In a general sense coupons are a great way to boost sales and generate buzz around a particular product or service. A successful coupon campaign can boost the bottom line and can even create or expand a loyal customer base. However, with all of the potential benefits of a coupon campaign, there are disadvantages as well, and therefore coupon promotions require careful planning and researched strategy to ensure success.
Coupons are widely accepted in retail sales, but will they work in your service drive? There are several case studies of dealerships that have successfully implemented service coupon campaigns to drive traffic and increase sales, so we know it can be done. For the purpose of this article, let’s examine some advantages and disadvantages to using coupons in your service department.
Advantages of Coupon Promotions:
- Attract New Customers
Attracting new customer is a vital part of growing any business. Sometimes all it takes to get them in the drive is an enticing offer. Case-in-point, if you offered free oil changes to every customer, all the time, you would see a huge increase in traffic. Of course, offering free services is not a long-term strategy, but the concept illustrates a point. Make an offer good enough, and you will attract new customers.
- Reward Existing Customers
Coupons are also a great way to reward existing customers. VIP programs are a very effective for your most loyal customers by offering discounts on services they use regularly. Never take for granted that your customers continue to come to you over and over. Many of them could be one enticing coupon away from heading to your competitor. A VIP coupon program helps them to become vested in your dealership and makes it harder bolt for the competition.
- Entice Former Customers to Come Back
Customer retention can be difficult in the current world of instant gratification. Coupons are a great way to reach out to past customers who have not been back for a while. Some do not return because of a bad experience, but most likely do not return out of apathy or because of a better offer elsewhere. Give them a reason to come back in the door by offering a nice discount on something they need.
- Promote New or Underperforming Services
Coupons work well to raise awareness for services offered in your service department. Take a look at your less popular services or new services that customers may not be accustomed to. This is a great place to start a coupon campaign.
Disadvantages to Coupon Promotions
- Coupons Cost Money
The biggest risk with any coupon campaign is the cost. Coupons take money directly away from the bottom line unless you can figure out how to leverage them into more sales, sales of related services or attracting new customers. You need to ensure that the overall benefit you will get from offering coupons is greater than the percentage of profit you will lose on the discounted services.
- Coupons Can Be Perceived as “Just Another Gimmick”
Unfortunately, auto dealerships are known for gimmicks and tricks to entice people in the door. If not done properly, service coupons can fall under this reputation as well. Avoid the appearance that the coupon is not what it seems. If you offer a percentage off, do so without a caveat. If you are offering a free service, do it for free without strings attached. If buyers don’t trust you, they won’t trust your coupon and will be afraid of a surprise when it comes time to pay.
- Offering too many coupons will lessen impact
When a customer sees a coupon for the first time, they will take notice, especially if it offers great value. If they see that same coupon every 2 weeks, they will start to expect that it will always be there and there will be no sense of urgency. A great deal should be just that, a great deal. If your customer can get that same deal all the time, then you might as well just lower your price and forget the coupons.