How to Use Coupons for Your Business

Author: Jonathan Griffit

Jonathan Griffit

Jonathan Griffit

7 min. read

Updated February 21, 2024

Coupons can be a great tool for your business—or a great way to lose money.

It all depends on how smart you are and how profitable you design your coupon to be. You may not realize it, but even on daily deal and coupon sites, you have more control than you might think.

It’s not about how many people buy or use your coupons, it’s about making the most of it—both in terms of profits and getting new or return customers that become regulars (not “one offs”).

Use these tips to create a profitable and successful coupon strategy that will help grow your business.

1. Negotiate with coupon sites

Groupon and other daily deal sites ask you to give a 50 percent discount and give them a 35 percent to 50 percent commission on what’s left. This means when you do a deal with them, you can lose around 75 percent of the regular price for a service or product you sell.

Don’t be mistaken: Groupon and similar sites need your business as much as you need them. You can always try to negotiate—both insisting on giving a smaller discount to clients or a lower commission for them. Explain that you’d really love to work with them, but you can’t afford to lose such a large chunk of your profits, and ask if there is any way they’d consider a lower percentage for their part.

It doesn’t always work, but there’s no harm in trying, and if it does work, you’re on the right track to profitability with a coupon. There are also some sites that offer commission-free coupon creation that you might want to try as well.

2. Bundle products and services

The best way to still turn a profit on coupons is to bundle more than one service or product as a package deal. It can be combining a high margin product with a lower one, or a package that includes a series of visits.

This will also allow you, in certain cases, to ask for a higher price because it’s harder to compare prices of bundle deals with other offerings out there.

3. Keep ‘em coming back

Businesses that use Groupon or other coupon sites think that they will get a bunch of new clients that will keep coming back after they use the coupon. But a study by Rice University clearly showed that 87 percent of people claim that they won’t return to the same place—they’ll just look for the next deal and move on.

You want to create loyalty, and it’s not just about giving a great service—it’s about creating a real connection with a few visits or by offering anyone that uses the coupon some kind of deal or discount if they book their next visit on the spot. You can also follow up the service with an email asking how it was and offering them a coupon or deal for their next visit.

Make them feel special—give them great service and follow up with a good deal. If they stay with you, even if you lost some money on the initial coupon, it will be worth it in the long run.

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4. Pick the right time

Sometimes all you need to make a coupon profitable is to make it valid on your “slow” days or hours, or simply not available during your peak hours.

For example, if your business is empty during the “dead hours” of 2 to 4 p.m., make an “afternoon delight” coupon; if morning is your slow time, make a “rise and shine special” to help bring in new customers during your slow morning hours. This speaks to audiences that might be available at these times, and also ensures that you don’t neglect your existing clientele or profits by having to accept a customer with a coupon instead of one of your regulars at peak time.

5. Have a good excuse

It’s very important to have an “excuse” for the coupon, or a reason that it’s being offered—it could be limited edition, based around launching a new service or product, a certain holiday, or a business anniversary.

If you make a habit of offering coupons without an “excuse,” it might send the message that you’re “in trouble” and need to drum up business. It also might create expectation that this is the price they’ll always get. Having a reason behind offering a coupon will make clients much more accepting of the full price when the special time is over, and it will be easier to turn them into profitable clients.

6. Remember that less is more

Groupon and similar sites want you to offer as many coupons as possible, so they make as much money as possible off your deal. However, it might not be the best thing for your business to offer a large volume of coupons, because it might affect your existing clientele or business if the coupon ends up not being profitable.

It’s better to offer coupons in small “exclusive” batches. Test out what works and what’s profitable, and you can always repeat a successful coupon.

7. Detail specific conditions

It’s always better to keep your coupon working for you by setting conditions.

For example, limit one per client or visit, only for the first visit or new clients, only above a certain purchase size, and so on. This will ensure that you are making enough to justify the coupon.

8. Keep in touch

If you really want to turn coupon users into regular clients, don’t miss the opportunity to add them to your community. Make it a condition that in order to redeem the coupon, they must provide their email and phone number.

Once you have their details, you can send them scheduled coupons and deals for special occasions like their birthday, a three month since their last visit coupon, a one year anniversary of their first visit, and so on.

9. Make friends with their friends

To bring in even more customers, try offering a service for two people or more asking the buyer to “bring a friend.” This makes them look good to their friends while getting a good deal for both of them, and also gives you great visibility with a whole new potential client base that didn’t even purchase a coupon.

Another friend-brings-friend option is, when someone redeems a regular coupon (especially a one-off deal), you can give give them a coupon to gift to a friend instead of one for themselves. This gives them something nice to share with a friend, turns every customer into an “ambassador,” increases their loyalty, and potentially brings you another new customer—without damaging your brand.

10. Don’t forget cross-marketing

If there are businesses around you or that you know of that provide complementary services to your target audience (make sure they aren’t competitors!), a very cheap and easy way to cross-market is to strike a deal with them that you will offer your clients a coupon for their business and vice versa.

This opens customers’ eyes to other services that suit them, makes them feel taken care of, and helps grow your potential reach extensively. The other businesses end up becoming trusted referrals to your business, because clients often ask hairdressers to recommend beauticians, or nutritionists about personal trainers, and so on.

11. Do the calculations beforehand

Jot down a few calculations estimating what will happen in different scenarios.

Potential scenarios include whether you sell all coupons or just a few, if clients return or not, if they come at a certain time of day, and so on. You can use a pen and paper, a spreadsheet, or even a coupon calculator.

Coupons have been around for many years in many forms, and there’s a reason they’re still popular. They can be a great tool to help grow your business, as long as you get creative, have some fun, and do it the right way.

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Content Author: Jonathan Griffit

Jonathan Griffit started his first company at the age of 19 and since then has founded and been a part of several internet and mobile companies, as well as gaming and AI. He consults in UX and is passionate about helping companies grow and succeed.