Do any of you offer coupons and at what percent of the menu price do you set them at?
I think you will find that nearly 100% of us offer coupons. Certainly there are a few that do not and I guess a couple will chime in, but coupons are a wide spread part of the pizza world.
We do not offer coupons that offer a % discount. We generally have a three types of coupons:
Value added: Order this and get that for free or 1/2 price. For example “Buy a 16” pizza and get a free pint of ice cream" or “Buy a 16” pizza and get 1 Dozen wings for half price".
Set discount: Example might be “Save $5 when you order two 16” pizzas" or “Save $3 on any carryout order”
Promo price: Examples “Buy a 14” pizza with 1 topping for $11" “Buy any name menu combo 14” for $15"
I separate my thinking about coupons into two areas:
Try me offers that are really aggressive. Offered in a way that they can only be used once and for a limited time. Placed so that new customers may find and use it.
Ongoing offers I am willing to honor all the time.
We haven’t done coupons, but we are doing a mass mailing this coming week, and we will have coupons on those so we can see what our ROI is on the mailing, and watching web analytics closer too.
I am afraid to get stuck in the “Coupon Trap” where that is the only time you’ll see someone is if the have a coupon,
Unfortunately, the old owner had the store in a coupon trap and I am slowly pulling away from that. If we did a $1000 night, $300 would have been lost to coupons.
If you are using coupons, target them on your slow days or areas of your business you want to boost so that you can assure you are getting customers with the coupons you otherwise wouldn’t have. Also if you can offer mobile coupons you can ensure they can be shares with friends and family driving new business as well. If you offer the same coupon in the same way every week or month, people will use them as they expect them to be there. Direct mail/signage and print should be used to gather customers onto a Mobile marketing VIP list so that you can get exponential value out of that large investment.
If you took $1000 in orders and took $300 in coupons you did not have a $1000 night… you had a $700 night.
Stop thinking of coupons as money you gave away… they aren’t. If you are going to use coupons (there is a good reason most pizza places do) you need to build your typical coupon offer into your price structure. Then start looking at who they attract and what they produce.
It is all well and good if you do not want to use coupons and therefor do not build that assumption into your pricing but if you do use them, your business model has to fully include them… i.e. price model!
We’ve never done coupons. Of course, we’re not really blowing the doors off either. Maybe it’s just me. I never liked having to clip and keep track of a coupon for things. And if a business basically relies on coupons for pricing, I’m likely to not shop there so I don’t feel like I’m getting ripped off if I pay full price. But I know, I need to not just do things the way I want to.
We run coupons but they are only good Sunday through Thursday. This way we can offer more aggressive deals during the slower days and not worry about the coupon people taking up valuable table space on Friday and Saturday.
Great point, bodegahwy, but it could actually be even worse than that…
The $300 you discounted was likely your profit, meaning you you made a “revenue” (not profit) of $700. Revenue is like a water mirage in the desert… it leads one to believe that they are being or about to be benefitted, but in reality it can turn into a serious problem that can lead to one’s business closing. Here’s how…
A discount is offered, sometimes through a local promotion or through an online coupon site.
The coupons drive lots of traffic to your business, quickly. Traffic is perceived as beneficial, but traffic without profit means you are only covering your costs, at best, with no money to pay yourself, or your operating costs.
Coupon shoppers, the people that appear only when you send out coupons, statistically stay coupon shoppers and don’t necessarily translate into long-term customers. Since the goal of a coupon is to incentivize someone to come in today at a discount hoping they’ll return in the future at your standard prices, coupons do not address this need.
To add insult to injury, when a large influx of customers comes in all at once and your team isn’t used to this kind of traffic, support, service and sometimes even product are sometimes affected or compromised. Disenfranchised customers may then go and post poor reviews about your business making it even more difficult to find new customers, without giving out coupons.
This can become a vicious cycle and lead to serious financial issues.
There are better ways to bring in customers than coupons. I’ll be happy to provide some if anyone is interested. Hope that helps.
Most likely not. Most of us have coupons built into our model even if not at the 30% in this example. As long as your “coupon cost” is in line with your model it can work very well. For better or worse, the pizza business has come to expect coupons in much the same way that car buyers do not expect to pay “sticker”.
No question, there are coupon customers with no loyalty but there are also very loyal customers that simply expect that this is part of the business. As long as your pricing model takes this into account you can be just fine. Hopefully the offers you make do not simply give away money but also incentivise a larger ticket average so you are getting something out of the coupon model.
Customer loyalty awards are just another version of the same thing albeit with a different twist to talk about.
