Coupons

Part
01
of five
Part
01

Using Coupons: Motivations

Some of the most common reasons people have for using coupons are that they feel a great deal of happiness when they use a discount coupon. They feel smarter as they save money with the offer during shopping. This includes online shopping. Unfortunately, this habit of using a coupon/offer every time that people go shopping can become an addiction.

Use of Coupons and Happiness

  • The feeling of happiness that people feel when they use a coupon is indeed one of the main motivators to use them. Happiness was the predominant feeling cited by a group of people in an experiment led by Dr Paul J. Zak from Claremont Graduate University.
  • In Dr Zak's experiment, half of the participants were granted a $10 online coupon and the other half were not. The key finding was a visible rise of oxytocin (the hormone of happiness) up to a 38% higher level than that of people kissing.
  • The reduction of stress and consequent increase in happiness was detected by measuring the reduction in respiration rate of 32% compared with people without a coupon. Heart beat rate was also reduced by 5% and hand palm-sweating was 20 times lower in people with coupons.
  • In the words of Dr Zak: "These results suggest that coupons can directly impact the happiness of people, promote positive health and increase the ability to handle stressful situations, all of which is particularly valuable as we head into the holiday season when stress levels tend to be at an all-time high".

Using Coupons Make People Feel Smart

  • When a person is looking for a coupon, they are looking for a deal that makes them feel that they are catching an exclusive offer and that they are going to save money in that purchase. This is a strong motivation to use them. However, the truth is that this is rarely the case.
  • In the words of professor Robert C. Webb from Boston Suffolk University: "A major part of the motivation for using coupons comes from the feeling of being a thrifty and smart shopper" several investigations support this assertion.
  • In a Hawk Incentives study, a Blackhawk Network business, where 2000 American adults were evaluated about their attitudes and expectations towards deal-seeking behaviors; it was found that 40% of respondents said that they feel smart when they can find the best deals such as when using coupons.
  • The psychology behind coupon-use states that the consumer sees in the coupon the same "opportunity" that they see in a "sale" sign in the rack of a retail store. Almost every time these "offers" give the same price of the product in other stores. But the sale and offer words, the % sign, make people feel smarter when shopping.

The Purchase Effect of Couponing

  • Two-thirds of the Americans surveyed in the Retail Me Not survey, said that they made a purchase they weren't originally planning to make solely because they found a discount coupon.
  • 80% of the people surveyed answered that finding a coupon or offer encouraged them to make a first-time purchase with a new brand. Even in the online market, 74% of people surveyed said that finding a coupon is vital in choosing where to buy online.
  • The motivation to find a great deal through coupons plays an important psychological role in American purchasing practices. It leads them to give the product price high importance. People even affirm that they can't complete a purchase if they do not catch a discount coupon or offer. This can trigger an unpleasant habit and become an addiction.

Research Strategy

Your research team began the research on reliable websites like Campaign Monitor and PRNewswire; these websites provided a pattern with which to consider what motivations are considered as the most important. In Campaign Monitor, a website specialized in marketing, 5 factors that motivate people to use coupons were cited; first place in the list was "happiness". Considering that the Campaign Monitor's professionals had to select which factors are crucial to be on the list, the motivator "happiness" was considered a "top motivation". Other websites corroborated this information, such as Indoor Media and Business Wire with the article written by the respected Dr Zak. On the Indoor Media website the second motivation listed on this report was found. It was selected as "top" because the reliable information provided in this website was corroborated by a study published in the PRNewswire website; where 40% of 2000 American people answered that the use of coupons make them feel smarter. That is why it was selected as a "top motivator". Lastly, the third motivator was found in the article of the Campaign Monitor website. Again, it was also corroborated by a study found on the INC website. It is crucial to mention that some sources are more than two years old. That being said, the insights found there are not affected since this information is still reliable and was corroborated by findings from more recent sources.


Part
02
of five
Part
02

Using Coupons: Barriers

Two of the top reasons people resist using coupons are lack of time and embarrassment. More information regarding this topic is provided below.

