The Redemption Sweet Spot

Debunking seven common myths about couponing

December 2007 By Peter Meyers And Steve Litt

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Myth #1: Store-brand users aren’t worth pursuing with target coupon offers.

Fact: As store brands upgrade their quality, fewer store-brand consumers will be price-centric, and more will be quality- and feature-conscious. They’ll often redeem targeted offers at rates as high as those of other competitive users.

Myth #2: Targeting the most loyal users of a competitor’s product yields the best return on a coupon program.

Fact: Light to moderately loyal competitive users are more likely to try a new product and will do so on a lower-value coupon offer.

Myth #3: The presence of a sample is a requisite for driving high redemption rates.

Fact: There are other factors much more likely to drive redemption rates. Some of those include expiration, value, current versus competitive user, and frequent versus infrequent coupon user.

Myth #4: The current users of a product don’t need long expirations to get them to redeem a coupon offer.

Fact: To gain more than two-thirds of potential redemptions—even with current users of your product—offers must be valid for six months at a minimum, and in the 10- to 12-month range for personal care categories like skin and beauty products.

Myth #5: Coupon clutter is pervasive in all delivery strategies.

Fact: Escalated volume is not a factor in targeted coupons mailed directly to homes. Notably, targeted promotion redemption rates are up in this sector for household products and pet products.

Myth #6: Coupon offers on frequently purchased items are redeemed quickly, so an expiration of less than six months will do.

Fact: Targeted offers with expirations shorter than six months in general reap only half as many redemptions as longer term offers.

Myth #7: Current and competitive product users need the same coupon value to be motivated.

Fact: In any product sector, current users typically require much less offer value to drive them to purchase. Sectors vary, but it often takes 40 percent less value to move a current user than a competitive user.

Steve Litt is product director at ICOM Information & Communications, a Toronto-based provider of targeted list, data communication solutions and analytic services. Peter Meyers is vice president of marketing at ICOM Information & Communications. Both Litt and Meyers can be reached at (416) 297-7359.