Coupon Business Model: Valid or Not?

Let’s just all face it, we love money and as much as we love to shop for our favorite products online, we love getting good deals and well… free stuff. And if you are an avid online buyer, you must have stumbled across numerous websites that offer coupons which provide costumers, like you and me, with lovely, lovely discounts.

Just ask yourself, when being offered a discount, how many items do you usually purchase that you totally are not in need for? A LOT!

We get you. A recent study had shown that 90% of all consumers use coupons to save money and buy products that they would not likely buy without a discount. And now, without further ado, what is a coupon?

This concept has not changed much over the years since its traditional printed version. Online coupons refer to a discount code or number which can be redeemed on a website. They cannot be redeemed at a physical store location for the prices would greatly differ and hence the same discount cannot be fairly applied. Meaning, you will either get a good deal or a free product.

That little coupon code box that shows up in the cart or during checkout could also be labeled:

  • Promo code
  • Discount code
  • Offer code
  • Source code
  • Gift code

Viable and impressively effective it still is to use coupons for marketing purposes. Thanks to technology, the ways people consume information and shop have changed, and today consumers are given better deals via various ways:

  • Text messages
  • Push notifications
  • Emails
  • Social media platforms
  • Couponing and discount sites

How does a couponing website operate? And how does it profit?

Good questions! Coupon companies operate by promoting the discounts supplied by participating businesses to be directly sent to the customers. These companies mostly profit by working with the businesses and providing boosted traffic (attracting more consumers) and making first-time visits more probable.
Via direct sales is how some of the coupon companies make money. Yet there are other ways through which coupon companies could make profit. Among which are the following:

Online Advertisement

Online coupon companies can easily maximize their advantages by the ad-placement services. They do that by selling the advertising space available on their individual websites. Every time someone views the ad or even better, click on it, the payout increases. This type of business model allows the coupon company, a chance to give the coupons away for free.

Paid Deals

Some coupon companies sell deals provided by them. They charge the coupons for a less amount than original. While a company might charge you, say 20 bucks for a coupon, the coupon companies charge way less.

Affiliate Programs

Making money through affiliate programs has to be one of the most common ways that most online companies reply on. The affiliate relationships involve a massive online coupon company that pays any other website for leading the traffic towards its very own deals.

Bulk Sales

Instead of selling the deals to customers individually, the coupon companies can also sell the coupons in a bulk form to their customers directly. The companies charge a fraction of total savings offered while bringing enough money for covering the costs incurred. The coupon companies try and convince multiple businesses to bring in bulk coupons for sale making this business idea work.

Advantages digital coupon marketing provides

A well-targeted digital coupon campaign can bring about a great many benefits, amongst which are the following:

Attracting new buyers

Nobody tires of saving money so the better the deal, the more likely the presence of new consumers who do not typically buy from you.

Customer loyalty guarantee

Existing customers are more likely to return for more.

Assisting with promoting new products

A good deal for a new product is a sold deal. People get encouraged to try it and recommend it to others.

Growing engagement and spreading word about one’s brand

Brands can win more followers by rewarding the most active community users on social media.

But how healthy is it to us customers?

When people talk about the practice of extreme couponing, they keep mentioning numbers about how much you can save on your shopping cart, and how much stuff you can obtain for free. Yet, what isn’t discussed is how much time they have spent on the practice. You probably also won’t hear about the fact that a lot of the “savings” come from buying products that aren’t needed, wanted, and that probably should not be purchased.
Let alone the fact that the products that go on sale are usually the same ones to continually go on sale. Another main problem with coupon shopping is that to maximize your savings, you are limited to purchasing items that are on sale or products which you can find coupons for.

So as we have said, if the same items continually go on sale week after week, this could only mean one thing, that is, you will end up buying the same products repeatedly. Some people claim to save hundreds of dollars – however, these savings sometimes come from buying 20 tubes of toothpaste or a set of wallpapers that you do not even have any more room for.

Therefore, whether you see it or not, couponing could evolve as not merely a bad habit but an obsession, a time-consuming obsession. Many extreme coupon shoppers have entire binders full of coupons. Organizing these can take huge amounts of time. Ultimately, it may not be time well spent if you are saving hundreds of thousands of dollars on things that you perhaps shouldn’t purchase.

Final Word

Is it or is it not valid?

The coupon is definitely a driving force in e-commerce that connects people (well, perhaps their wallets only) to brands. Companies always aim at drawing new customers and people themselves continuously aim at saving money and coupons seem to be on the rise, facilitating all of that. But hey, regardless of any of its disadvantages, it would be quite unwise to overlook the marketing potential of coupons. And well, it’s December already, the internet is buzzing with offers and discounts! A chance for sellers to reach a bigger audience and for us customers to save some money!

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