“Yes!” say University of Virginia’s Darden Business School professors Rajkumar Venkatesan and Paul Farris. The 99 percenters who fail to redeem coupons they receive in fact do matter. Their new research to this point is summarized in this month’s Harvard Business Review.
In 2010, U.S. consumers redeemed 3.3 billion coupons for $3.7 billion worth of savings, but that represents only 1 percent of all coupons. What about the other 99 percent, do they matter and if so, how?
Venkatesan and Farris performed an interesting field experiment with eight national retailers to analyze campaigns issuing over 500,000 targeted coupons for 300 brands mailed out over 16 months. By tracking whom coupons went to, both redeemers and non-redeemers were analyzed in terms of subsequent sales lift (defined as the subsequent amount spent on promoted and non-promoted items). The control group consisted of those not receiving coupons.
What happened? Actually, the non-redeemers accounted for 60 percent of the sales lift.
Coupons often get tagged as “bottom of the funnel” tools but clearly they also drive brand awareness and sales lift. Redemption rates, while important, are not the only success metric. Venkatesan and Farris conclude that new media players such as Groupon and Living Social are best evaluated not just in terms of list building and redemption but also in terms of long term sales lift even from non-redeemers and presumably even those on the list but who never bought the coupons.
Our take on this is that all those semi-annoying one-time, bargain hunting buyers SMBs see after a Groupon or Living Social campaign may in fact just be the tip of the iceberg. Their social media campaigns may actually be far more successful than they’re able to recognize given current tracking systems.
For more on the authors and the Darden School, see http://www.darden.virginia.edu/web/Media/Darden-News-Articles/2012/In-the-Trash-or-in-Hand-Coupons-Make-Money/.
Rick Ducey is the managing director for BIA/Kelsey. He is an expert in digital media innovations, competitive strategies, new product development and new business models, including digital ecosystem collaboration strategies.
Ducey oversees the firm's consulting, research and advisory services areas. He is also the program director for BIA/Kelsey's Video Local Media advisory service. This program provides coverage and analysis of how online, mobile and broadcast video technologies, competition, shifting consumer demographics and media usage trends are driving changes in the media ecosystem and SMBs and other advertisers can be successful in the new environment. Ducey assists clients with their business planning and revenue models, strategic research, market assessment, and designing and implementing digital strategies. He is also a cofounder of SpectraRep, one of BIA�s companies, which sells a patent-pending IP-based alerting system that he co-invented.
Prior to joining BIA in 2000, Ducey was senior vice president of NAB's Research and Information Group. In this position, he was in charge of the association�s new technology assessment, audience and policy research, strategic planning and information systems, including all Internet operations, and he also developed publications and seminars.
Before joining NAB in 1983, Ducey was a faculty member in the Department of Telecommunication at Michigan State University where he taught and did research in the areas of emerging telecommunication technologies and strategic market research. He also served on the graduate management faculties of George Mason University and George Washington University in telecommunications management and the University of Maryland, where he taught strategic market management and research methodologies. Ducey was selected as the Spring 2011 Shapiro Fellow at George Washington University where he teaches entrepreneurship in new media. He has published a number of research articles and papers in these areas and serves on editorial boards of leading scholarly journals in the communications field. He has also worked at radio stations WSOQ-AM/WEZG-FM and Upstate Cablevision in North Syracuse, New York.
Ducey received his Ph.D. from Michigan State University, M.S. from Syracuse University and B.A. from the University of Massachusetts at Amherst.
