Can you achieve brand loyalty through discount vouchers?

Discount vouchers

We often work with small businesses who are service providers. They are quite often faced with the challenge of how to attract not only first time customers but with how to retain those customers and gain long-term brand loyalty.

When marketing ideas are being discussed, we’re often asked our opinion about discount voucher sites. Will they build my customer base? Will they result in long-term brand loyalty?

When these sites come knocking on the door it is quite often hard to resist the promise of a large influx of customers, but does this create more harm than good for your brand and business?

How do discount voucher sites work?

You offer your service at around 50% of the price you would normally charge. When a customer redeems that service, you get 25% of that fee and the discount provider gets the other 25%. E.g. You provide a discount voucher for a hair cut. The regular price is $100, the customer pays $50, $25 will go to your business and the other $25 will go to the discount provider.

At the time, it may seem like free marketing for your business. However, quite often the high discount means that there will be a cost to the business by providing the service. Do the calculations and see how much it is really costing your business. You may be better off putting the money you spend towards more targeted marketing efforts.

Is a discount voucher user your ideal repeat customer?

The biggest challenge for small service providers is getting customers through the door, once this is achieved, you have a greater chance of attracting them back as a repeat customer.

This works in theory however in general the discount voucher consumer is looking for a bargain. They will most likely trawl the Internet for the next deal and jump from restaurant to restaurant. These customers are trialling your business because of a discount, without that discount they may never have considered it. It will be extremely hard to win back this customer as they will already be planning where to get their next discount.

While this is true for most consumers it may not always be the case. By offering a high level of service you are giving your business the best chance at retaining customers, keep in mind conversation rates may be low.

Will you achieve long-term brand loyalty?

It is important to understand who your ideal repeat customer is. What motivates them to purchase? What will bring them back to you? As a generalisation it will be hard to attract discount voucher customers back to your business because there will always be another discount for them to use. If you have a clear understanding of your consumer and the market, you will be able to determine if this marketing method is right for you. There are as many success stories as there are horror stories — so do some research first.

My experience

Having purchased and used my fair share of discount vouchers, my experience has been a bit of a mixed bag. The service provider usually doesn’t have the manpower or space to deal with a large influx of customers at one time. This usually leads to long waiting lists for bookings (my record is 8 months) and when you finally do get to use your voucher, the staff seem to be annoyed with you if you identity yourself a discount voucher user. It’s hard to blame them, they have probably been run off their feet for months ushering people in and out of the business. The problem with this is, they have missed a crucial touchpoint to covert me to a repeat customer. The booking experience and my first encounter with the business is usually enough to turn me off ever going back again. This is a huge area of opportunity for businesses who offer discount vouchers.

You know the pros and cons and still want to give it a go?

If you decide to offer a discount voucher here is my advice for your best chance at attracting customers back as repeat customers:

• If you’re adamant on trying this approach for your business work out your own costs and figure out just how much it is costing you to acquire those customers and then compare it to other marketing channels. Is there another channel that will get you more cut through.

• Treat it like any other marketing exercise with related budget implications, it is not a free way of attracting loyal clients.

• Ensure you have the manpower and space to handle an influx of customers, set clear guidelines as to how many vouchers you will be offering and plan the logistics before you go live.

• When discount voucher customers call to book, ensure you put your best foot forward. Don’t sound annoyed that they are a discount voucher user and treat them like you would any other first time customer.

• Provide the same kind of experience that you would to any other paying customer.  If you’re going to have any chance of winning them back you’ll need to delight the customer with high service standards.

• Offer the customer a reason to come back. Use the opportunity to promote to the customer again by offering them a reason to return. If you can attract a customer twice chances are you may see them again.

I have experienced about 10 different discount offers, the only one I would consider going back to was a lovely hotel in Apollo Bay. The others were unmemorable and underwhelmed me by their service offering.

I’m not a consumer that lives by discount vouchers; I give them a go every now and then. When I want to count on great service I stick to the places I know and love, at least I know I won’t be left disappointed.

Have you used a discount voucher website for your business? Did it result in long-term brand loyalty?

Gemma Dittmar

Director of Brand Projects

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