When trying to grow your brand, are coupons an option?

Take these first steps to assess the risks and opportunities of using coupons to gain new customers.

January 25, 2016

3 Min Read
When trying to grow your brand, are coupons an option?

Whether you are a startup manufacturer or an established brand, you constantly want to increase market share and support your marketing objectives. So what about coupons? Coupons done right can successfully create trial and build sales and market share. Make a mistake, though, and a promotion can go viral with serious financial risk while alienating your trading partners and consumers. Not good.

How can you benefit from coupons while minimizing the risk? There are plenty of tasks and decision points that need to be made to establish a successful program and create a working infrastructure for future programs. The key pieces are:

  • Should my brand coupon? If you have limited distribution, the fixed costs of setting up a coupon program could be prohibitive. But remember that the payoff of a coupon is not just short term--a trial could lead to a loyal customer; a switcher can be moved up the loyalty scale. Evaluate short-term and potential long-term gains when evaluating coupons versus other promotional options.          

  • Getting started. Have you registered your brand/company with GS1? Coupon barcodes and product barcodes need to work together, and the registration allows the industry to work together to not have issues at point of sale. It is not a best practice to use third parties to acquire barcodes. Do you take your prescriptions to a drug store or buy them on the street?  

  • Choosing a clearinghouse. Validation, redemption, fraud monitoring, reimbursement and reporting is complex. Trust the professionals. There are several large clearinghouses, and many smaller clearinghouses as well. Some cater to lower volume coupons and have experience with start-ups and the natural products channel.    

  • Developing a coupon policy. Retailers and consumers want to know what you will accept. The retailer wants to know what you will or will not reimburse. The consumer wants to know what they need to do to get the discount.

  • Creating family codes. Family codes are built into the GS1 Databar to group eligible product UPCs that are eligible for a given offer. They should be built on how you plan to coupon (e.g. category, size, flavor, etc.) For a drink company, do you want to coupon by flavor, “all cola products," or by size (50 cents off a 2 liter)? Family codes give you flexibility to decide what’s best for you.

  • Choosing the distribution that best fits the marketing objective. Want product trial? Have an event coming up? Want to increase market share, or neutralize a competitor? Soften a price increase? There is a distribution type that can help you better execute, whether it’s the Sunday insert, in pack, on-pack, mail, internet print-at-home or handout. There are many options.  

  • Coupon creation and design. Clean, clear and concise is the way to go. Keep it simple for the consumer--tell them what to do and show them the brand, get the barcode right, and follow industry best practices in design. Vary your attributes, (eg. face value, expiration dates, purchase requirement) based on your marketing objective.

  • Digital couponing options and issues. Digital click-to-card, mobile apps and other technologies are emerging, but they require a separate clearing/redemption infrastructure, so proceed with caution.

  • Reporting effectiveness. How are you measuring success? Evaluate the reporting and tools you will have available prior to choosing your clearinghouse.

  • Documentation process. Check with finance/accounting to determine whether you have Sarbanes Oxley requirements and/or internal controls that may impact your clearinghouse choice.   

  • Ongoing education. The landscape is shifting, particularly with emerging digital technologies.

Are there any best practices or voluntary guides to help you? Sure, that’s what the ACP is--a trade association dedicated to getting coupons right and making the coupon promotion option viable. There is also a webinar coming up, “How to Coupon," on January 26 at 2 p.m. ET. Look for a new guide this spring with specific guidance for those distributing in the natural foods channel.

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