Expand Your Customer Base With Coupons

Frugality is top of the mind for today's consumers.
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This story appears in the May 2009 issue of Entrepreneur. Subscribe »

Frugality is top of mind for today's consumers, who redeemed approximately 2.6 billion manufacturer-distributed coupons in 2008. And, given spending habits in a recession, coupon redemption rates are likely to keep rising. For startup entrepreneurs, this heightened interest in coupons spells opportunity. "Consumers are more sensitive to promotions, and marketers are going to be looking for innovative methods to appeal to them," says Matthew Tilley, director of marketing at promotions logistics company Inmar. Scarborough Research reports that online coupon usage is up 83 percent since 2005, leading to exponential growth at startups like CouponAlbum.com, CouponChief.com and CouponMountain.com.

In 2005, CouponChief.com co-founders Gary Gray and Kyle Hoggatt, both 29, used personal credit cards to start their website, which features various coupon codes. They invested any spare money into the San Diego company, and last year, they saved shoppers an estimated $2.9 million. Recently, they launched Pays-2-Share, a rebate program that rewards people for contributing unique coupon codes.

CouponChief.com now receives about 250,000 unique visitors a month, and Gray expects to see that number jump by 50 percent this year. "There are hundreds of coupon sites, so you need a unique model that catches on to succeed," he says. "We're positioned for long-term success because our program encourages participation, pays people back and gets us a larger database of real-time codes."

 

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