The very first coupon issued in 1887 was for a free glass of Coca-Cola. John Pemberton invented it in 1886, but the beverage wasn’t selling. Asa Griggs Chandler, who bought the company after Pemberton’s death, enticed pharmacies to distribute his product by offering them two free gallons of Coca-Cola syrup in exchange for the names and addresses of people who lived near the pharmacies. He then mailed them a coupon for a free glass of Coca-Cola.

As more and more consumers came in to redeem their coupon and kept coming back for more, pharmacies continued to buy the syrup. Now Coca-Cola is billion-dollar giant all thanks to its willingness to give out 8. 5 million free drinks through the use of coupons.

To this day, coupons remain a powerful tool for driving retail sales. Here are eight reasons coupons are such an effective sales strategy:

    1. Create Product Demand – As demonstrated in the Coca-Cola example, coupons are a great way to promote new or slow selling products. When Coca-Cola first came out, people were very reluctant to try it, but the coupon for a free glass was irresistible.

      People had nothing to lose by trying it and they kept coming back for more. Coupons can entice customers to set aside their hesitations and try a product they might not have tried otherwise. Not only do coupons create a one-time demand for a product, but they can foster brand loyalty that perpetuates demand.

    2. Coupons Directly Affect Happiness – Who doesn’t like to get a deal? Many people experience a little rush of euphoria when they use a coupon. According to a study called A Rationale For Coupons (If You Need One), coupons can directly impact a person’s happiness.

      The study showed that participants had higher levels of oxytocin, the hormone that is associated with happiness. It also showed that, “coupons were associated with reductions in several different measures of stress in the heart, skin, and breathing in those who received a coupon over those who did not.” It concluded that “those who received coupons were 11% happier than those who did not get coupons.” Happy customers keep coming back and also refer their friends and family to your business.

    3. Bring New Customers In – Coupons are a great way to get foot traffic in your store. According to Market Track, “80% of shoppers would switch stores or brands when offered a compelling promotion.” Coupons give new customers incentive to come in for the merchandise they have a coupon for. Once you get them in the door, you have the opportunity to sell them on your brand and all the products your store has to offer.

    4. Reward Loyal Customers – According to a survey by CFI Group and Radial, of 500 shoppers “93% of consumers consider special promotions as an influential reason for signing up for loyalty programs.” Loyal repeat customers spend 67% more on average than new customers. Coupons are a great way to reward your loyal customers for the purchases they make.

      Having a point of sale system with an integrated loyalty program will boost your sales. A good loyalty program will allow you to sign a customer up quickly, control the information printed on the coupons including the expiration dates, and set limits on redemptions by whitelisting or blacklisting items.

    5. Effective Marketing – Coupons are a great way to market your store and its products. Even if you don’t have a graphic designer on staff to design coupon advertisements for you, you can find easy-to-use software that can help you create eye-catching ads yourself with minimal effort. Coupons make it easy to measure the success of your advertising campaigns by tracking the coupon redemptions for each campaign.

      Tailoring coupons specifically for the needs of the customer is an effective strategy for turning a casual customer into a loyal one. According to Precima’s nationwide survey of shoppers, “more than 80% of shoppers across the US want promotions that are tailored to their needs, with nearly half, 47% of survey respondents reporting relevant offers increase their loyalty.”

    6. Increase Impulse Spending – Coupons, much like other discounts and promotions, elicit a feeling of urgency for the consumer because the coupon has an expiration date. This can lead consumers who use coupons to make more impulsive purchases. Reach & Impact: Inside the Mind of the Shopper, a study conducted by Market Track found that “83% of shoppers have made an unplanned purchase based on a promotion/coupon.”

    7. Gain Valuable Consumer Insight – Tracking coupon redemptions not only gives you valuable insight into the success of a particular advertising campaign, but it also affords you a tremendous opportunity to gain insight into what your customers really want. This can help you make more informed purchasing decisions, as well as influence customers to sign up for your store loyalty program.

    8. E-mail Coupons Increase Transaction Rates - Once customers join your loyalty program and sign up for your emails, you can also track the click through rates to determine what offers and promotions your customers are interested in. E-mail coupons not only increase click through rates, they also drive sales and increase transaction amounts.

Research on coupon trends and strategies conducted by Experian showed that, “eighty percent of online coupon mailings garnered higher transaction-to-click rates and transaction rates than the non-coupon campaigns. Of this group, 78 percent produced higher revenue per e-mail. Furthermore, average order values and transaction rates increased by 6 percent and 48 percent respectively when using e-mail coupons.”

As a retailer you can’t afford not to take advantage of the sales driving power of coupons. Coupons can bring new customers to your store, as well as generate customer loyalty. Having a point of sale system that lets you create your own custom loyalty coupons is essential to the success of your business.