Marketing and the coupon renaissance by Colin Forrest, Head of Marketing, Pitney Bowes on 15-Apr-2013

In 1888 a fledgling company distributed what is believed to be the first ever discount coupon, offering a free sample of its product to American consumers. Between 1894 and 1913 an estimated one in nine Americans had taken the company up on its offer, enjoying a free taste of a new soda by the name of Coca-Cola.

Discount coupons have been used as a marketing device ever since, although popularity has waxed and waned. Evidence points to coupon usage lying somewhat dormant over the last 20 years. But today’s consumers have shaken the technique awake. Indeed – coupon usage is up 14.7% since the 2008 recession.

Now, international research from communications experts, Pitney Bowes, reveals that coupons are making a comeback and small businesses are in the best position to gain. The whitepaper, entitled ‘The Coupon Renaissance’, revealed that 76% of consumers would buy more from local businesses if they offered coupon incentives. With many small local businesses struggling in today’s economic climate, the figures offer a positive outlook that SMEs should capitalise on.

The research showed that an impressive 80% of consumers have redeemed a coupon in the last year and half (49%) of customers redeem them as frequently as one per month. Colin Forrest, Head of Marketing for UK and ROI at Pitney Bowes, said "Small businesses ought not to be intimidated by the extensive variety of offerings and heavy discounts provided by larger organisations. Our research revealed that as many as 85% of customers would go to the effort of redeeming a coupon which offered a discount of as little as 10%. Therefore it is important that this marketing tool is not seen as a cost drainer, but rather an effective return on investment. In a society of increasing choice and consumer autonomy, small businesses should not underestimate the power of the coupon as a strong marketing pull."

The whitepaper also revealed that the overriding reason customers don’t redeem coupons is because they fail to note the expiry date in time. A total of 39% are missing out on great incentives for this very reason.

"In today’s world, very few people rely on just one kind of medium to interact with businesses. At first glance, a consumer making a DVD purchase may look like a singular interaction. But consider the buying journey to get to the purchase point. The shopper may have seen an advert in a magazine, scanned a QR code to take them to the web, viewed preview scenes online, opted-in to receive e-mail updates – before eventually deciding to buy in store."

The discount coupon can be offered at any stage of this purchasing chain – either digitally or physically. But first, the business needs to know who this shopper is. Why? As we have seen, consumers are choosy about which offers they redeem on, with over a quarter regarding nothing less than a 20% discount to be worthy of consideration. This still leaves a considerable 75% who may be open to lesser offers. Gaining a joined-up view of customer behaviour can help to ensure that the right level of offer is targeted at the right consumer or group of consumers.

"Being joined-up means tracking interactions across all touch-points – whether web, phone, mail and more – and using the information gained to inform on-going communications and campaigns. The perceived value of a consumer will vary depending on the strategy of each business, but coupons can be used to encourage the loyalty of big-spenders or to tempt infrequent purchasers to buy more. The level of offer will be tailored to each audience, perhaps a greater discount for the big-spenders as a ‘thank you’ and a smaller discount for those who have bought less often."

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