Lately I've been pondering the effectiveness of promoting with coupons.

There are a couple of merchants that I have purchased from who send out coupon discount codes with clocklike regularity. I see the effect it has on me as a shopper, and I wonder if those coupons are really as productive as the merchants think?

The first time I bought something from Merchant X, I paid the price posted on the site and was happy to do so. But once I was on their mailing list, they started sending so many discount codes that I have effectively been trained to never, ever pay the posted price again.

I go to their site, add the items I want to my shopping cart, then I go away to wait, because I know that I'd be stupid to buy the items today. I know that if I wait a few days, another discount code will come along in my email that knocks 10%, 15%, sometimes 20% off the price I'd otherwise have been willing to pay.

From the merchant's end it would look like the coupon was an effective promotion, but was it really?

I'm just an occasional shopper, but there's a thriving subculture of "couponers" out there who practically make it their life's work to trade coupon codes and chase discounts.

What are the pros and cons of catering to the discount mindset? What makes the difference between offering an occasional special, versus training your customers to expect permanent discounts?

Sounds like the b&m store down the road from my office. They alternate between discounting individual items and discounting multibuys. Nobody in their right mind ever pays list price.

The effect on me when looking at similar b&m stores in the area is to think "I'll come back when they discount that".

And the traffic boost you can get from coupon sites like FatWallet can be substantial. I have had site traffic go up by 10x on one occasion from someone putting my coupon on the site. These dedicated coupon people will then post the coupon all over the net so that you get a lot of traffic and backlinks, If your total offer is good you will get a lot of sales too.

There are some other threads here about consumer behaviour with coupons 
[webmasterworld.com...] 
and this was interesting (from otc_cmnn)... 
"So now the question is... when you make coupons such a blatantly obvious and integral part of your site, what % of users actually USE a coupon? Naturally it will be different for everyone, but for our common consumer goods $60 average order site - it is less than 35% of checkouts. " from this thread [webmasterworld.com...]

Coupons have especially become the "to do" thing when shopping online.

Several merchants themselves inform the customer of possible coupon deals by displaying "applying coupon" on check out pages. This leads the customer to search for coupons on Google etc and then come back to the merchant site to finish the purchase.

I think, merchants should only display coupon "boxes" when the visitor has actually landed from a coupon website or an affiliate.

On the other hand, offline coupons are a valuable tool for "offline "merchants as it actually increase the footfall and conversions in the stores.

I've been on both sides of this equation.

For a merchant, coupons are a double edged sword. You got new customers but they eat into your margins, big time. Coupons are not ideal for retailers but they may work if you measure repeat business.

Now for SEO/SEM, coupons are a niche just like geo-targeting is a niche. Coupons are a convenient anchor to go after, as is geo-targetting. And the success you get will be based on your implementation of the practice. Simply deciding to do it is a small fraction of the effort required to be successful at it.

(and yes, there's a seedy side of coupon marketing involving cookie stuffing that is so rampant anyone mentioning coupons may be put in that bucket.)