts, it is not always the best idea for saving money. In fact, some couponing strategies could end up costing you more.

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Before you dive into coupon clipping or downloading, make sure you've got a plan for your shopping trip and what you'll do with your savings.

What Is Couponing and How Does It Work?

Couponing is a strategy often used to save on groceries, home products and personal items to avoid paying full price. By using a paper coupon, promo code online or store discount program, you may get some costs knocked off the top of your shopping bill. But estimates vary on how much you can really save even when dedicating a lot of time to couponing.

Some people spend time collecting coupons in multiple formats and from different sources, including store and manufacturer coupons in paper circulars, rebate sites and online apps.

The average family saves about $5 to $10 per week with coupons. But one study suggests coupons offer a yearly savings of over $1,400.

How much you save with coupons depends on how much time you put into it. Average couponers who spend about 10 minutes a week save around $7 per week.

Pros and Cons of Couponing

While couponing doesn't have to go to the extremes you may see on TV shows and online, it can be beneficial for many families. However, the practice isn't without its downsides.

Pros of Couponing

Couponing is popular for many reasons, including:

• Price savings: The obvious pro of using coupons is saving on your purchases. If you can find coupons regularly for items that you planned to purchase already, you'll have valuable savings. Similarly, if you learn to strategize by combining manufacturer and store coupons, you could double your savings.
• Options to buy in bulk: If you're looking to stock up on items that will last, coupons can make it possible and affordable.
• Intentional shopping: Couponing also forces you to shop intentionally. You must have a plan to maximize your savings, which means you're less likely to go into the store and make impulse purchases. For some, couponing can be a strategy that helps them stick to their budget.
• Access to new products: Manufacturers may release coupons for new products. Browsing through coupon sources could give you early access to these products at lower prices.
• Ability to donate: Some couponers use their strategies for social good. If buying one shampoo that was already on their list could get them another free, they'll use the coupon and donate the extra item to someone in need, food banks or shelters.

Cons of Couponing

Even though couponing can save you money, there may be some downsides:

• Not always the best deal: Just because a product is discounted doesn't mean you're getting the best deal. Coupons for brand-name items may still leave you paying more than buying the store brand, for example.
• Storage requirements: Figuring out what to do with all the items you save money on with couponing can be a challenge. Serious couponing often leads to stockpiling, which requires space to save the items or eventual waste.
• Reselling challenges: Some couponers realize they can't use everything they receive with coupons, so they begin to resell. But reselling presents its own challenges. Some coupons are labeled "Not for Resale" so you're not supposed to resell items purchased with the coupon. You'll also have to report any income to the IRS and, if you deal with food products, you'll have to safely store them and monitor expiration dates.
• Limited dietary options: Couponers often find that coupons for food are mostly available for highly processed foods. They may not always be compatible with your specific diet. You may feel constrained by what is available for food-related discounts.

5 Places to Find Coupons

If couponing still sounds worth it to you, get familiar with the different methods so you can find the best deals for yourself. Consider using a variety of coupon sources including:

1. Paper coupons: You may find paper coupons in circulars delivered in print newspapers or provided in flyers at the store where you're shopping.
2. Store apps: Many stores offer coupons and discounts if you download and use their apps to shop.
3. Rewards programs: Rewards programs at stores often provide you with a digital barcode or physical rewards card to swipe at checkout to receive discounts off your total.
4. Online promo codes: When you're shopping online, coupons are often provided as promo codes. These may offer free shipping, a percent off or buy one, get one discount.
5. Rebate websites: If you don't have the time to hunt down coupons for everything you want to buy, consider rebate websites. When you use these websites, either by shopping from their portal or by installing a browser extension, they find the best coupons for your purchase. They may also provide percentages of cash back or other reward point systems to help you save.

Tracking down coupons can be a fun hobby, but remember if you start spending a lot of time on it your savings may not be proportionate to that time. Some couponers may find picking up some gig work or even a part-time job could earn them more money than what they can save by spending hours couponing.

The Bottom Line

Coupons for things you already planned to buy are like free money, so take advantage of them when readily available. Getting a discount on your groceries or other shopping can help extend your budget.

Looking for discounts beyond your weekly shopping can also help you save. You can use Experian BillFixer&#; to negotiate your common bills such as cable, cellphone, internet and more. Get paired with expert negotiators when you try a free seven-day trial of BillFixer to see how much you can save.

Are coupon codes worth your time? 80% of consumers are more likely to shop from a new brand if it provides a discount coupon, and that number jumps to 89% for millennials.So, yes, in short, coupon codes are an effective marketing tactic...But there&#;s a caveat.While coupon codes are desirable from a consumer&#;s perspective, there are numerous downfalls to this marketing tactic that can have an ill effect on your brand.I put together this article to help you weigh up the pros and cons of coupon codes and make an informed decision about whether they are right for you.

The Pros of Using Coupon Codes

Let&#;s start with the positive side of things - the pros.As I mentioned in the introduction, coupon codes are extremely popular with consumers, especially in the eCommerce industry. They&#;re also an excellent way for brands to engage new audiences, re-engage stagnant customer groups, and create a spike in sales.Here are the pros of using coupon codes:

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Attract new customers and increase revenue

Consumers are naturally pessimistic and distrust brands before purchasing from them. Building enough trust with a prospect to convert them into a customer can be time-consuming and costly.Discount coupon codes can accelerate the conversion process by reducing the perceived financial risk of transacting with your business. They also tap into buyer psychology by creating a feeling that the customer is getting a good deal.For example, here is a coupon from Ugmonk that offers new prospects a 15% discount on their first order if they make it within 48 hours. The code is unique and expires automatically, which is a smart use of urgency to inspire action.

