Shop owners are often wary of coupon campaigns, which can feel like “giving money away” only to attract discount-conscious customers. But according to Brian Warfield, senior product manager for Mitchell 1’s Social CRM product line, coupon marketing can be a creative tool with a number of business advantages. Those advantages include attracting new customers, retaining current ones and promoting new services.
Warfield, who has more than 20 years of experience in the automotive software business and earned a degree in marketing from the University of Cincinnati, recently outlined his tips for running an effective coupon campaign.
What are some situations in which a coupon campaign would be helpful to a shop?
There are a number of different situations in which to use a coupon campaign: getting existing customers in sooner and more often, enticing new customers to try your service, promoting seasonal changes or special events, introducing a new service, or reinforcing your brand.
Coupons are also helpful to drive business during a slow period. Your business is going to ebb and flow, so if you know when it’s going to ebb, and you can do a coupon in advance of that, it can prove very helpful. In that case, you want it to be an aggressive coupon with an expiration date of less than 30 days to really drive business in the short term. Typically if the customer looks at a coupon and notices they have time, they’re probably going to forget about it.
Why are many shop owners wary of coupon campaigns?
Most shop owners have a story about a free oil change–type promotion in the local paper that resulted in attracting bottom-feeders with no measurable results. A free oil change requires tracking the value of any new customer. If you’re not committed to that type of tracking you’re not going to see the results. But that doesn’t mean coupons don’t have a place in the overall marketing strategy.
Many shops focus too much on the coupon itself instead of what they are trying to accomplish, the process for effective implementation and how to measure if the promotion is working. If you’re not going to track the results, all the money you spend on marketing is going to feel like you’re giving it away; it’s never going to feel like you got a return.
Marketing is a creative process—it’s never one and done. To find what works for your local market and consumers, be willing to experiment with a promotion, tweak or change it, and try again.
What are your tips for running an effective coupon campaign?
First of all, you really need to match the promotion with the objective. The purpose of the coupon can be many things: visibility, driving business, finding new customers, raising awareness, or promoting a new or regular service.
If you’re going to spend your dollars in one of two places, the best dollar spent is always going to be in bringing your customers back sooner and more often. You want to leverage your existing customers because you can get quite a bit of information about your existing customers to target in your promotion.
If it’s new customers you’re looking for, you need to be prepared to make a bigger commitment to wow the customer away from their current provider. Because the investment to win new customers is bigger, you’ll need to think longer term and look at the lifetime value of new customers that were generated.
Targeting noncustomers requires the ability to analyze your database, and target customers by geography and demographics. Your marketing provider can usually help you by analyzing your shop management database to identify those customers that represent your best customers, and then using those customers to buy a targeted list to bring in similar new customers.
Is it better to advertise a discount in dollars or percentages?
I think customers think in terms of dollar bills. If you say $20, they can picture a $20 bill; that feels very tangible to them. Percentages get tricky because in order to make the percentage sound like a decent amount, you have to set a pretty high percentage. For example, a 20 percent discount on a job with only a 10 percent net profit isn’t a very good strategy.
Look at your average repair order to determine a dollar amount that represents the right percentage discount. Then, match the promotion to the available technician and equipment resources and with services that have the best margin.
What separates a good campaign from a bad one?
Implementing the coupon is only 20 percent of the process; the other 80 percent is the business process and measurement. I think one of the key elements is that everybody in the shop is on-board with the promotion. Let’s say you have a current promotion and you get some folks who are very discount conscious. That might make the service advisor think this is a bad idea. You might have a few customers that are discount conscious, but you can’t lose sight of the fact that there are customers who are going to respond and end up being a good customer.
It’s crucial to have an objective, a strategy, and discuss items like inspecting, upselling, and converting to long-term customers. Go over the promotion with the staff and make sure they understand their part of the process.
Besides understanding the objective you’d like the campaign to accomplish, you also need to have a process in place to measure and track the results. Make sure the service advisor is asking what brought the customer in. Not everyone will volunteer the coupon if you don’t ask about it. Once you ask, you’ll be able to identify that in your shop management system and tag that customer to the promotion. If it’s an ongoing customer, ask them what brought them in for this specific visit.
A lot of shops will do a call campaign and make sure they give that customer a call within a certain amount of time after their visit. Part of the Mitchell1 service is sending out a thank you email with a review link. That’s a way to not only market your shop, but use the feedback to improve the business and business processes. If the customer walks out of your shop without any feedback and you have no idea if they had a positive or negative experience, then you have no idea if that customer is coming back.
How can shop owners avoid feeling like they’re “giving away” money on coupons?
Look at it as an investment in future business, and measure the results long-term. Make sure the coupon matches your strategy for growing your business; promote services that provide a good margin and that are part of your overall business growth strategy. Also, have a realistic annual budget. Marketing experts say that marketing expenses should be roughly between 2–6 percent, depending on the market being served and business goals for growth. Some shops include the total amount of discounts in a given year in their annual marketing expense and compare that against the business generated.
