Best Coupon Strategy?

[SouthernVelvetCafe]

I'm opening a coffee shop and doing a lot of talking through it with an experienced friend who is coming on as a manager. Tonight we were discussing marketing strategies and coupons and the topic of digital coupons came up, as well as direct mail marketing.

I'm all for sending out postcards that double as coupons, especially for something like my grand opening. My friend dismissed it as junk mail. I've seen a lot of support of direct mail, especially the kind that can be "lumpy." But can mine be effective without the ability to send along a cup of coffee?

For a steady coupon strategy, I was debating between paper coupons that could be handed out or digital coupons for phone and web. I like the idea of digital coupons, especially as I'm attempting to be as environmentally friendly as possible (even though I'm sure the difference between the energy output for cell phones and making the paper is probably negligible). But I don't know if I'm interested in trying to tread that fine line between never sending out enough coupons and sending so many I'm annoying. A general coupon app or a Facebook coupon would work, but I'm not sure if those are as effective a marketing tool as the direct text messages or e-mails.

And with the addition of the reward cards I plan to have, is this even something I should do? Am I risking doing too many coupons and undercutting my bottom line? My products are already in a reasonable price bracket for the industry, even on the low end.

Any of it? All of it? Something I didn't think of?

[David Hunter]

Hey Stephanie,

Yep, I'm a huge fan of direct mail and 3D/lumpy mail.

You don't have to send a cup of coffee, but you could send a little pouch with coffee in it, in an envelope to make it lumpy. Though, I'm not sure I would send it out to everyone, since not everyone drinks coffee. If you could get a list of coffee drinkers then you're on to something!

As far as coupons... I have mixed feelings. Yeah, they're a great lead generation strategy, because who doesn't like to get discounts? But, Look at Starbucks... their coffee is more expensive and they target more affluent folks. Do you ever see them send out coupons? I haven't. But, they to have their "rewards" cards where you can earn free drinks (and, they get their contact info so they can continue to market to them... Remember: It's cheaper to market to an existing customer than get a new one). So, I'm not sure if I'd go the coupon route, but definitely look into the rewards cards that you're talking about.

If you do decide on coupons, maybe you want to make them product specific. Instead of just, get X off when you spend X, or buy 3 get one free, you may want to offer a special on certain products. And, change it every mailing. Be diverse. Get your customers to try all of your products.

Anyone else here have thoughts they could share on coupons?

[JC]

I'm opening a coffee shop and doing a lot of talking through it with an experienced friend who is coming on as a manager. Tonight we were discussing marketing strategies and coupons and the topic of digital coupons came up, as well as direct mail marketing.

I'm all for sending out postcards that double as coupons, especially for something like my grand opening. My friend dismissed it as junk mail. I've seen a lot of support of direct mail, especially the kind that can be "lumpy." But can mine be effective without the ability to send along a cup of coffee?

For a steady coupon strategy, I was debating between paper coupons that could be handed out or digital coupons for phone and web. I like the idea of digital coupons, especially as I'm attempting to be as environmentally friendly as possible (even though I'm sure the difference between the energy output for cell phones and making the paper is probably negligible). But I don't know if I'm interested in trying to tread that fine line between never sending out enough coupons and sending so many I'm annoying. A general coupon app or a Facebook coupon would work, but I'm not sure if those are as effective a marketing tool as the direct text messages or e-mails.

And with the addition of the reward cards I plan to have, is this even something I should do? Am I risking doing too many coupons and undercutting my bottom line? My products are already in a reasonable price bracket for the industry, even on the low end.

Any of it? All of it? Something I didn't think of?

If you can afford it, send out coupons for one free coffee as a friendly introduction to your neighborhood (I wouldn't call it a Grand Opening). A free product with no strings attached has always struck me as a thoughtful way to get new customers. The most effective method imo would be to send them on postcards, which I know is expensive, but considerate and would get much more attention than lumped in with others companies coupons.

[Freelancier]

Look at Starbucks... their coffee is more expensive and they target more affluent folks. Do you ever see them send out coupons?When they have a new store in an areas, yeah, they'll go the coupon route for a few weeks to increase awareness of their presence. But they have a brand, so they don't have to climb that hurdle that a one-off shop has to do.
Interesting interview in Time with CEO of Starbucks... his business is being squeezed on the bottom by gas stations and on top by those who are offering a "coffee experience" that includes hand-selecting the beans and so on. So offering coupons is good for initial awareness, but differentiation is what will keep them coming back once you have their attention.

