Common Myths About Couponing Revealed
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Free Download - 7 Online Tactics That Insure Customers Loyalty By Allan Katz |
I believe in couponing as a prospecting tool to get new customers in the door. But that’s about it. Constant couponing simply trains your customer to expect a coupon regularly and does not really build long lasting customer loyalty.
So when I read an article in Target Marketing Magazine, written by Steve Litt and Peter Meyers of ICOM Information and Communications, it caught my attention. Their basic premise, based on a study of a 20 year database from 6,300 direct mail programs, is that “much of the conventional wisdom about couponing is wrong.”
The study was an analysis of coupon redemption trends in the health and beauty, food and beverage and apparel industries. 425 million coupons were issued to 28 million U.S. and Canadian households.
What they found was shocking. As you probably know, a properly designed coupon has an expiration date and a certain value. Conventional marketing wisdom dictates that the shorter the expiration date, the quicker the prospect will respond, because of the law of scarcity of time.
However, today consumers are busier than ever, enjoy dual incomes and are flooded with thousands of choices in every product category. Therefore, as the consumer model changes, the coupon model must also change.
It seems from the research that value is becoming more important to consumers and the trend has been to cut expiration lengths to drive action quickly. The fact is that the research shows that from 1996 to 2000 consumers took an average of 5.5 months from when they received a coupon offer and its redemption. From 2001 to 2006 average redemption times for the same consumer leapt to 6.5 months. In the majority of cases, according to Litt and Meyers, “a shorter expiration length reduces redemption far more than any corresponding increase in value can make up.”
DISCLAIMER:
Keep in mind that this study was done on consumer products commonly found in supermarkets so your retail marketing scenario or industry may be different, but it is definitely worth a test. Retail customers are waiting longer in between visits and this may parallel the trend.
Once a customer has made her initial purchase what incentive are you giving her to come back? Here again targeted offers on frequently purchased items need a longer expiration date than earlier thought. Targeted offers with expiration dates shorter than 6 months in general reap only half as much redemption as longer term offers.
ENCOURAGING LOYALTY
As you lead your customers up the loyalty ladder, couponing can be counter productive if you use it constantly and offer the same discount to each and every customer without regard to recency, frequency or monetary value. Valuable customers who shop with often require much less of an offer value than someone who has never purchased from you before.
Begin today to test different expiration dates on your coupons, six months and longer, to determine how much of a difference in response it will make. Think about this way. If the consumer is interested they might clip the coupon and put it up on their refrigerator door, waiting to take advantage of your offer. Every day when they get a bite to eat they will see your name before their very eyes right there in front of them. It’s like a mini-billboard constantly reminding serious potential buyers of your services.
Steve Litt, product director and Peter Meyers, V.P. of Marketing, are with ICOM Information and Communications, a Toronto-based provider of targeted lists and analytical services. They can be reached at http://i-com.com
Common Myths About Couponing Revealed - To learn more about this author, visit Allan Katz's Website.
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Loyaltyblog - For savvy small business people and entrepreneurs who want solid marketing advice on how to attract new customers and keep them loyal. I'm The Loyalty Coach and my mission in life is to help retailers and service companies attract more customers and keep them loyal through the use of proven marketing techniques & tactics I've perfected for my clients over the past 25 years.
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