Judge Coupon Campaigns by Objectives

A retailer might intend a discount coupon campaign to introduce shoppers to products, services, or categories. Or a retailer might issue coupons to draw in shoppers from other retailers on items the target audiences have commonly purchased in the past. Those are only two of the numerous possible objectives for a coupon campaign, but they are the ones looked at in a set of studies based at Universidad de La Sabana in Bogotá, Colombia and IESE Business School in Barcelona, Spain.
     The upshot of the studies was that the ways in coupons can build profitability depend on the type of campaign objective and on the nature of the item you’re discounting. Therefore, clarify your objective before you design the campaign, and then evaluate the success of the campaign in terms of that objective.
     The nature of the couponed item also makes a difference. In the Bogotá/Barcelona research, what made a difference in effectiveness included:

• How often consumers purchase such items 
• The number of alternatives 
• The price range among the alternatives 
• The frequency and regularity of discounts on the item 
• The size of the discount 

     Other factors to consider:

• The degree to which the consumer believes the coupon is customized for them. 
• How far in advance of the purchase decision the coupons are distributed. Coupons presented at the store entrance drive up sales more than do coupons available in the aisles of stores. Distribute coupons as early in the shopping process as possible. 
• Conditions for coupon use. When coupon redemption requires the customer to spend more on an item than they’d planned to, the coupon redeemer increases the amount they are willing to spend on other items as well. 

     Slice-and-dice your campaign results by factors like these to untangle what’s really happening.
     In your analyses, also recognize profitability comes from those who notice, but don’t redeem, their coupons. Researchers at University of Virginia found that such consumers spent more in the stores issuing the coupons than did consumers not receiving the coupons. Because the large majority of people who receive coupons don’t redeem them, the sales lift caused by a coupon campaign comes mostly from the non-redeemers. There are many more of them, even if each spends only a little more.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Add On the Value of Coupons As Ads
Clip Mistaken Notions About Coupon Users