Pros and Cons of Coupons for Brands In 2025

Coupons have always been essential for brands and businesses to boost sales and conversions. However, these coupons have various drawbacks, and overusing them can lead customers to view the product as less valuable, which may harm the brand in the long term.

According to various reports, around 90% of US online shoppers have redeemed coupons. This data helps businesses plan their strategies effectively. But using coupons wisely can help brands maintain their perceived value while still attracting budget-conscious consumers. The same goes for consumers, who should be strategic about when and how they use coupons to increase savings without compromising quality. By balancing value and perception, brands and consumers can benefit from a smarter approach to discounts.

In this blog, we will thoroughly examine the advantages and disadvantages of using coupons to help businesses strike a balance on coupon usage.

Interesting Facts about Coupon Usage

• Facebook is used by 42% of Americans to find coupons, with 18% using Facebook Groups. Instagram and YouTube are used by 30% and 25% of consumers, respectively.
• 14% of females always use coupons online compared to only 8% of men.
• Millennials prefer using online discounts for at least half of their orders, with 67% of women and 49.9% of men actively doing so.
• 39% of consumers buy more than they intended when they have a coupon, while 67% make an unplanned purchase because of a coupon.

Advantages of Using Coupons for Consumers

Coupons are a valuable marketing tool for businesses, offering numerous advantages that can significantly impact their success. Strategically using them can help enhance customer engagement, drive sales, and achieve various operational goals. Here's a closer look at the key benefits:

• Increased Foot Traffic: Coupons attract customers to your physical stores or online platforms. When customers are motivated by the discounts you offer, they are more inclined to visit the store or website, which causes an increase in overall traffic.

A great example of this: In 2021, Kohl’s launched a coupon campaign offering $10 off purchases of $25 or more. This promotion significantly increased foot traffic to their stores. During the campaign, Kohl’s reported a 20% increase in in-store visits and a 15% rise in average transaction value.

• Higher Sales Volume: When you offer discounts to your buyers, their spending power will go up, which is when they shop more than they initially intended. Also, by providing discounts on their purchases or higher-value items, you can increase the average transaction size of your business.
• Attracting New Customers: It is the most common and a great way to attract new customers. Offering discounts can lower the barrier to entry for those who might be hesitant to try a new brand or store with a higher price tag.

In this scenario, we can take Airbnb as an example. To attract new customers, Airbnb offered a coupon of $25 off for first-time users who booked a stay through its platform. This promotion was highly effective, resulting in a 25% increase in new user sign-ups and a 20% boost in bookings during the campaign period.

• Customer Retention: Another advantage of offering discounts is allowing you to retain your existing customers. Customers who regularly use coupons will be inclined to have a strong brand or store preference, hence, it will bring about an increase in the rate of retention.
• Competitive Advantage: In a competitive market, offering coupons can differentiate a business from its rivals. Discounts and special promotions can make a business stand out, attracting price-sensitive customers and positioning it as a more attractive option compared to competitors.

Example: In 2021, McDonald’s launched a mobile app campaign offering $1 off any purchase over $5. It was designed to attract price-sensitive customers and differentiate McDonald’s from other fast-food chains. The campaign resulted in a 15% increase in app downloads and a 20% rise in mobile orders during the promotion period.

Advantages of Using Coupons For Consumers / Buyers

Coupons offer several benefits to consumers, making shopping more affordable and enjoyable. Coupons help the buyer save money on their purchases, avail of certain deals, and have a better shopping experience. Knowing these benefits will enable you to leverage shopping offers and make your budget work for a longer period.

• Relief From Inflation: The most obvious benefit of using coupons is, it will help you save money on your purchases. Coupons help to decrease your cost of products and services so that you can get more things in the same amount.
• Increased Value: Coupons can enhance the value of purchases by providing additional discounts or perks. This means you can buy more items or higher-quality products without paying full price.
• Opportunity to Try New Products: Coupons encourage users to try new products or brands that consumers might not have considered otherwise. According to research, around 86% of online shoppers are more likely to try a new brand just because they are offered a coupon.

