Moving Products: Understanding Coupons
I have been asked in to consult with a number of companies (agencies, start ups, media platforms) to help them with their coupon offerings for CPG brands. There seems to be a major disconnect
between companies that want to recommend coupons as part of programs or platforms and the basic understanding of how coupons work.
At some point in the conversation, I ask the team if any of them have used a coupon (digital or paper) recently. I am generally greeted with silence. I then ask who shops in a grocery/mass merchandiser store on a regular basis, and you could hear crickets.
It’s imperative that anyone who wants to offer/understand coupons for a grocery/mass shopping experience go out and use coupons. Find them in the Sunday paper, print them out at home, scan them from a retailer’s app or load them to a shopper card. (If your company is not located near a store that takes coupons then take a field trip. WalMart is the largest redeemer of grocery coupons, so it’s safe to say you can find a store nearby or split your group into teams and send them to different types of stores for different experiences.)
There’s a lot of information online. Kantar publishes studies a few times a year that outline CPG coupon usage and FSI media ad spend (up 17% in 2012). The latest infographic showing a 35% increase in digital coupon usage was released and reprinted in Supermarket News in November 2012. There will probably be an announcement shortly comparing 2012 to 2011.
It’s not enough to suggest coupons as part of a program and then leave it up to the company to choose the vendor. It’s important to show your clients that you understand the coupon landscape, the basics of how they work and how they impact a program budget.
I understand that many CPGs have preferred coupon vendors. If that’s the case,
ask the client who the vendor is and then contact that vendor and get educated.
Next, understand the coupon redemption path. How a paper coupon is actually redeemed and how a CPG reimburses the retailer for the coupon value is very important. Often a new coupon company will offer to act as the clearinghouse. However, CPGs have financial systems in place and will not be willing to hand over the checkbook to another company. Retailers have their own relationships with their clearinghouses that need to be considered, as well.
Lastly, you need to understand why coupons are a good idea and when they should be used strategically.
If you are giggling to yourself over the use of the word “strategically,” then you don’t understand how coupons are truly useful. They are not meant to be used all of the time in order to build a brand. All of the other work that you are doing to help your clients with relevant, brand-equity building programs should be doing most of the heavy lifting. But a coupon incentive delivered at the right time, in the right vehicle, can move a product from the shelf into the cart.