Lack of Time

  • People associate time with their lack of interest to use coupons. According to a survey, non-couponers feel that finding coupons is time-consuming.
  • Moreover, some people say a key reason for not using coupons is "because it takes too much effort." This means that those who care most about saving time when shopping, are willing to give up saving money.
  • Also, when people have coupons, these tend to expire before they even have time to use them. It has been found that coupon expiration dates have become shorter.
  • According to a survey taken by non-couponers, around 28% of them said that they lost interest in coupons due to the lack of time, 60% said that their coupons expired before they had time to use them, and 48% said that finding coupons takes too much effort and time.

Embarrassment

  • Coupon usage has been seen to be avoided by consumers "to reduce negative social consequences." According to research, consumers may be afraid of looking cheap to other shoppers or to the cashier.
  • In addition to this, some people want to avoid being labeled as "extreme couponers," as they try to avoid "stigma by association." This may be due to the fact that coupon enthusiasts are depicted in a negative way on television shows and online.
  • Some sites even write about why people shouldn't be embarrassed about using coupons and other sites suggest that some people are ashamed of using coupons because it may reveal their socioeconomic status.
  • Experts like Terri Lynn, a media relations consultant, advice to not be embarrassed for wanting to save money on purchases. This provides evidence that many people may avoid using coupons because of embarrassment.

Research Strategy:

To provide some of the top reasons people resist using coupons, we looked into sources that revealed researched data on why some people do not use coupons. After we identified some of the top reasons, we summarized the findings. We considered the reasons found to be "top" because they were the ones mentioned the most online.



Part
03
of five
Part
03

Top Sources for Coupons

In 2019, about 92% of Americans used a coupon for shopping. The top sources for coupons in the US include print media, digital media, and loyalty cards. About 80% of customers get influenced by coupons while making a purchasing decision. Gen-Z, millennials, and Gen-X are 2x-5x times more likely to use a mobile coupon over printed ones.

Top Sources of Coupons

  • In 2019, the top-3 sources used to obtain coupons in the US include print media (mail, magazines, and newspapers) at 51%, digital media (email, text, QR code, websites, and apps) at 39%, and loyalty cards (preferred customer cards) at 26%.
  • The most preferred sources for discount coupons among Americans included mail (50%), newspaper or booklet inserts (44%), paperless coupons on store loyalty cards (42%), paperless coupons on a mobile device (38%), and coupons printed from internet deals (34%).
  • Among all Americans, the top types of paper coupons used by consumers include coupons by mail (88%), store (87%), newspaper or booklet (87%), and computer (79%).
  • Alternatively, the top types of paperless coupons used by consumers include coupons by store or brand website (71%), search engine or coupon website (68%), links from blogs (61%), store or brand mobile app (56%), social media (50%), coupon app (47%), and cash-back app (44%).

Preference for Different Coupon Sources

  • According to a recent survey by Valassis, about 92% of Americans used a coupon for shopping in 2019. Further, about 45% of consumers used coupons regularly, while 32% used coupons sometimes, and 15% of American consumers rarely used coupons for shopping.
  • The preference for using mobile coupons over paper coupons varies by age, i.e., millennials and Gen-Z are 5-times more likely to use mobile coupons over paper ones. At the same time, Gen-X prefers mobile coupons over paper ones by 2x. Alternatively, baby boomers prefer using coupons from Sunday paper insert over mobile coupons by two-to-one.
  • Mobile coupons score over paper coupons because of their convenience, ability to integrate with loyalty programs, enhance brand awareness, and target effectiveness.
  • The types of ads that can elicit a customer's response for coupons include In-store signage (57%), online ad (23%), Facebook ad (12%), TV ad (7%), and radio ad (1%).
  • According to NCH, about 256.5 billion coupons were distributed in the US by CPG companies in 2018. Free Standing Insert (FSI) held the largest share at 94%, followed by the digital press at 1.5%, and all others combined at 4.5%.
  • According to the 2019 Shopper Behavior Study by Inmar, about 35% of customers look for digital coupons, 43% look for paper coupons, and 40% look for instore circulars before shopping at a store.
  • According to a survey by Opportunity Health Center (OHC), about 80% of customers sign up for promotional brand emails to specifically receive discounts and deals.

