“Frugal behavior is now considered trendy by many shoppers and will continue for years to come,” Matt Egol, a partner in the company said.
When the company collaborated with Grocery Manufacturers Association for a study, Shopper Marketing 3.0, they found that shoppers were conducting research before they shopped, with a focus on finding the best prices, clipping coupons, and reading circulars for what is on sale.
Inmar’s 2009 consumer study segmented coupon users into six distinct groups based on their semi-annual buying habits in the first half of 2009. The final category, “Coupon Enthusiasts,” included those who had used 104 or more coupons in a six-month period. Having lived the lifestyle of a “coupon enthusiast” for over thirty years and studying the phenomenon for the last three, I have an insight into the cultural phenomenon of avid coupon that could be of value to marketers who need to be able to understand the working of the minds of this segment of the population.
Here are seven basic points marketers should know about “coupon enthusiasts” to effectively plan their marketing strategies and promotions.
1. Don’t underestimate our numbers.
We are a significant portion of the consumer population, and our numbers are growing. According to a July 2011 Advertising Age article, the “coupon enthusiasts” increased from 11% of coupon users in 2009 to 13%, and that segment of society was responsible for 70% of the coupon purchases in 2010
2. We don’t shop the same as your average consumer.
According to research done by the Promotion Marketing Association (PMA), a typical coupon user reports an average of 7% savings on their weekly grocery bill. The avid couponers I interviewed for my book reported much higher savings, some as high as 80% or more with their coupons.
3. We aren’t the “extreme” couponers you’ve seen on television programs like TLC’s “Extreme Couponing.”
Reality television isn’t the reality for the majority of us without access to double coupon opportunities. We might stockpile products we normally use, but we probably don’t have an entire garage or room full of toilet paper. Though we might not be the extreme you see on television, we do like a good deal and will go to great lengths to get it.
4. We don’t like it when you mess with one of our favorite forms of promotion.
Just ask former J.C. Penney CEO Ron Johnson. When he came on board as the new CEO in 2011, his intent was to wean customers off of coupons. Instead, he abruptly eliminated them altogether, implementing a “Fair and Square” pricing plan. The department store chain lost 163 million dollars in the first three months of his plan, and the number of people coming into J.C. Penney’s dropped by 10%.
“What is the source of this?” Mike Kramer, chief operating offer commented. “Coupons, that drug. We did not realize how deep some of the customers were into this.”
Johnson initially refused to bring back the coupon. By the end of 2012, the retailer had lost 4.3 billion dollars from the previous year, nearly one-third of its sales. Johnson was ousted as CEO in April 2013. Lesson learned: Don’t abruptly replace a popular form of promotion with something like “lower prices.” You risk losing your coupon customers completely.
5. We enjoy the hunt almost as much as the deal.
A joint project between Deloitte and Harrison Group, the “2010 American Pantry Study” explored issues of post-recessionary purchasing resourcefulness and the impact on brands.
“We continue to witness consumers creating a whole new rule book and skill set for shopping that’s based on value, not boasting of brands,” said Pat Conroy, Deloitte’s vice-chairman. “Our analysis concludes that personal gratification and a desire to feel smart about what consumers are putting in their shopping carts are trumping brand satisfaction, and that price-consciousness, value orientation, and bargain hunting will remain prevalent for years to come.”
Not only do we enjoy the hunt for a good deal, we are very good at what we do. Craig Herket, chief executive at Supervalu Inc., operator of Jewel, Albertson’s and other supermarkets, said it best in a March 8, 2010 Wall Street Journal article calling coupon clipping the “newest extreme sport.” He told analysts that shoppers with an eye for discounts were “executing with surgical precision.”
6. We will try a product because of a coupon or promotion, but that doesn’t mean we are willing to pay full price without the promotion.
Marketers using Groupon have noted this. Social promotion users are not always the relational customers the businesses had hoped for when they signed up with Groupon. According to Rice University’s Jones School of Business, a study of 150 businesses running Groupon promotions between June 2009 and August 2010 found that the coupon promotions were unprofitable for 32% of the businesses that ran them. The businesses were disillusioned with the “extreme price-sensitive nature and the transactional orientation of these consumers.”
For those survey respondents who said their Groupon campaigns had not been profitable, only 25% of the redeemers of their offers spent more than the face value of the coupon, and only 13% came back a second time to shop full price.
7. Coupons—even the paper ones—remain an effective promotional tool.
According to a pilot program at the C&K Markets in Oregon, paper coupons are not defunct. The so-called “retro-marketing” promotion at the stores in April 2010 credits paper coupons for a double-digit increase in total sales. One store even saw a 44% increase in sales from the year before. Their traditional marketing method involved a direct-mail booklet that contained thirty-two coupons. Sales results showed that the coupons were achieving what C&K set out to do; build up its shopper base.