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How Too Much Couponing is Bad For Your Brand’s Health

Last month we began a blog series on the ravages of addiction. No, not meth, but a different kind of ultra addiction (even if it is benign): couponing.

Too much couponing is bad for both your customers’ and your brand’s health. Like any “street” drug, couponing has all the hallmarks of inducing short-term pleasure followed by long-term dependence and tolerance, requiring higher and higher “doses” to achieve the same effect.

 

Brands become addicted to the “high” of increased foot traffic, window-shopping and web page visits, at the cost of margin of course. And customers become “coupon addicts” as they rapidly lose a sense of what constitutes a “fair price” and become perpetual bargain hunters. Everyone needs a “fix.”

Inmar, a coupon management and couponing research company, recently found that while total U.S. coupon distribution had fallen to 311 billion in 2011 from 336 billion in 2010, redemption had surged 6.1% to 3.5 billion from 3.3 billion. That includes redemption increases across direct mail, electronic shelf, freestanding insert, handout, in-pack, instant redeemable, Internet print-at-home, and on-pack coupons.

That sounds an awful lot like brands trying to methadone themselves off couponing, while consumers actually continue to use excessively. Case in point as far as brands creating a self-fulfilling prophecy that has turned their constituencies into junkies.

Somehow I doubt that’s where retailers and loyalty marketers want to go.

Neither brands nor consumers should go through withdrawal symptoms in order to reduce their couponing consumption. True loyalty programs that build playgrounds of engagement and rewards real behaviors can (and should) be effective rehab.

They work because smart companies know their rewards programs are about stimulating experiences, not solely about discounts or even pure points plays. So shifting from a couponing campaign to a loyalty program has truly healthy benefits. Take for instance our work with AMC Theatres. Their rewards program isn’t about offering a discount for each and every film a moviegoer clamors to see. The program, AMC Stubs, stimulates ongoing engagement, tracks individual consumption and personalizes the experience to fulfill on each customers tracked behaviors, movie-going habits and desires.  We also integrated all of this functionality through iPads and SMS follow-up. Ultimately the AMC program — and its rewards — is about empowering consumer choice and not relying on a flat, two-dimensional coupon offers.

Couponing is a drug no doubt. Shifting the acquisition, retention and cultivation paradigm to loyalty can create a much safer buzz, say like — coffee. My jonesing for a cup of Joe isn’t so severe that I’ll drink any old black sludge to start my day you know. I have my preferences: the right brands, blends, beans, etc. etc. Loyalty done right across channels builds far better brand allegiance to advocacy through much higher levels of engagement. Now that’s a level of addiction I think brands and consumers can all stomach. Give me a second cup of that.

If you missed Part 1 of the series, click here to read it.

Kobie Marketing

Kobie Marketing