[SouthernVelvetCafe]

I've definitely put a lot of thought in ways I can be different--better, in my opinion--than Starbucks. Part of that is going to be my unique aesthetic. I'm going for a fun vintage-y feel, without going full roller skating waitress diner. Which is part of what I think could make a postcard--thoughtfully designed to represent my look--so successful. I have to agree that after sleeping on it, I'll probably focus more on a rewards program than on coupons, though I do agree that an initial coupon push to increase area awareness is probably in my future.
One of my other differences is how much I'm focusing on homemade pastries at the cafe. Would offering a free cookie or some other pastry on the postcard be a good way to get them in the door thinking about using me for both their dessert and coffee needs, or is initiating the contact solely through coffee the better strategy?

[Paul]

I'd do coffee and pastry for a silly low price as a promo. If your going 50's nostalgia promote it as 50's prices ..."check us out -just 50 cents for a coffee and donut!". That can be more memorable than just free coffee.

Also, on local eateries keep your marketing dollars focused tightly on your trading area. Don't waste money too far out from your shop.

[RR151]

Southern Velvet Cafe,

I always like the idea of a bit of secrecy with the ability to change the offer automatically.

Here is how it works?

Using a fridge magnet you add your brand graphics, a QR Code and for those that can't scan the QR Code add a message that invites the reader to come into your Cafe. Maybe something like. "Join us today for something special." Add to get the deal ask for: "I want today's deal" The "Ask For Statement" is important and is used to track your advertising. It can be anything you want.

The QR Code changes the offer daily and is called a dynamic QR code. So what is a dynamic QR code? A dynamic QR code redirects the location of the QR code at regular times. So on Monday the QR code redirects to deal 1, on Tuesday it is deal 2...If scanned on Wednesday you get Deal 3...The dynamic QR Code can be changed at a moments noticed so you don't need to send a new postcard every time you have a new offer.

How to get your fridge magnet to stay on the fridge?

To find new clients, hook up with the local community center and have them do fundraiser. They sell your fridge magnet for $10.00 and keep the cash for their fundraiser. Your fridge magnet has a year's worth of offers with a new offer each day and can worth maybe $100.00 or $200.00. I am not a big fan of discounts I prefer packaging deals. Buy a medium coffee and get a muffin for 10 cents. The muffin "10 cent number" is the cost of the muffin materials.

Another idea is to go over to an on demand tee-shirt printer. The local community center is all about the local football or baseball teams so have the graphic created Line 1: "I am the number one fan of X-Team" Line 2: Your QR-Code, Line 3: Name of your coffee shop with byline Join us for a coffee after the game. The community center is selling the number one fan tee shirts and you are supporting by offering deals to everyone that buys the tee shirt. Then everytime the #1 fan wears your tee shirt they have access to your deals...

This is Relationship Marketing at it's best....

[Alex - Arvixe]

If you can afford it, send out coupons for one free coffee as a friendly introduction to your neighborhood (I wouldn't call it a Grand Opening). A free product with no strings attached has always struck me as a thoughtful way to get new customers. The most effective method imo would be to send them on postcards, which I know is expensive, but considerate and would get much more attention than lumped in with others companies coupons.

+1 here. Get users inside your store and wow them. If they like it they will come back and not alone ;).

Why not try both of your coupon ideas? See what works best. You just might be surprised :).

[SouthernVelvetCafe]

Get users inside your store and wow them.

Agreed! Do you think you'd be more likely to take someone up on a free coffee or a free pastry? I'm thinking the pastries are a good way to get people hooked. They're what I'm truly passionate about. I just want to feed people. ^_^

[Freelancier]

My thought that if you're a coffee shop, people are coming for the coffee more than the pastries. If you're a pastry shop, people will be coming for that.

So you need to excel with the one people expect you to excel at and then wow them by also being good with the other. I'd do the coupon for both, the coffee + pastry, give the person $1 off for getting both. Hopefully your margins are good enough that that discount is not considered a loss leader.

[David Hunter]

Even if your losing a little money by bringing customers in, you need to look at the LTV (Lifetime Value) of a customer. If the coupon brings them in and then continue to come in every day for their morning coffee, then you have a winner.

You just don't want to get your customers accustomed to coupons, then they'll expect them. As others noted, send it out as an introduction to Southern Velvet Café. Start collecting contact info right away and start tracking the customers.

[RR151]

I am with David,

Usually 80% of your business comes from 20% of your clients. The key is to get regular customers to drink their morning coffee at your cafe. The big boys like McDonalds have employed free small coffee week in my area. They want you to taste their coffee and they know the power of the morning coffee drinker.

