It can be a hard concept to imagine — giving customers merchandise for reduced prices hardly seems like the best way to pull in hefty profits. Yet, coupons are a major part of sales for nearly every company imaginable. There are entire television shows exclusively focused on couponing. Why is this phenomenon so popular with businesses if, technically, it reduces your profit margins?

Coupon marketing increases impulse purchases

According to a 2013 poll by Tada, 54% of shoppers surveyed said that they would not have purchased an item if there had not been a corresponding deal. Coupons bring in customers who may have never even cast a glance your way. As families start to feel the pinch of a tough economy, coupon clipping steps up, especially when little luxuries are becoming fewer and farther between. A great sale can encourage a normally frugal consumer to spend a little extra at your business.

It widens your marketing area

Customers will travel far and wide to use a coupon with a great deal on it. That’s what makes companies, like the Twin City’s direct mailer Dollars & Sense, such a pivotal point for businesses in the Twin Cities area. Customers in Minneapolis will be more willing to travel to St. Paul (and vice versa) if you’re offering a great deal on your business’ product. Because Dollar’s & Sense mails out to over 1M households a month, a coupon in our mailer means more profits in your pocket from customers who want to use your coupons!

Coupon use encourages related purchases

Everyone has gone into a store with a list and walked out with a cart full of things that we didn’t really need. Coupons are an easy way to convince a customer that they’re saving enough money on one item to splurge a little on another. Happy customers walk out (or digitally check out) of your store with a cart full of product and you pocket the profits off of the full-price items that they purchased along with the discounted item.

The language of coupons is enticing

Words like “BOGO” and “Free” scream out that there’s a deal ahead. If your coupons are thoughtfully made, they can do the talking for your business. When customers feel like they are getting something back for doing business with you, it can feel like a prize for shopping. Customers who weren’t previously in the market for a new pair of shoes are now walking out with their summer strappy sandals and you have the profits from one reduced-price item, plus a full-price item. Without a coupon, you may not have made any profit from that customer at all.