By Eric Loebel, Director of Business Development, Celilo Group Media 

Businesses use all kinds of tools to attract customers—from display advertising to direct marketing, from billboards and sandwich board signs to promotions and sales. Among these ways of drumming up business, the trusty coupon stands out as a century-old, highly-effective marketing tool  

The idea of the coupon was first introduced in the early 1900’s, first with a campaign by Asa Candler, who hand-wrote and distributed coupons for glasses of Coca-Cola, and then by C.W. Post, who offered one-cent-off coupons for Grape Nuts. A hundred years later, Coke and Grape Nuts are still popular products, showing that coupons draw in and create loyalty with customers. 

During the Depression, coupon use exploded. By 1965, it was estimated that 10 billion coupons were distributed and half of Americans were using them. Coupon use grew steadily through the 70s and 80s but then declined throughout the boom time of the 1990s. The struggling economy of the last few years has caused a surge of coupon use. 

By 2008, total coupon use accounted for $317 billion in sales and 89% of American consumers reported using coupons at supermarkets (Promotion Marketing Association). The press has caught onto this coupon resurgence. NPR says, “a bad economy is fueling a robust trade in coupons.” The Wall Street Journal article claims “Coupons are Hot,” noting that coupon usage jumped up 10% between November 2008 and February 2009. In the New York Times Lance Saunders, executive vice president and head of account planning at Campbell Mithun in Minneapolis, is quoted as saying: “Thrift is the new normal…There’s no stigma to getting anything on discount. Instead, there’s a sense of pride.” 

A well-designed coupon is an inexpensive, but highly valuable marketing tool. A well-designed compelling offer delivered to the consumer moves product off the shelf while providing additional advertising value all at low cost. And because the coupon must be redeemed, it is a uniquely measurable form of advertising.

Coupons have a strong afterlife. About 60% of coupon users who like a product will buy that same product later without a discount. Shoppers who redeem a coupon and perceive they were given a good price break will walk away with a positive feeling about the brand and their purchase, which has a lasting impact on future buying habits.

Coupons are especially appealing to those that want to get shoppers to switch from one brand to another or try a totally new product, business, or service. These tend to be the highest-value coupons, because it's the hardest kind of purchasing decision to influence. It takes about a 40%-50% discount (2 for 1 offers work well) on an item to get someone to switch from a product they use regularly.  For a shopper who might rotate among two or three brands in a category, it takes a 20-30% discount to sway someone's purchase to a rival brand.