1. The local discount program that has many 5% discounts (low value offers) is unlikely to attract attention of customers. Saving 5% on a meal isn’t that sexy compared with a 2 for 1 deal! So 5% discounts can lower the perception and uptake of the entire local discount program.
2. For the customers who do take notice of the program, you should expect to get a better result from a 10% deal compared with a 5% deal….it’s natural selection!

I always encourage merchants to think about the discount in terms of ‘what is the perceived saving?’ (view the presentation below to find out more). If you are offering 5% on a meal the saving only equates to 50c on a $10 purchase and I don’t believe this is enough to motivate people to use the voucher. Put yourself in the shoes of the customer and ask ‘would this saving motivate me to use the voucher?’.

Feel free to connect with me on Twitter or subscribe to my blog so we can keep in touch!

Technorati Tags: Discount Coupons, Restaurant Promotion, Small Business Tools

The best advice I can give for coupon restaurant promotion is to (1) limit your exposure and (2) use ‘perceived value’ to your advantage. Attracting new customers with a discount coupon is great for business as long as the terms of the offer limit your exposure by not giving away too much margin. You also want perception of value so potential customers feel compelled to use the coupon.

So here are some suggested marketing tips to attract customers and limit your exposure:

1. Put a maximum on the value of the discount. If you are offering a 25% discount on the food bill then consider applying a cap to the total saving. As a guide the cap should be equal to 25% of the value of four average full price main meals. So if your average main meal is $30, the cap on the saving should be ($30 x 4) x 25% = $30.
2. Structure a discount that is easy for your staff and customers to understand and calculate. It’s much easier to understand the value of 20% compared with 22.5%.
3. Limit the discount to ‘food only’ or ‘main meals’. The perception to the customer of ‘25% off the food bill’ and ‘25% off main meals’ compared with ‘25% off the bill’ is the same. In their mind they are saving 25% but options 1, 2 and 3 in table 1 illustrates how a perceived saving of 25% can actually only result in a 10% reduction in the bill.
Discount Calculation

View more presentations from sladesherman.
4. Consider BOGOF deals as opposed to percentage discounts. BOGOF deals are ‘2 for 1’ meal deals and are usually worded “Buy one main meal and get the second equal or lower priced main meal at no charge”. They have excellent perceived value as 2 for 1 implies a saving of 50%. In reality most people purchase more than just two main meals so the actual discount is less. Table 1 shows that the difference between the perceived saving and actual saving for a BOGOF offer is significantly better than other options reviewed so far. The chart below represents the perceived saving vs. actual saving for the four options in Table 1.
   Restaurant Promotion
   
   View more presentations from sladesherman.

My example in table 1 relates to a typical bill for four people but every restaurant is different so I encourage you to review the options and how they relate to your restaurant. Measuring your offer: Once you are promoting your offer, hopefully it’s resulting in increased patronage, but if not here are some things you can review:

1. Measure how many coupons you collect and ask customers who come in with coupons why they selected your restaurant.
2. Ask the local discount program to give you an indication of how many members are in your area. Check if the members match your target market (this also applies to paid advertising in which you are promoting a discount).
3. Ask the local discount program what sort of usage other restaurants in your area are getting and what discounts they are providing. If possible, change your offer so that you are more competitive.
4. Review the ‘perceived value’ of your offer. The best way to do this is to ask customers what they think of the offer and ‘listen’ to their feedback.
5. Test discounts by doing local letterbox drops or promoting your offer with local retailers and measure which coupons yield the best results.

Technorati Tags: Discount Coupons, Marketing Tips, Restaurant Promotion