Effectiveness of Coupons

  • Inmar's latest survey states that about 80% of customers report that coupons influence their purchase decisions. Some examples of how coupons can alter purchase decisions include buying products sooner than required (37%), buying a particular brand only because of a deal (35%), buying more than required quantity (35%), buying an alternative product within the same brand (24%).
  • Additionally, about 97% of the US consumers look for a deal when they shop, 89% of consumers feel that using coupons enable them to save money, and 86% of consumers are influenced by coupons to try new products and brands.
  • According to a recent survey by OHC, about 56% of customers visit a retail store after receiving a deal on their mobile phones, when passing near the store.
  • The share of coupon redemption in the CPG industry was about 79% for paper coupons, i.e., 39.2% for FSI coupons, 20.1% for in/on-pack coupons, 6.3% for direct mail coupons, and 13.2% for all other types of paper coupons. Alternatively, the paperless digital coupons contributed about 21.2% of all coupon redemption with 16.4% paperless coupons and 4.8% print at home coupons.
  • According to a recent study by Dealspotr across 20 popular coupon websites, only 35% of coupon codes were found to be working on the websites.
  • The redemption rates for paperless coupons via email on a mobile device are in a range of 0.5%-2%. Alternatively, delivering the coupons via text messaging can increase redemption rates to about 10%.
  • According to research, about 85% of consumers will redeem a mobile text-coupon within one week of receipt.
  • Instant on-pack coupons on consumer products feature a high redemption rate of 18%. Further, the printed on-pack coupons increased redemption on frozen foods by 69%, household goods by 33%, and refrigerated foods by 9%.
Part
04
of five
Part
04

Coupons Usage and Brand Loyalty

Coupons are used 80% of the time by first-time buyers compared to 91% by repeat purchasers when taking advantage of discounts to do their shopping. Below is an overview of the findings.

Frequency of Coupon Use

Coupons' Effectiveness in Building Brand Loyalty

  • Almost 70% of customers say that coupons are an effective way to build brand loyalty. They are usually enticed by exclusive offers and over 50% of these customers say that these kinds of offers make them feel rewarded.
  • The same research also shows that 79% of consumers look for deals in loyalty and reward programs before purchasing a product and up to 74% "choose a store based on a strong loyalty or discount programs."
  • Furthermore, consumers would exchange "their data for automatic credits for coupons and loyalty points (64%) and access to exclusive deals (60%), followed by the ability to gain points and rewards (56%) and special offers for items that interest them (53%)."

Research Strategy

To determine how often coupons are used by first-time buyers vs. repeat purchasers who take advantage of discounts in the U.S., we searched for surveys that have been conducted in recent years on the topic. We used readily available statistics from Access Development, one of the largest private discount networks, that regularly collects and compiles consumer surveys from different sources.
Part
05
of five
Part
05

Coupons Conversion Rate

While the conversion rate per type and the number of coupons used per purchase in the US were not available, our team was able to determine that in most retail and grocery stores of the country, users can redeem between one and four coupons per transaction, but the number varies greatly depending on each store's policy. Additionally, we calculated that the average redemption or conversion rate of all the coupons issued in the US in 2016 was 0.65%.

Relevant Information and Statistics

Coupons Usage

  • The average value of a coupon in the US is $1.95, and 41% of coupon users save $30 per week by redeeming them.
  • 90% of consumers use some type of coupon, which can be either printed or digital.
  • In 2019, the number of digital coupon users in the US reached 1.05 billion.
  • There was a 30% increase in the number of paper coupons used from 2016 to 2017 and a 33% increase in the number of digital coupons used.
  • 82% of US shoppers said they take a week to redeem a digital coupon, while 30% of them do it within 24 hours of receiving it.
  • Target allows using up to four coupons of the same manufacturer per purchase.
  • Generally, users can stack one manufacturer and one store coupon together; however, most stores have their own coupon policies and limits per day and per purchase.
  • The main retail stores that allow coupon stacking are BJ’s Wholesale Club, CVS Pharmacy, Dollar General, Rite Aid, Target, and Walgreens, usually one store and one manufacturer coupon. Rite Aid allows combining a valuable coupon with the other two.
  • Kohl's allows using only four coupons, while Banana Republic, Victoria's Secret, Family Dollar, Jo-Ann Fabric and Craft Stores, and Michael's only allow the stacking of one store and one manufacturer coupon.
  • Stores like Banana Republic and Walgreens have strict policies indicating that the coupons used cannot exceed the number of items bought, that the value of the coupon cannot exceed the one of the total purchase and that online orders can use one coupon code.

