Coupons Will Be Vital in this Recession: Prepare Accordingly
COUPONS - GUIDE
Published On: July 14, 2020
A few days after the world entered into 2020, #RoaringTwenties was the top trend on Twitter. Anyone who clicked this hashtag saw the oh-so-familiar visuals of flappers, jazz maestros, and a whole lot of individuals doing the Charleston dance.
The optimism of people hoping the 2020s will resemble the 1920s —the decade of cultural and industrial advancements —wasn’t misplaced. Global growth was projected to rise to 3.3% in 2020 from 2.9% in 2019. In 2021 it was down marginally from 0.1% to 5.9% However, the forecast for 2022 remained steady at 4.9%. The unemployment rate in the United State was at an all-time low and it seemed the 20s of this century we're going to ‘roar’ too.
But as we all know, fate played a cruel trick. It brought back two of the worst events that occurred around the 1920s -a pandemic and a recession.
The 20s in the century past began as the world was recovering from the Spanish Flu pandemic. It ended as the Great Depression devastated the global economy.
Currently, we are witnessing a bit of both as COVID-19 continues to take lives while a global economic recession is on the horizon.
1. Great Depression vs. the Incoming Recession
Whether or not the current crisis can lead to a Great Depression 2.0 is the most hotly debated issue these days. One particular reason people are fearing an economic collapse is due to the rising unemployment rate.
It is estimated that unemployment hit 24.9% during the depression. In April of this year, the unemployment increased from 4.4% to 14.7%
-that's an unprecedented 10.3% increase in a single month.
To make matters worse, Morgan Stanley predicts a 30.1% decline in the United States’ GDP in the next quarter. This would be the worst quarterly performance in 74 years and somewhat similar to depression where America’s GDP shrank at a record rate.
The depression itself was triggered when the stock market lost 11% of its value on heavy trading on what’s now called Black Thursday. While there hasn’t been a plunge of this scale due to the ongoing pandemic, the market’s performance in the past has been worrisome. As per Bespoke Investment Group, the S&P’s 34% decline in April was the worst market drop since 1931.
One thing that makes the current situation worse than the Great Depression is that it's happening globally at the same time. In contrast, the depression started in the USA and its ripples were felt throughout Europe and Asia.
Currently, businesses are suffering around the world. According to one survey, 70% of Dubai companies are expected to go out of business in the next six months. Meanwhile, more than a million people have been laid off in Australia.
The world is witnessing a severe economic disruption on a scale that makes it similar to the Great Depression. The lessons from centuries ago can help businesses and retailers, in particular, map out a strategy to brave the turmoil that is to come..
2. An Old Weapon against the New Threat
It’s widely agreed that Coca-Cola came up with the concept of coupons. In 1887, the company offered two gallons of Coke syrup to pharmacists in return for names and addresses of customers who lived around the pharmacy. This information was used to mail coupons directly to consumers.
This was an exceptional marketing strategy, way ahead of its time. However, it was the despair of the 1930s economy that helped evolve coupons
into a worldwide phenomenon. People that didn’t have a steady stream of income and were down to their last pennies during the Great Depression, found a practical solution in coupons.
This isn’t an isolated case. When the financial crisis of 2008 triggered a recession, Americans turned towards coupons once again. According to CNN, Americans used 3.3 billion coupons in 2009 — 27% more than the previous year.
History shows whenever going gets tough, customers seek out discounts, deals, and whatever that can help in saving some hard-earned money.
3. It’s Already Happening
COVID-19 pandemic has significantly increased the demand for coupons. Customers isolated at home are ordering both essential and non-essential items online. Digital coupon redemption increased 56.5% in March compared to the same month of the previous year. Customers are also enrolling in the digital coupon program of grocery store chains at a record rate.
Likewise, consumers in the UK have also taken a liking to coupons. As per data published by Rakuten Advertising’s UK affiliate network, from early February to early April of this year, orders from vouchers and coupons increased by a staggering 52%.
Governments too have taken a liking to couponing. The Chinese government has issued a number of consumption coupons to boost the country’s retail sector. These coupons have been issued through third-party platforms such as Alibaba, Meituan Dianping, and Tencent. The country’s government hopes to incentivize more consumption of retail goods.
4. What does this Mean for Retailers?
All past trends indicate that going forward, shoppers will seek coupons on purchase whether they're ordering online or visiting the store. Last year, the digital coupon redemption touched 31 billion. The number will go up exponentially this year and this is where retailers have an opportunity to both create revenue and gain loyal customers for days to come.
Aside from being effective, coupons are also extremely practical tools for promoting a brand. Unlike other forms of advertisement, coupon websites don’t ask for a payment to feature your offer and put your name in front of thousands of potential customers. Of course, you will need to give them a commission but that’s a small price to pay.
These days, customers expect a discount or whilst shopping online. Some customers are so used to coupons that no coupons mean no purchase to them —even if your product provides great value for the money.
Coupon use will become more popular in the coming days and brands that do not already have a coupon marketing operation in place would need to create one ASAP.
5. Prepare for the Future
Like every other mode of advertisement, successful coupon marketing
desires persistence and dedication. It’s also important to have clear goals for your campaign so that you may set certain benchmarks for success.
Don’t be afraid to seek out professional advice if you’re novel to this tool. Once you have the basic idea, follow these five steps for crafting an effective couponing strategy:
- Step 1: Start by analyzing the couponing practices within your industry. Visit your competitors’ websites and examine what value they’re setting for coupons and what’s their general standards for expiration dates of coupons in the market.
- Step 2: There’s no “one size fits all solution when it comes to coupons. You will need to divide your market into segments and target them with different offers.
- Step 3: Create coupons for specific holidays as customers are expecting discount offers during different important occasions. For instance, July 4th is coming up and you can target consumers with Independence day coupons.
- Step 4: Track coupons to monitor their performance. This is extremely easy for digital coupons and will allow you to optimize your campaign in the future.
- Step 5: Partner with coupon websites like EMUCoupon to reach customers that haven’t heard about your products. Use other means of promotion as well (such as your brand’s social media pages and online influencers.)
Even though retailers are reopening in the US and all around the world —the lockdowns have already done a great deal of damage to the economy. With millions of people either laid off or furloughed, frugality is not optional for a good number of consumers..
History indicates that people looking to save money seek out coupons. So it is almost guaranteed there will be a surge in demand for online promo codes and deals in the months to come.
Aside from the current circumstances, coupons are a great way to boost sales and increase conversions. Data from coupons also allow in building customer profiles that prove to be vital whilst a company is facing stiff competition.
Of course, how successful you are with this strategy will depend on a combination of factors including the quality of your products and customer service. But effective coupon marketing can surely be an important piece of the puzzle.