Friday, July 24, 2009

Discounts gone wild: why a great deal is not always great for your company

About once a month a coupon for Bed Bath and Beyond arrives in the RWA mailbox. If you’re female with even a tiny affinity for home goods, you know these coupons well. They’re big, blue and good for 20% off any one item. RWA staffers love them and universally feel dejected when we fail to redeem one on some cherished household item before the coupon’s expiration date.

The other day an avid BB&B shopper shared a little inside tip on our favorite blue coupons. “Expiration, smexpiration,” she says. You can use them anytime you like. The stores honor them even after they are expired.

Now we’re feeling even more dejected.

A coupon should generate excitement; here’s your special chance to save money on something you really want. Part of that excitement is knowing that you only have a small window of opportunity to act on this offer. If you realized that window stayed open 24/7, suddenly the excitement is gone.

Take Subway’s $5 Footlong offer. Twelve inch subs were just $5 for a limited time only. Apparently Subway has a broad definition of the term “limited” as months late $5 Footlongs are still on the menu. Now you even get a $5 concert ticket with your $5 Footlong.

Sure, everyone likes a deal, but what happens when your customers start expecting a deal all the time? If you use coupons too much or too long to promote your business, customers become conditioned to only shop when they have a coupon. Didn’t get a chance to use your coupon this month? Don’t worry, you’ll get another one next month. Suddenly your customers have adjusted the price they expect pay to a much lower level than before. A 12” sub for $5 is a great deal, but now that Subway has been running it for so long, will customers ever be willing to pay more than $5 for a sub?

Coupons and special offers work best when you use them sparingly. The “Once a Year” sale is much more enticing if you don’t have it every other month. A $5 off coupon is more valuable if your customers have to use it or lose it and if they know they won’t see another coupon for a long time.

Gotta run. Late for 2-for-1 martinis. Fridays only.

Wednesday, July 15, 2009

Finally! Coupons come to movie concessions.

No movie-going experience is complete without a tub of buttery popcorn nestled in the corner next to your armrest and an icy soda to wash it down. Lately, though, I’ve downgraded my tub to the economy-sized bag of puffed corn and started smuggling juice boxes and bottled water into the theatre. Shameless, I know.

I’m not alone, though. On my most recent theatre outing to see the new Ice Age movie (well worth seeing, by the way), I spied a fair number of oversized “purses” with box and bottle shaped bulges. One mother of four was a chiropractor’s dream. No woman could haul a purse that heavy without risking a herniated disk. She probably figured a visit to the spine guy was cheaper than a visit to the movie concession counter. She’d be right.

Someone at Sprint must have been listening to long-suffering movie patrons. This month Sprint put kiosks in 500 theatres nationwide (see NY Times article). Sprint users just scan in a code from their phone and the kiosk spits out coupons for free upgrades on concessions.

No more economy-sized bags. You can enjoy the big tub without spending big money. Now that’s worth going to see.