How to Offer Coupons Effectively

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Don’t Lose Your Shirt!

How to Offer Coupons Effectively

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Coupons have long been a mystery to many manufacturers (especially smaller companies) who are trying to cash in on the extreme couponing trend without losing their shirts in the process.  Understanding the basics of couponing will help you make better decisions as to where to place your coupons to best meet your strategic goals.  My team and I have been producing consumer coupons for the last twelve years (and for a while I was an avid couponer). We have found there are best practices, tips and tricks that you should know.  Over the next several blogs, I’m going to delve into couponing to help dispel some of the mystery of what can be a very lucrative promotion.

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When we started couponing, coupon codes appeared complicated, a list of numbers that no one could seemingly read and, there was nowhere that you could get the information easily (the internet was in its infancy then). We soon learned that coupons at that time were extremely easy to read if you knew the language. The problem was that this tipped the manufacturers hand to the consumer. Family codes were not as widely used unless you had a big brand and did a lot of couponing, so for many manufacturers, if you had a savvy consumer who knew how to read these codes, you could end up paying a lot of money out on coupons redeemed for items that were not even yours.

Thankfully, coupon codes are no longer transparent to the consumer and now give manufacturers and retailers more tools to control  what is being offered and on what products, but you need to know a few things about coupons before you jump into the mix.  You also should be aware of what will make a coupon successful and what will leave your coupons unclipped or unprinted.
In the coupon landscape today, there are three major ways that consumers can get coupons. These three methods are by no means exhaustive, but they are the leading avenues used by consumers.  There are also some new technologies that I will discuss in the end of this blog, but for now let’s look at conventional coupons.

Coupon Types

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Free Standing Insert

The first coupon I want to talk about is called an free standing insert (FSI) which are the coupon packets that you will find in your newspapers, normally on Sundays.  These coupons have been around for a long time and offer you not only space for your coupons, but also some ad space.  These FSI coupons can be purchased in ¼ page, ½ page and full page but they are not inexpensive.  While you can segregate your FSI coupon to be available regionally or nationally, you will still be looking at prices starting around $15,000 and going up (not including redemption).  FSI coupon redemption rates usually average around 0.5 – 1%. These coupons are great for new products because they get your item in front of people who coupon and encourage trial.  If you are trying to obtain reads from people who are not couponers, this is not where you would want to direct your efforts. However, one of the main advantages of these types of coupons is that consumers can use them to help plan their shopping trips.

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In-Store / On-Pack

In-store or on-pack coupons also known as instant redeemable coupons can come in the way of store circulars, they can be affixed to a product or handed out at the store level.  These coupons are more likely to be redeemed because they are provided in the store at the time of purchase, so you should assume a higher redemption than an FSI.  This redemption rate can also be dependent upon the retailer, some are good at bringing consumer attention to in-store coupons while others are not.  For retailers, it is in their best interest to advertise these coupons as it affords them a volume lift at no cost to them. When planning these types of coupons, estimating redemption levels should skew high. We have had coupon redemption rates on in-store coupons as high as 27%, but normally they range between 5 – 7%.

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Catalina Coupons

The Catalina coupon is another type that you may see in store distributed after your purchase is made and are often dependent on what you buy during that shopping trip or what your store loyalty card notates that you have purchased in the past.  These coupons can be either retailer or manufacturer driven.  They are designed to get consumers to return to the store to purchase or are a great way to stimulate trial purchase of new products.  These campaigns start at around $25,000 (redemption not included) and do have minimums.  They also have an added benefit, most shoppers at least look at this coupon along with their receipts.

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Online Printables

Are you familiar with the online printable coupon?  These coupons have become very popular over the last five years and can be printed from either a coupon site such as coupons.com or directly from manufacturer’s websites or social media channels.  These can usually be printed at a rate of two per household/email address.  Obviously this is the easiest system for consumers to cheat as they could enter multiple email addresses, use different computers or printers (what most coupon systems track) or they could possibly create their own coupons using codes stolen online from other coupons.  There is some of this cheating going on and it has barred some retailers from taking these coupons because of liability issues, but it is a great way for manufacturers who want to engage with consumers directly to do so and attract their loyalty with repeat offers.  By and large, most consumers are functioning within the online coupon rules.  We use coupons to get consumers to engage online across various social media channels plus we let retailers know that we are going to be putting out coupons for their consumers.  Demand can be up to 30% higher when there is a coupon promotional opportunity and retailers love to see the volume increase, especially when it requires nothing from them.

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Online Rebate

The last type of coupon “rebate” program that I wanted to mention was a new online program that has been in play for just over a year called Ibotta (I-bought-a).  This is a free app that can be downloaded to your mobile phone that will earn you cash back from buying products without the coupon clipping.  In procuring their rebate, the consumer must answer a question about the product, take a poll, watch a video or learn a fact.  Once they do so and prove they bought the product by uploading the receipt photo via their phone, the rebate money that they have earned will get downloaded directly into their PayPal account.  With over 3 million downloads in just over a year and the added benefit of being paperless, we think this is the new couponing trend.  Plus they don’t have minimums and are just  slightly more expensive than regular coupons.  If you are looking at getting into coupons, we think that this should be something that you are looking at.

In my next blog post, I will be pointing out the finer points of coupons themselves, and what you should and shouldn’t have present on those coupons.

Are you looking for help with your coupons? At Social Experiment, we can help, contact us today!