Coupon-Redemption Conventional Wisdom Sometimes Foolish

Overall coupon redemption rates are in decline in North America, and some of the conventional wisdom on couponing is out of date or simply wrong, according to ICOM, which studied redemption trends derived from its 20-year database, writes MarketingCharts.

ICOM said the data is from 6,300 targeted direct mail programs it has designed and 425 million coupons it has issued to 28 million US and Canadian households that voluntarily provide information about their purchasing preferences.

According to ICOM, these are among the Top 10 “myths” about coupon redemption:

• Myth #1: Short-term expirations drive immediate sales.
  Finding: Consumers need more time. A short expiry often cuts redemption far more than any increase in value can make up.
• Myth #2: Higher value always equals higher redemption.
  Finding: Value alone isn’t enough. Maximum redemption comes from an optimal value-expiration sweet spot.
• Myth #3: Store brand users aren’t worth pursuing with target coupon offers.
  Finding: 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 other competitive users.
• Myth #4: Targeting the most loyal users of a competitor’s product yields the best return on a coupon program.
  Finding: 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 #5: The presence of a sample is a requisite for driving high redemption rates.
  Finding: There are other factors much more likely to drive redemption rates. Some of those include expiration, value, current vs. competitive user, and frequent vs. infrequent coupon user.

MarketingCharts lists the rest of the top 10 “myths.”