Imagine receiving a simple piece of paper with a “25% off” discount you can use at a physical store. Coupons used to be the most popular way to promote a store or brand, and this how discounts were given out in the past, whether it through the newspaper, mail or in-person distribution. This form of coupon still exists today and, in some cases, can be a powerful promotional tool. Modern loyalty programs frequently use coupons, but in a different way.

What is a coupon?

A coupon is a physical or electronic voucher or code entitling the owner to a product or a special deal. In loyalty programs, they are often used in promotional campaigns to attract new members (for example, a 10% off voucher for the first purchase after enrollment), as an apology used by customer service (often referred to as a goodwill discount) or as a typical reward redeemed by a customer. A member can use an available coupon to:
  • Exchange it for a given product
  • Get a discount on an entire purchase
  • Get a discount on selected products

Loyalty program members often like feeling like they got ‘the best deal,’ so coupons are a great addition to a loyalty program’s rewards catalog. Coupons also benefit program operators, as they can help increase overall spend, purchase frequency, and word-of-mouth marketing. 

Coupons are a great incentive for both the customer and the brand:

Instant and easy delivery – coupons are an instant reward that can be sent electronically to the member (with almost no cost). They can be distributed via POS, by mail (paper coupons), e-mail, mobile app, and other channels. Unlike many physical awards, delivery is easy and hassle-free. 

Easily define limitations – the program operator can set up an expiration date of the coupons, repeatability rules, and many other measurements.

Shareable coupons – a member may give a coupon to someone else – and this way, the company can acquire a new customer. 

Using coupons with external partners – if the program operator decides, using coupons with program partners is the easiest way to involve more brands in a program.

As you can see, loyalty coupons have many useful features that make them an attractive incentive to be used as a reward in a loyalty program.

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