Will Save to Card Coupons Replace Paper Coupons

The last few years have seen the introduction of "Save to Card" coupons. These are coupons that you can access online, via a mobile device or through a Kiosk and then save the coupon to a Store Loyalty Card. So for example you might see a link for 50 cents off Tetley Tea and save that Coupon to your Kroger Plus card. Then the next time you purchase Tetley Tea at a Kroger, the 50 cents will be deducted at Checkout.

While, Save to Card coupons quickly rolled out to some of the retailers like Kroger, Pathmark and Safeway,  many of the other supermarket retailer groups like Ahold and Delhaize Group still seem reluctant to jump in.

Save to Card coupon offers several advantages. For retailers, it helps drives customers back to the specific store, reduces fraud and the coupon can usually be electronically cleared (reducing costs). For manufacturers, it provides much faster feedback on how a campaign is doing and can better target consumer with specific offers. For consumers, it saves money on ink and paper and eliminate the risk of forgetting to bring or losing the coupon.

However Save to Card coupons also have several disadvantages. For retailers, there can be a significant cost to  implement and there are multiple Save to Card platforms some of which like Zavers are not tied in to a specific retailer. For manufacturers, there is a lose of branding/mindshare (the consumer see's the brand when they print and handle the paper coupon). For consumers, they may lose track of what coupons they have or when the coupons expire (some consumers like to hold off using the coupon until the product is on sale). There is also something to be said about the experience of handing the cashier all your coupons and getting to see them deducted off your bill that is lost with Save to Card coupons.

So will Save to Card Coupons Replace Paper Coupons? My short answer is no. I think Save to Card coupons will gradually grow over the next few years and become an important distribution channel. Now as you get further out, say 8-12 years is when I think Paper coupons will begin to phase out. In between, I think you'll see some hybrid solutions such as the ability to scan a unique paper coupon in to your phone so you can redeem it or transfer it to a Save to Card coupon.

What do you think?

What's the Deal with the proposed Connecticut "Coupon Tax"

A proposal by the Governor of Connecticut, Dannel P. Malloy recently created headlines about Taxing Coupons. What is this "Coupon Tax" and what does it mean? 

Well in many states, state sales tax is calculated on the final price (after all discounts and coupons). So for example if the sales tax is 10%, on a $100 item the sales tax would be $10. If you had a $10 coupon, then the final price is $90 and the sales tax would be $9. This is currently how it works in Connecticut, here's the official explanation by the Connecticut Department of Revenue Services.

However in some states, such as New Jersey, taxes are applied before any manufactures coupons. So in the above case, if you had a $10 manufacturer coupon, you would still pay the full $10 in sales tax. Check out the New Jersey Division of Taxation tax note. However if you had a store coupon (i.e. $10 off at The Gap), then the sales tax would be applied on the final discounted price. From here it gets more confusing as different states have all kinds of different rules (i.e some may tax BOGO coupons others may not, some may only tax certain items, etc..). In fact in some cases, the rules can vary even down to the local level when an additional local sales tax is applied.

However as far as I can tell, no state bases it's sales tax on the MSRP or regular price. So for example if a coat was normally $199 but was on sale (no coupon required) for $99, then the tax would be on the $99.

So what's the story in Connecticut. Well it was widely reported that the sales tax would be extended to include "all discounts and coupons" off the full price. Editorials were quickly written that the tax is unworkable. How would the state determine the regular price? Would it be MSRP? The store's regular price? Unfortunately no one seems to know what the Governor is actually proposing? It would be nice to see an actual transcript of the remarks. It's interesting that there has not been any follow up.

My thoughts are that the Governor proposal is to ultimately change the rules regarding coupons to be more like New Jersey where taxes are applied before any manufactures coupons. I'm betting he is not an avid coupon user and his remarks were intended to lump in all discounts provided by the consumer not the retailer.

 

Is it time for a Coupon Industry Trade Show?

With the rapid rise of online coupons and the companies and publishers associated with them, one question that comes to mind, is should there be a Coupon Trade Show?

The Association of Coupon Professionals does have an annual Industry Coupon Conference. However this tends to more of an operational event focusing on barcodes and coupon clearing with only a few brands and retailers attending. What's missing are the publishers, advertising agencies and a consumer focus. 

Other Internet marketing and advertising shows such as Affiliate Summit and adtech tend to only have a small component devoted to coupons.

So what do you think? Have we reached critical mass? If so, should a coupon show piggyback on an existing trade show or would you prefer to see a dedicated coupon trade show?

Retailers Should Offer Coupons to Boost Self Checkout

I was waiting on line at the Supermarket last week and noticed most people were not using the self checkout. In fact the line was 3 or 4 deep at the cashier checkouts, while only 2 of the 4 self checkouts were being used. While many grocery retailers have invested heavily in self checkout to reduce labor costs, they don't appear to have thought out a good marketing plan to get consumers to use them. From a consumer point of view, yes you can sometimes save time if the regular lines are pretty long or if you only have a few items, but it's more work than a regular check out. How about rewarding the consumer who uses the self checkout?

If the retailers are really saving on labor costs, why not use a portion of the savings to incentivize the consumer to use the self checkout by offering coupons to those who use it? This would significantly increase the percentage of customers who use the self checkout, further reducing costs. In fact, you could even have brands chip in some dollars for sponsorship (for example use the self checkout this week and get a 50 cent coupon for Chip Ahoy cookies that you can use on your next shopping trip). Another option would be to tie it to the store loyalty card - i.e. Use self checkout 5 times this month and get double points all next month.

What are your thoughts?