Buying Customers....

I found a coupon on my night stand last weekend for a special:
Buy One Starbuck's, Get One Free.

It didn't take much thinking to figure out the source.

"Just thought you might need some ideas," Beth said.

About 77% of American consumers use coupons, according to the
Promotional Marketing Association. Coupons save Americans more
than $3 billion a year -- the most dedicated coupon clippers are
men and women that earn $50 - 75,000 a year as reported in the
Chicago Tribune. Interesting statistics.

Ever since C.W. Post issued the first coupon for a penny off a box of
Grape Nuts cereal back in 1895, couponing has been successfully
used to buy customers. Yes,I said "buy customers". In reality, that's
what advertising and promotion are all about: Buying customers. Good
advertising, like good purchasing, seeks to buy the best quality at the
best price.

How do you assess that? A good customer is one that is either highly
loyal, a heavy user of your product or both. Beth, for instance is
pretty loyal to Starbucks -- she doesn't drink Caribou or Gloria
Jean's. But she isn't a heavy-user. She may buy a cup a month. A good
price means they cost less than your per customer profit on the sale.
For instance if you do a $1,000 promotional ad and get 100 customers,
you know each customer cost you $10. If you make $10 or less profit
on each sale, then you're better off doing nothing than running that ad
or promotion. I belief a promotion needs to measurably pay for itself.

The best thing about couponing is that you can code coupons and track
the results. If coupon profitability for one media vehicle exceed the
other, perhaps it is wiser to focus more budget on the most productive
media.

And don't think couponing is just for consumer marketing.
Business-to-business marketers have found that couponing can be
effective for them as well. I just got an offer in the mail for a
discount on cable internet for my office. Although there's no dashed
line to cut along, the code I need to use to get the discount is
basically a coupon. The same goes for the Internet couponing.

Now if you'll excuse me, I've got to make up for a coupon I didn't use
last weekend. (Sorry, hon!)

- Phil Sasso