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Shoestring Marketing Coupon’s Clinch the Sale

Date: October 18, 1995

Title: Shoestring Marketing/ Coupon”s Clinch the Sale

Author: Alf Nucifora

They”re distributed in such volume that they”ve almost become a second currency. Manufacturers and marketers give away billions of coupons each year. Why? Because in many instances, the humble coupon can turn indecision into buying action.

While any fool can discount a product and thereby devalue the currency of a brand, a well thought-out couponing effort can serve any number of valuable purposes. For example, it can support the introduction of a new product by generating trial purchases and it can generate repeat usage via the bounce-back coupon, which encourages current buyers to make a subsequent purchase.

The technology of couponing is proven. The formulas are reasonably precise and the rules clearly defined. Make it worth their while: If you want to stimulate consumer response, provide an offer that”s proportional to the price of the sale. A 10¢ coupon on a $3 item will fail to motivate the purchaser. A 50¢-off introductory offer stands a far better chance. The coupon should evoke interest from the customer without destroying the brand”s profitability. Make it easy to clip: Don”t get cute. Coupons go at the bottom of the page, preferably close to the corner. Make the coupon large and communicate the offer in bold, large, legible type. If possible, feature a photograph of the product itself. And pay attention to bar coding rules, etc., particularly if the coupon is to be handled through a third-party processor. Make me an offer that I can”t refuse: Be imaginative with your offer…cents off, self-liquidating offers (“this unique, one-of-a-kind widget, for the giveaway price of only $4.95, plus postage and handling”) and volume-movers (buy one, get one free). In every case ask yourself, “Does the offer provide a salient benefit to the customer? Will motivate the customer to action? Is it an offer that I can afford to make?” Get it into the right hands: There are various forms of coupon distribution. You need to pick one that is both cost effective and efficient, i.e., it should get the coupon into the hands of your targeted customer with minimal effort and at just the right time. Common options include: The on-page coupon or free-standing insert (FSI), that appears in magazine and newspaper advertising is an excellent and popular device for broad scale distribution. They are also wasteful.

Solo direct mail, i.e., the coupon is part of a singular mailing to the individual household. Because it involves the U.S. Postal Service, and little or no economy of scale, it is one of the most expensive means of distribution. But the right mailing list can increase response rate and minimize waste.

The merged mail coupon (sometimes called a co-op mailing) involves placing your coupon in with an envelope full of coupons for a variety of products and services, running the gamut from pizza restaurants to carpet shampoo specialists. In many ways, merged mail coupons represent the middle ground. What you gain in distribution efficiency you lose by being one in a crowd.

The in-store coupon, which includes any discount or incentive communicated within the confines of the store. Although, far from wide-spread, the in-store category has shown the greatest growth in past years, largely because of its ability to target qualified consumers at the all-important point-of-purchase. Many in-store programs are still in the experimental stage, but early results show tremendous promise.

Don”t forget the small type: Don”t forget to include an expiration date and communicate any legal requirements that are essential to the offer. Limit the expiration date of the coupon if you want to force immediate product trial/purchase, particularly for introductory products. Allow a longer expiration date if you”ve got a product that is normally purchased on an extended buying cycle, e.g., shampoo, shoe polish, soy sauce.

Stand up and be counted: If you”re running multiple coupon offers, make sure that each offer has its own unique coding (a small, discreet, buried code) so that you can track response rates. Don”t distribute a coupon unless you”re fully prepared to track the results, review the findings and conduct a pay-out analysis. Don”t have unrealistic expectations with respect to response rate. In most consumer categories, response rates from 1% to 5% are considered successful.

At some point or another, most marketers of consumer products and services are confronted with the decision of whether or not to run a coupon offer. Be aggressive, but understand your program objectives and follow the rules.

Alf Nucifora is an Atlanta-based marketing consultant. He can be reached via fax at 770-952-7834.

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