Top Ten Myths About Coupon Redemption

Overall coupon redemption rates are in decline in the United States and Canada. As North American marketers search for answers to help them cut through the clutter arising from a proliferation of offers, the time has come to re-examine some of the conventional wisdom on couponing.

TORONTO (BusinessWire EON) July 31, 2007 -- Overall coupon redemption rates are in decline in the United States and Canada. As North American marketers search for answers to help them cut through the clutter arising from a proliferation of offers, the time has come to re-examine some of the conventional wisdom on couponing.

Much of that conventional wisdom is wrong, say ICOM Information & Communications marketing and consumer insight experts Peter Meyers and Steve Litt. Their assertion is based on redemption trends derived from a 20-year database ICOM built in the course of designing 6,300 targeted direct mail programs and issuing 425 million coupons to 28 million U.S. and Canadian households that voluntarily provide information about their purchasing preferences. ICOM’s database uniquely differentiates redemption behavior between current, competitive and new users of products.

According to Meyers and Litt, these are the top ten myths about coupon redemption:

Myth #1: Short-term expirations drive immediate sales.
Fact: 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.
Fact: 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.
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
other competitive users.

Myth #4: 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 #5: 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 vs.
competitive user, and frequent vs. infrequent coupon user.

Myth #6: The current users of a product don't need long expirations
to get them to redeem a coupon offer.
Fact: Even for current users, to gain more than two-thirds of
potential redemptions, offers to current users must be six months at
minimum, and in the 10-12 month range for personal care categories
like skin and beauty products.

Myth #7: 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 #8: 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 have only half as many redemptions as longer term offers.

Myth # 9: 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.

Myth #10: Americans and Canadians share the same coupon redemption
behavior.
Fact: There are shared traits but the difference in absolute
redemption rate is substantial. Americans receive 10 times more mail
than Canadians and are less likely to respond to offers. Canadians
favor contemplation over quick action and require longer expiration
terms. The net result: the decline in overall coupon redemption rates
is steeper in the United States.

ICOM will provide additional in-depth analysis of coupon redemption trends, along with practical strategies to help marketers face the challenges presented by coupon clutter, in a free webinar to be hosted September 18, 2007 by Meyers and Litt. For more information or to register, visit www.i-com.com/top10myths (http://www.i-com.com/top10myths).

About ICOM: ICOM Information & Communications L.P., Toronto, is a full service provider of targeted list, data communication solutions and analytic services for the consumer packaged goods (CPG), over the counter (OTC), pharmaceutical, market research, and auto industries in North America, as well as the direct response sector in Canada. Recognized as a leader in targeted marketing solutions designed to enhance integrated marketing initiatives and drive return on investment, ICOM manages the largest permission-based direct response survey database in North America, providing its clients with superior customer insight and marketing results.