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The overall decline in coupon redemption rates in the USA and Canada raises a question as old as coupons themselves - what prompts a consumer to redeem?
Driving this question is marketers' desire to analyze consumer redemption trends. Better knowledge about redemption leads to more accurate and efficient coupon strategies, improving return on investment and encouraging ongoing consumer participation.
Using an ICOM Information and Communications analysis of coupon redemption drivers, a data pool was assembled allowing the research to break down coupon redemption trends across a variety of market segments. Information was derived from a 20-year database assembled in the course of designing 6,300 targeted direct mail programs and issuing 425 million coupons to 28 million US and Canadian households that voluntarily provide information about their purchasing preferences.
Mining this database revealed research that identifies coupon and user variables involved with redemption and cross-analyzes these variables to debunk couponing myths and reveal true trends. Coupon variables considered included expiration, value, volume, and product type. User related variables examined such characteristics as current vs competitive user, frequent vs infrequent user, store brand vs non-store brand user, and American vs Canadian redemption characteristics.
The results yield groundbreaking new information and trends regarding coupons and consumer redemption.
Finding the sweet spot
Today's marketplace suggests that coupon face value alone is not enough. Most consumers need time in addition to value - more time than an increasing number of brand marketers are giving them.
In fact, the research shows a significant change in consumer redemption time for targeted coupons over a recent ten-year period. From 1996 to 2000, consumers took an average of 5.5 months from coupon distribution to redemption. In the following five years, from 2001 to 2006, average redemption times for the same consumer leapt to 6.5 months, nearly a 20 percent increase. Time, along with value, are two important variables to consider when looking to predict consumer coupon behavior.
Of the two factors, value and time, value in recent years has been stable or increasing, while the trend has been to...