Conversion Rate

  • From 307 billion coupons printed in the US in 2016, only 2 billion were redeemed.
  • 64% of the coupons redeemed by Americans are for food, either on brick-and-mortar retail stores or at restaurants.
  • 80% of the customers are willing to change brands if they are given better offers.
  • The share of coupons created for non-food products is 66.8%.
  • The total value of the coupons distributed in the US per year is $407 billion.
  • It is expected that by 2021, 145.3 million Americans will be using digital coupons.
  • There was an increase of 41% in the number of coupons used from 2016 to 2017.
  • In 2022, 80% of the coupons redeemed will be digital from the user's mobile device.

Type of Coupon

  • OTC health care products and household goods represent 70% of the coupons offered to US consumers and have a 49% redemption rate.
  • 28% of the coupons offered are for food and have a 51% redemption rate.
  • In 2017, 293 billion coupons were distributed in the US, from which 271 billion were printed, and 60 million were digital coupons.
  • 60% of printed coupons are for non-food items like clothing, cleaning products, restaurant meals, and office supplies.
  • Target offers both item and store wide coupons to their clients.
  • Most retail and grocery stores offer manufacturer/product coupons and store coupons that can be stacked for a single use.

Research Strategy

While we were able to calculate the overall conversion rate of coupons redeemed in the United States, we were unable to identify the number of coupons used in a single purchase or the conversion rate break down between retailer and product coupons.

To determine both statistics, we began looking through industry reports like Statista, Valasis, Juniper Research, NCH Marketing Services, etc. While these sources gave us statistical information and insights about the use, trends, and growth of coupons usage in the United States, some of which were added to our main findings, they had no information regarding the average number of coupons used in a single purchase or the conversion rate breakdown.

We tried looking through industry analysis made by retailers that promote the use of coupons in the US, like Target, Walmart, or CVS for the number of coupons used per purchase by their clients, and conversion rates of store and product coupons. We also looked in articles and blogs made by coupon experts like The Krazy Coupon Lady and Coupons in the News for the same information. While these sources gave us multiple statistical data, the focus was on mobile coupons, had a worldwide and not a US focus (Invespcro and Readycloud), or was focused on Grocery store statistics.

For our third step, we attempted to calculate the number of coupons used per person by triangulating the average value of a coupon in the US ($1.95) and the fact that coupon users save $30 per week thanks to coupons. While this data told us that these consumers use 15.38 coupons per week ($30/$1.95), the information was not enough to determine if they were able to use them in a single purchase or not, and only applied to 41% of the users.

Our fourth step was a different triangulation approach for the conversion rate by type of coupon, seeking for the number or percentage of product and retail coupons, to compare it with the total number are coupons issued and redeemed to calculate their share; However, while we found some coupon percentages by type of product, non of the data found had enough information to know if these were given for the entire retail store of for a product in specific. Additionally, the percentages by type of products were given individually and not a part of the whole, so we cannot compare them to know they represent a share of the same total.

After this, we compared the coupon limits of the main retail stores that allow the use of more than one coupon, or coupon stacking, to estimate the coupons that users can utilize per purchase. We determined that, in general, users can stack one store coupon with one manufacturer coupon. However, although the rules vary per store and each of them have their policies, most of them limit users to one coupon per purchase or one coupon per transaction, specially on smaller stores and with digital coupons. We also determined that the stores that allow coupon stacking, set a coupon limit between two and four coupons, being the most common two.

Finally, with the information presented above, we assumed that the average consumer uses between one and four coupons per purchase, based on the coupon limits set on the most popular stores. But, we were unable to determine the conversion rate of product and store coupons.

Conversion Rate Calculations

To calculate the conversion rate for coupons in the US, we used the most recent data available about coupons used in the country, found in Statista, that indicated that in 2016, 307 billion coupons were distributed and only 2 billion were redeemed.

We calculated the rate as follows:
(2,000,000,000 divided by 307,000,000,000) multiplied by 100 equals 0.6514 or 0.65%, which indicates the total conversion or redemption rate of the coupons distributed in the US in 2016.
Sources
Sources

From Part 05