As someone who is working on a brand new store, this one has indeed kept me awake at night. I agree with Bodegahwy they need to be built into your priceing structure. If i want 30% food cost. I cannot price my menu there and coupon at all. Especially when some sides will have a higher than 30% cost. The real downside in coupons lies with “Swichers” people who would have paid 14.99 for a large pepperoni but buy it for 9.99 instead. Thats were having a POS and being able to direct mail your customer base by last date of order is so important. If tommy orders a large Pepperoni for 14.99 once a month. You can mail him a free order of cheese bread or a 2 litre if he orders in the next week. This gets an EXTRA order from him at a high margine. If Suzie only orders once every 3 months you can afford to offer her a little better deal to get her to order once a month.
When I open I wont have any of those people in my data base. I will doorhang one 9.99 price point and one 14.99 price point the back of the doorhanger will be a menu.
Ill use my readerboard,to push that I take foodstamps to the people who live close and a person sign waving IN A PIZZA SLICE COSTUME. One thing about coupons you dont need something filled with 9 different ones. 2 or at the most 3 should cover most of what you need. If your mailer makes you look like joes discount pizza shop. Thats what people will think you are. I am reminded of the story of a beer company decades ago that was number 9 in the market. They hired an adverting agency, the agent came and wondered around the plant for a week, asking all kinds of questions. At the end he told them what they had to do with all their marketing, push this he said. “Brewed with artesian water from our secret artesian well” they though he was crazy. There is absolutly nothing special about artesian water they said. He said dont worry just do it. They did and in no time at all they went from 9 to 3 in market share. The thing about Artesian water, nobody knew what it was but they thought this was the only beer that had it. So it must be better. How is your shop better than the chains?
It has been 15+ years since I had a pizza place so this comes from my current business …Something I tell my clients is “sometimes” more aggressive marketing can work better than coupons…Say for example you are doing 1,000 a day in gross sales but giving away 150.00 to 200.00 revenue in coupons…So you net 800.00 to 850.00…But if you spend some of that loss from coupons on more marketing each day you may increase your net…But this will require some testing and tweaking…All marketing requires testing and tweaking until you find the “sweet spot”…Good luck…
Good point. One of the main reasons I am starting with doorhanging and banner waving is not only are they proven cost effective, I can do them without doing huge discounts. Also it will allpw me to hire more people than i need and still give them enough hrs. If they get an extra 8 to 10 hrs a week door hanging and banner waving that will help alot.
Sales does not include coupons. Period. Do not count “sales” before coupons! Just track your sales (actual amount collected) and track your coupon percentage but do not get bogged down thinking that coupons are dollars you gave away. They aren’t. If your coupon percentage starts to get away from you make adjustments.
Build your menu and pricing model with an assumption of what your coupon percentage is so you can work with your cost model. In my store we target 15-16% “coupons” but that includes most donations as well since we just “coupon them out” at zero dollars… but that means we have to figure that something like 12-14% is the typical coupon value… so on a $35 order before discount we are likely going to have a $4.00-$5.00 coupon which is in line with our models.
On the subject of coupons, I would like to share a portion of some data compiled in a recent case study from one of our client’s direct mail campaigns. The case study’s main focus was to track the ROI of direct mail for pizza shops. That said, a portion of the tracking was to compare coupon redemption results to number of phone calls received. Here are a portion of the results but also a quick disclaimer; 100% of this data was managed and provided to us by our client. We simply took the data and created a case study using the numbers.
A portion of the results:
We sent out 15,000 direct mail menus. Over a 17 week period they received a total of 1,225 phone calls directly from this advertisement (634 were unique calls and 591 were repeat calls). Over the exact same period they only received 526 coupons.
So, the take away in this example is that although they provided everyone with a coupon, customers like the product enough to continue to place repeat orders without coupons.
I think if you look at the data over a long period of time and calculate the lifetime value of the customers acquired from this specific campaign, that the discount given was a great investment.
If you’re interested, you can view the entire case study as well as specific coupons redeemed, etc. on our website by clicking the link below:
In the past I used to make the mistake in making certain judgments about aspects of my business as related to my customers. I learned that I have to be careful about looking at the world through MY rose colored glasses thinking that if I like it (food or promotions), my customers will also. My eyes may or may not be representative of what many of my customers think or like. My reality may not be the same as my customers in all cases or some cases. In our family many ideas are shared around the dinner table (when we can make it for dinner). With five children and my wife there are a lot of viewpoints coming mostly from gut feel. I want to hear them all because the comments sometimes change my approach. I have one particularly good asset/source at the table and that is my wife. Any new item or proposed changes to the menu are put on the table. Almost infallibly, if my wife likes something it will not work and if she does not like something it definitely has a shot to make it. This is invaluable and dependable; I hope she never changes.