• Increased Purchasing Power: Coupons can help you stretch your purchasing power further. By saving money on individual items, you can afford to purchase more goods or opt for higher-priced items that might otherwise have been out of your budget.

Disadvantages of Using Coupons For Businesses

While coupons can be a powerful tool for businesses to attract customers and drive sales, they also come with certain drawbacks that can impact overall profitability and brand perception. Understanding these disadvantages can help businesses develop more effective coupon marketing strategies and mitigate any adverse effects.

• Reduced Profit Margins: One of the primary disadvantages of using coupons is the potential for reduced profit margins. Discounts offered through coupons can significantly lower the revenue generated per sale.

• Potential for Abuse: Coupons can sometimes be subject to abuse, such as customers using multiple coupons on a single purchase or exploiting loopholes in the coupon terms. This abuse can lead to financial losses and complicate inventory management.

One best examples to define this point, let’s take Domino’s Pizza. In the year 2018, Domino’s in Russia launched a promotion offering 100 free pizzas per year for 100 years to customers who got a tattoo of the Domino’s logo. The campaign quickly went viral, and within days, hundreds of people got Domino’s logo tattooed and shared it on social media. Because of excessive responses, Domino’s had to end the campaign much earlier and had limited the offer to the first 350 members.

• Short-Term Focus: No doubt, giving coupons can bring more sales and traffic to your business. But at the same time, these will create a perception among buyers and lead them to expect constant promotions. Which may harm your profit margin and could significantly reduce customer loyalty in the long run.
• Over-Reliance on Discounts: This is another concern that could harm your business. When you give too many promotions regularly, your customers expect more and more, and in some cases, they would stop buying without a deal.

Disadvantages of Using Coupons For Buyers / Consumers

The introduction of discounts can actually aid buyers by allowing them to save a lot on their purchases. On the other hand, recognizing these faults will also be a great help to you as the consumers will be able to make smart choices and stay away from the pitfalls that are often associated with coupons.

• Encouragement of Impulse Buying: Coupons sometimes lead to a condition known as impulse buying. Impulse buys refer to those instances when consumers make off-the-cuff purchases they hadn't planned to, just because they have a coupon.
• Complexity and Confusion: On the negative side, some occasions are experienced as very complex or confusing when coupons come into the picture, such as multiple offers or detailed terms and conditions. Customers may have difficulties grasping the requirements for necessary coupons, e.g., the smallest purchases or the final date.
• Limited Availability: Coupons are not applicable to all items or brands, and coupon is only limited to them. Shoppers might notice that they can find their favorite products on coupon discounts because retailers may decide not to list them among the savings options.
• Expiration and Restrictions: Coupons' usual features include expiration dates and restrictions that can be given for a certain product or a particular time. So, it is up to customers to be aware of these shortcomings and thus avoid expectations in case the intended coupon cannot be used as initially planned.

Frequently Asked Questions

1. What are the disadvantages of using coupons as a sales promotion?

• Lower Profit Margins: Discounts can reduce overall earnings, especially if customers would have bought at full price.
• Customer Dependence: Shoppers may wait for coupons, harming regular sales.
• Attracts Bargain Seekers: Coupons can attract price-sensitive buyers who may not return without discounts.
• Brand Perception: Frequent coupons can make your brand seem less premium or undervalue your products.
• High Costs: Printing, distributing, and managing coupons can add expenses to your marketing budget.

2. Which type of product's sales would be likely to benefit most from using coupons?
   Products that are competitive and frequently purchased benefit most from coupons. Groceries, toiletries, and household items often attract deal-seeking customers.
   Coupons also boost sales for impulse buys like snacks or cosmetics and help introduce new products to first-time buyers. Seasonal items and subscription services use discounts effectively to drive demand and attract new customers.

3. What are the benefits of sharing your promo code with new customers?
   Sharing promo codes with new customers offers several benefits. It attracts first-time buyers by giving them an incentive to try your products or services. Promo codes also help build trust and create a positive first impression, encouraging repeat purchases.