Keep Discount Conditions Strict Enough

I’m home today, it’s lunchtime, so interspersed with my keystrokes writing this posting, I’m taking bites from a delicious pastrami sandwich. I got it for free at a local sandwich shop using a two-for-one coupon I’d clipped out of the newspaper. Or maybe it was my wife’s sandwich I got for free.
     I’m not telling you the name of the sandwich shop because I wouldn’t want you to look them up and blab about my secret: See, I’m so accustomed to the two-for-one coupon that appears each week in the newspaper that I won’t buy a sandwich there unless I have the coupon. Oh, I give excuses for being that way. I tell myself that although the sandwiches are great, they don’t have enough counter help. Since I have to wait, I deserve a free sandwich, I mumble.
     But the truth is that if the coupon offers weren’t so frequent and liberal, I wouldn’t wait for a coupon. I’d be spending more money there. The truth is that a discount coupon can hurt sales.
     Researchers at Massachusetts Institute of Technology gave promotional coupons to customers who came into a convenience store. For some, the offer was, “Spend at least $6 and get $1 off.” For others, it was, “Spend at least $2 and get $1 off.”
     Customers lived up—or down—to the goal set by the retailer’s coupon. Those required to spend at least $6.00 did that, while those required to spend only $2.00 didn’t exceed that amount by much. To make sense of this, it’s important for me to tell you something else: The researchers knew that purchases at the convenience store averaged about $4.00. So it appears that the “Spend at least $2” customers were actually spending less than they would have without the coupon.
     Now, I see a methodological problem with this field study. It’s possible the “Spend $2” people grabbed their 50% rebate and ended up with such good will that they got in the habit of visiting the store quite frequently, spending lots more money there. Whether that sort of thing happens is something you might want measure in your store.

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Customize Your Discount Coupons
Give Coupons Early and Proudly