The top ten myths about coupons - and the truth

WM Circle Logo

By: Wise Marketer Staff |

Posted on August 7, 2007

The top ten myths about coupons - and the truth

Overall coupon redemption rates are in decline in the United States and Canada, according to consumer insight experts at ICOM Information & Communications, which has published its top ten list of myths about couponing.

According to Peter Meyers and Steve Litt of ICOM, based on coupon redemption trends from a 20-year database that covers some 425 million coupons and 28 million US and Canadian households, the top ten myths concerning coupon redemption are as follows:

  1. Myth: Short-term expirations drive immediate sales Wrong. Consumers need more time. A short expiry often cuts redemption far more than any increase in value can make up.  
  2. Myth: Higher value always equals higher redemption Wrong. Value alone isn't enough. Maximum redemption comes from setting an optimal value/expiry "sweet spot".  
  3. Myth: Store brand users aren't worth pursuing with target coupon offers Wrong. As store brands upgrade their quality, fewer store brand consumers will be price-centric and more will be quality and feature conscious. They will often redeem targeted offers at rates as high as other competitive users.  
  4. Myth: A competitor's most loyal users yield the best return Wrong. Light to moderately loyal competitive users are more likely to try a new product and will do so on a lower-value coupon offer.  
  5. Myth: A sample is a prerequisite for a high redemption rate Wrong. There are other factors that are much more likely to drive redemption rates. Some of those include expiration, value, current vs. competitive users, and frequent vs. infrequent coupon users.  
  6. Myth: Long expiry dates aren't needed for current product users Wrong. Even for current users, to gain more than two-thirds of potential redemptions, offers must be six months at the minimum, and in the 10-12 month range for personal care categories such as skin and beauty products.  
  7. Myth: Coupon clutter is pervasive in all delivery strategies Wrong. Escalated volume is not a factor in targeted coupons mailed directly to homes. Most notably, targeted promotion redemption rates are currently up in this sector for household products and pet products.  
  8. Myth: Coupons for frequently purchased items are redeemed quickly, so an expiration of less than six months is fine. Wrong. Targeted offers with expiry periods shorter than six months generally have only half as many redemptions as longer term offers.  
  9. Myth: Current and competitive product users are motivated by the same coupon value Wrong. In any product sector, current users typically require much less offer value to drive them to purchase. Sectors vary but it often takes 40% less value to move a current user than a competitive user.  
  10. Myth: American and Canadian redemption behaviour is shared Wrong. There are shared characteristics but the difference in absolute redemption rate is substantial. Americans receive 10 times more mail than Canadians and, consequently, are less likely to respond to these offers. Canadians tend to favour contemplation rather than quick action, and therefore require longer coupon expiry periods. The result, not surprisingly, has been that the decline in overall coupon redemption rates is steeper in the United States than in Canada.

ICOM is to host a webinar on 18th September 2007 (1.00pm EST) to provide further analysis of coupon redemption trends, along with strategies to help counter "coupon clutter" (click here).

More Info: