There is a right way to do coupon advertising, and there is a wrong way to do coupon advertising.  The one will bring you more business and profit.  The other will waste your money and time.  And the single distinction between huge profit and huge waste is whom. 

Let me explain.

The right way is to give your coupons to the people who will not otherwise buy your products.  When you give coupons to these potential customers, you help turn “potential” into “actual”.  Your company receives more sales in the short term and a broader customer base in the long term.  This approach can yield healthy return on your up-front investment.

The wrong way is to give coupons to the people who will buy your products without coupons.  When you give coupons to loyal customers, you have the same number of sales with lower profit margins per sale.  The approach is investment without return.  That’s bad.

Fatal, actually.  The risks of doing things the wrong way have long worried marketers.  “The effectiveness of coupons as a promotional vehicle has remained a controversial topic for at least two decades,” write scholars Jorge M. Silva-Risso and Randolph E. Bucklin.  The article published by Journal of Product & Brand Management later added, “One concern expressed by managers is that coupons are redeemed predominantly by loyal consumers who would have purchased the brand in any event.”

If you do not target your promotional coupons, your money might be gone with the wind forever.  But, if you get those coupons in the right hands, your money will sprout wings and fly back into your bottom line.  Targeting turns waste into profit.  It all comes down to “who”.