Ugmonk Coupon Code ExampleDepending on where you distribute your coupon codes, they can also generate traffic from untapped sources you may have never thought of. For example, there are numerous coupon listing sites, and people often share coupons with friends and family on social media. This new traffic further contributes to the conversion of prospects into new customers.You may also find that new customers purchase other non-discounted products or services from your business, creating an ancillary revenue stream from the coupons at a higher margin. In fact, 38% of couponers buy something they don&#;t need.All-in-all, coupon codes are a great way of attracting new customers and increasing revenue in the business. However, that comes with complications&#; more on this in the cons section of the article.

Gain market share

Coupon codes also provide your brand with a competitive advantage. If you compete on price with other businesses in your industry, a coupon code could be the difference between a sale and someone shopping elsewhere.You can use a coupon code strategy to gain market share in a highly competitive industry quickly. You&#;re undercutting your margins to draw shoppers away from your competitors and hold onto them in the long-term.The lifetime value of the customer subsidizes the short-term loss of profit. If, of course, you provide a high-quality product and a great experience.

Re-engage current customers

It&#;s much easier to convince a happy customer to buy from you again than it is to build trust with a complete stranger. However, it&#;s also very common for a customer-to-brand relationship to be a standalone transaction that results in no further interactions.Finding ways to re-engage with your customers is critical because all of the hard work has already been done. They are your most profitable forms of conversion.One way to do so is by sending current customers an exclusive coupon code. You may choose to send this to cold contacts who haven&#;t purchased in a while or use it as a tool to reward loyal customers. Either way, it is a smart way of re-engaging and creating new buying opportunities for customers.This from Marley Spoon illustrates how coupons can be used as a way of re-engaging cold customers:

Marley Spoon Coupon Code Example

Capture data and enable marketing personalization

Data is all the rage at the moment, and from a marketing perspective, it&#;s not surprising. 80% of online shoppers are more likely to buy from a company that offers a personalized customer experience - data enables you to provide that personalization.If generated as unique codes, coupons enable you to track their redemption and each user's behavior. This information will help you personalize the marketing experience for each individual in the future by using data about which topics and products interest them.

Track affiliate and influencer campaigns

Coupon codes are often used as a means of tracking brand ambassador or influencer campaigns. Not only can you personalize the experience for each influencer or affiliate, but you can also trace all code redemptions back to the source and determine an ROI from the campaign. You&#;ll also find that influencers like to offer their audience something that is at least perceived to be exclusive.This is a tactic regularly used in TV or outdoor advertising, too, where a campaign-specific coupon is generated to help brands track conversions.

The Cons of Using Coupon Codes

At face value, coupon codes sound like a no-brainer - especially if you're trying to grow market share or generate a spike in revenue. But there are also several vital downsides you need to be aware of.Here are the cons of using coupon codes:

Cut into your profits

The most obvious con to using coupon codes is that they cut into your profit margins. Depending on what you sell and how tight your margins are, this can result in minimal profit or, in some cases, a loss.When you take into account advertising and promotion costs, as well as operational costs such as shipping and handling, from a purely financial standpoint, coupon codes don't make a lot of sense. That is unless your site and follow-up marketing are well-optimized for up-sells, cross-sells, and ancillary revenue so that the lifetime value of a coupon customer makes the investment worthwhile.

Reduce the value of your product or service

On top of the financial hit you may take in the short-term, coupon codes can also have an unwanted effect on your product or service's value perception. Simply put, if someone pays less for a product once, they're unlikely to want to pay more for that same product in the future.The perceived value of your offering is now less than what it retails for, meaning that you could fall into the trap of always discounting products to get sales. This cannibalizes revenue in the future and creates an expectation from your customers that discounting is normal. The trick to overcoming this challenge is to run coupon campaigns and provide discounts infrequently so that customers don't get used to it.

Be exposed to fraud

Coupons are synonymous with fraud. If you choose a generic coupon for a campaign, anyone and everyone could guess it without meeting the redemption criteria, such as giving you their contact details. You may also find that the same person uses the code over and over again under different aliases.

Single-use vs generic coupon codeNow, while you want a coupon campaign to be shared with friends and family, you don't want a situation where thousands of people are getting discounts without providing data you can use in the future. It's also concerning when coupons are listed on coupon sites and other online forums without your knowledge because once it's out on the world wide web, you lose control of your brand reputation.Single-use coupon codes that are automatically personalized for each person can overcome this challenge.

Using Coupon Codes the Right Way

So, are coupon codes good or bad?Considering the pros and cons mentioned in this article, the appropriate use of coupon codes is not a simple argument.For some brands, they simply won&#;t make sense. But for others, they can be the lifeblood of a successful marketing campaign.If you're planning a coupon campaign, I'd strongly advise using unique codes rather than generic codes that anyone can use or distribute. A unique code is designed for single-use, which means that every user has their own code, and it can't be re-used or duplicated.Of course, creating so many codes for a campaign requires technology! ShortStack makes unique code distribution simple and intuitive.

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