What is the Lifetime value of a regular customer: Medium coffee @ $2.00 per day X 5 days a week X 4 weeks a month X 12 months a year = $520.00 per year. If they like the coffee, company and atmosphere that means maybe 10 years +, which is $5,200.00 minimum for one customer. Add a muffin at a $1.50 = $360.00 per year.

The muffin and coffee customer is worth $8,800.00 lifetime value. Per year: it is $880.00...How many of these customers do you need to make a profit?

If you could get this client to bring in 2 friends as company then it's $2,640.00 per year. Get them to come for lunch and you have more $$$. You should play with the numbers by maybe adding bacon and eggs at 5 or 7 bucks with the morning coffee...

Next: It is easier to hold onto an existing client than to go look for a new customer. If you can get 100 regular customers with friends for morning coffee and muffins it's $264,000 per year.

What about this for a coupon? Give each of these regular customers 5 business cards worth one free coffee be sure to add their name on the back of the biz card. Why? Just tell Mary Joe sent you. If you can personalize it your coupon is way more powerful. Let your raving fans find your next customer. They would be proud to help out. What's the cost? 10 bucks for 250 business cards. These cards do two things 1) build the relationship with your morning coffe drinker or your raving fan and 2) someone else is telling everybody where to get the best cup of coffee.

It's not you blowing your own horn. what is more effective you handing out coupons or your raving fan inviting people to taste your coffee.

Just a thought, RR

[RR151]

Couple more thoughts,

The Business Card is the most powerful print media with the least associated costs. That makes it a great way to test a new marketing campaign. If the biz card is successful then you can roll it out into a postcard or some other high end print piece. The Biz Card is a soft launch sorta...

I am not familiar with your business but here are some ideas.

VIP Club Membership Biz Card: This is an invitation only opportunity used to show off your new types of special coffee types. To qualify you need to be drinking coffee so many days a week or what ever you think is needed to make this group special. Once you have a very special program built maybe offer a bring a friend program. If you all about high end coffee this will work perfectly.

Employee Biz Card: This is one of my favorite. It is designed to empower your employees to pay it forward to someone they have met that has given them exceptional service. Example: The gas attendant filled the car and then clean the window without them asking. The employee was impressed and then used one of their biz cards to offer the attendant a free coffee/muffin at your cafe. These biz cards have the employee's name on them and you can track the sales that come from them handing out the biz card. Maybe there is a bonus for bringing in so much business...

There are a ton of ways to use the biz card, just let your imagination open up and start to think out side the box.

Just a thought...RR

[David Hunter]

RR151, sounds like you've been reading up on Dan Kennedy's No B.S Grassroots Marketing book!

Stephanie, did you get that book yet?!!!

[RR151]

Nope haven't read Dan Kennedy...But will put it on my list. Thanks David

Stephanie if David recommends Dan Kennedy then it's got to be a good read. I love anything that is about Relationship Marketing.

David got any more books your hiding. I am always looking for new ideas...RR

[SouthernVelvetCafe]

RR151, sounds like you've been reading up on Dan Kennedy's No B.S Grassroots Marketing book!

Stephanie, did you get that book yet?!!!

It is top of my list!

[RR151]

David,

Is this the name?

No B.S. Grassroots Marketing: The Ultimate No Holds Barred Take No Prisoner Guide to Growing Sales and Profits of Local Small Businesses...

RR

[David Hunter]

Yep, that's the full name of the book.

[RR151]

Great David,

Looks like I have my Saturday night reading material all lined up.

I sent you a couple PM's as follow up, did you get them?

Hopefully you understand that I am just interested in helping with people's marketing issues.

If I am out of line I expect you to put me in my place, right?

...RR

[fullflavor]

I would give the digital coupon route a try. Digital coupons will soon out number the paper coupons. Only about one percent of paper coupons are redeemed, fueling the natural migration to digital.

[MarketingMasterSystem]

Another idea would be to go to where your potential customers are gathered (local event of some sort perhaps?) and serve some free coffee and hand out your cards or flyers or whatever letting them know where you are. If it's a charity type event you could gain some extra advertising by letting the charity know you'll be there so they can spread the word.

[amjenx]

Does your cafe offer free wifi?

I realize this was February when you posted originally - what was the progress of what you did?

Loyalty cards are huge, 10 punches, free brew.

The best strategy I've seen is having a designated day of the week where you gift a cup of coffee. Similar to a grand opening - you allow the neighborhood to come in and support you. Social media and email marketing are huge in communicating specifics for your store (new roasts, flavors, etc). When you get think tanks, students, and individuals who purchase bulk coffee to take to meetings as customers, you can give them special perks and privileges.