Coupons should be a part of your local online marketing strategy.  If they are not right now, you should reconsider.  They can drastically impact the effectiveness of existing marketing efforts by increasing the number of people who convert off your website, emails, social media accounts and more.

Online coupons can be used to attract new customers who may not be aware of your business and existing customers who either need a reminder to come back, or should be rewarded for their loyalty to help turn them into a champion of your business (especially on social media).

In fact, combined with an effective marketing distribution strategy, coupons are some of the most effective tactics available to you.

Online Coupons Make Customers Happy … Science Proves It  

Recent research has correlated coupons directly with brain chemistry linked to happiness. People who receive $10 coupons have 38 percent higher Ocytocin levels, 32 percent calmer breathing rates, 5 percent slower heart rates, and 20x less sweaty palms. You can’t make this stuff up.

And certainly customer satisfaction matters. Happy customers rate you better on review sites like Yelp, FourSquare and Google+Local. They are more likely to come back. More likely to sign up for your email list (quid pro quo, Dr. Lechter) or like your Facebook page.  These are all positive outcomes for your business.  There are numerous studies that show the impact of positive social media reviews on your business and you should be monitoring and improving your local and social reputation aggressively.

Did you know that 60 percent of people are willing to post about a product or service if you offer them a discount?

How Do You Choose the Right Online Coupon for Your Business?

Choosing what to offer depends on your local business’ economics and what is attractive to customers. We like to start with your cost of acquisition. How much are you currently spending to acquire a new customer and what is their average lifetime value (the profit you see from a customer from their first visit to their last)?  Those are metrics that many local businesses don’t track, but can be calculated on the back of an envelope pretty readily.

What would you be willing to pay to get a new paying customer to walk through the door right now?  That’s a good baseline.

Then look at how often your customers come back and how much they spend over that time and subtract your variable costs (i.e. the costs associated with every new customer, not your fixed costs like rent). What do your numbers look like?

If you are looking for new customers, you should be willing to pay that much to get them in.  Use coupons as the incentive to pay that cost of acquisition.  If it’s to increase loyalty, structure it that way like many punchcards and other loyalty type programs.  If you want to increase the customer community you can reach via Facebook, Twitter or email, then make that part of the offer.

What are you trying to achieve with your marketing plan?

Make Online Coupons Attractive for Customers Too

On the other side, think about how to make that cost of acquisition attractive to customers. Is it for a new, exciting product?  Is it for early access to something special?  Is it seasonally relevant (New Years is coming up next week). What cuts through the crowd?

Studies show that there is a vast improvement in effectiveness when you offer at least 20 percent off.  In the age of daily deals, less than that is more easily dismissed.  Customers also like definitive amounts they can value, like $5, $10 or $20 off.  They can understand those offers because they have concrete value.

The Real Coupon Challenge Is About Controlling Distribution

Your most important challenge is not creating the offer, but making sure it gets in front of potential customers.  In fact, that’s why Groupon commands half of a pre-paid offer – they have a 30-million email customer email list and you don’t (yet).  And that of course is why local Internet marketing is more important than ever.

Local businesses have the ability to command distribution more now than in any time in history.  You used to have to spend money on a PR agent, billboard or a large postal mailing to get the word out.  Now you have more inexpensive or free online marketing tools than ever including your website, Facebook, Twitter, email and more.

With a little work and a continuous strategy, you don’t need the same paid resources to achieve distribution.  At LocalVox, we are always talking about the difference between advertising and marketing.  Advertising is an episodic spend to gain traffic, where as marketing is long term strategy to build assets that grow in value over time – your brand, your reputation, your SEO footprint and your distribution channels.

Coupons Improve the Effectiveness of All Your Distribution Channels

Coupons improve the conversion of each and every channel and they should be spread across all of them.  On local business websites, we see 3-4x improvements in conversion by putting your coupons prominently upon them.  We see similar effects on Facebook, Twitter and email as well as one other important effect – loyalty and retention increases.

When consumers opt in to your email list or like your Facebook page, they want more than just information.  It can be a challenge to make every local business update riveting to consumers if it’s just informational.  And let’s be honest with ourselves: We all want to feel special.  We want the oxytocin release a business can give us by telling us we are special and we deserve a coupon.

By offering them as part of your communciation strategy, they’re more likely to pay attention to the next communication and less likely to unsubscribe.  And of course, they are more likely to share a deal than other content – 27 percent of people share deals on social media.

Mobile Geo-targeted Coupons Bring Together Acquisition and Distribution

One great way to use coupons is to combine them with mobile marketing. Our studies have shown that mobile marketing currently has the highest return on investment (ROI) of any channel – even greater than email marketing.  Taking an effective coupon as discussed above, you can target people in your zip code on their mobile devices as they walk or drive by or as they sit on their couches browsing their iPads.

A well-designed mobile deal will require an email address to claim the coupon.  Those emails can be used for future customers mailings to drive repeat business.  Even if an individual person doesn’t initially redeem the coupon (which is a win), you now can continue to market to a highly qualified prospect who has expressed interest in your business – which is a win. Building an email list is one of the most successful tactics local businesses can leverage for marketing success.

Because the mobile ad market has more inventory (supply) than advertisers (demand) and because of its targeting capabilities, we find it to be an opportune time to leverage mobile marketing as a paid channel for distribution.

Go Forth and Coupon!

So that’s the basis of a good online coupon strategy. We think that businesses should always have an active coupon (or coupons) to use across their distribution channels.  Local businesses should always be increasing their email lists with mobile coupons, converting more customers on their website with coupons and offering their loyal customers reasons to come back with coupons. It’s a lot cheaper than the cost of acquisition and builds marketing assets that grow in value.

So what are you waiting for?  Go forth and coupon!

This post originally appeared on the author’s website.