How Retailers Can Maximize The Power of Coupons

Here’s a lesson in consumer loyalty boiled down to three words: Seven in 10.

This is the number of brand-loyal shoppers (69%) who would switch labels while in the store based on discounts received on their mobile device, according to new survey results by shopper marketing firm Valassis. Roughly 80% of those surveyed said a coupon would influence them to purchase a brand they typically would not buy.

Despite the growth of low-priced retailers such as Aldi, Trader Joe’s and others, the research confirms that coupons still heavily influence consumer purchase decisions. And this raises questions regarding the psychology behind consumer price perceptions and what exactly flips the “buy” switch.

Does the thrill of saving money through a coupon outshine the act of paying a lower, everyday price for the same item somewhere else? Evidence suggests it might, which can have daily (and pricey) implications for traditional and everyday-low-price merchants (EDLP), as well as product manufacturers.

Put another way, experience may be a bigger factor in effective discounting than savings. Before exposing what merchants and manufacturers can learn from the research, let’s explore the psychology behind discounts.

Coupons On The Brain

The mental rush associated with saving money is well established. However, some studies indicate the excitement of redeeming a coupon is greater than simply paying less for a product that is not discounted. It comes down to power.

According to a study cited by Psychology Today, habitual coupon users prefer to buy products with a coupon even if it means spending more money. Specifically, shoppers preferred to spend $4.29 for a six-pack of yogurt, after applying a 50-cent coupon than paying $3.99 for the same yogurt at the same store during a different week.

By choosing a purchase that requires savings, the research explains, consumers feel they have control over the discount, which nurtures “smart shopper feelings.”

“The thrill of using a coupon and getting a better deal than other consumers takes precedence and shoppers lose sight of the actual cost,” Psychology Today explains. “The result: Regular coupon users often spend more for an item than those who don’t use coupons.”

84% Choose Stores By Discounts

The Valassis study, “2K17 Valassis Coupon Intelligence Report,” backs up this theory.

According to the findings, more than two-thirds of shoppers will buy a product only if they have a coupon for it. This makes that product an added item. Almost nine in 10 (86%) make purchases based on in-store discounts, such as through circulars or mobile notifications.

Other results of the study show:

• 86% of the shoppers surveyed said coupons have influenced them to try a new product.


• 84% shoppers say coupons influence their store choices.


• 77% decide which store
to shop based on where they can use paper coupons; 67% decide which store to shop based on where they can use paperless discounts, such as those downloaded to their loyalty cards.


• 75% of those surveyed print coupons from the internet.

But how do coupons stack up against everyday low pricing from the retailer’s perspective? In separate research, it’s been shown that planned discounts generate higher revenue for retailers than everyday low pricing. On the other hand, EDLP gives merchants better control of inventory management, forecasting and related expenses.

Clip n’ Save Tips

The takeaway is that when it comes to shopper preferences on price, people want the power. History indicates this as well as the research. Remember what happened when J.C. Penney opted to drop coupons in favor of EDLP several years ago — sales dropped by 20% in the first quarter.

Keeping these points in mind, following are three takeaways for all retailers, as well as product makers, based on the research findings:

• Put relevance before reductions: Regardless of the promotion, it will most likely resonate if it hits one of the rings that define the lifestyle of the target shopper. The more closely the offer hits, the better the customer experience and thus, customer engagement. Purchase data can enable retailers to tailor offers to individual shoppers. A supermarket can, for example, create and send customized coupon books based on a shopper’s previous purchases.


• Use the technology: Investments in data collection and related analytics are increasingly no longer a “nice to have” in big retail. A unique customer identifier, such as through an opt-in mobile app, can help a retailer understand a particular shopper’s browsing patterns both online and in-store. It can, for example, anticipate that she will shop certain areas of the store and send coupons for products that complement other items she regularly buys.


• Listen, literally: We shouldn’t ignore the potentiality of the consumer’s role in the promotion process. Retail marketers can be masters of engagement, metabolizing consumer purchase data into a variety of shopper segments to which they can tailor offers. However, merchants still risk misreading the signals. The sure-fire way to learn if a coupon hits its sweet spot is by asking the target shopper. A retailer can, for example, offer shoppers a range of coupons they can select from in return for conducting a survey. Those selections would confirm specific preferences.

What this all boils down to is the experience. When it comes to consumer loyalty and engagement, a promotion can be an effective attention getter. But it has to satisfy that thrill-of-the-hunt urge in order to leave an imprint. The goal of a coupon should not be to get the shopper to the store once but to get her to plan her return.

Source: B2C