Was Building Christmas Sales With Coupons Building a House of Cards?

Over the holidays, many shoppers were keeping their
budgets in line by searching out the best bargains, then cashing in on even
greater savings with store-sponsored coupons.

Macy’s shoppers were encouraged to use coupons that can
only be used if the shopper paid with their Macy’s credit card or a store gift
card.  It’s a smart way to protect
endangered margins in the increasingly discount world of the venerable
retailer. Customers holding charge cards often receive the coupons in multiples,
multiple times a year.

A friend recently watched a Macy’s customer charge
$185.00 worth of discounted merchandise, then immediately make a $185.00
payment on her account. Worked like a charm.

Another Macy’s customer had the sales person ring her
purchases in small batches, so she could maximize her coupons. Apparently she
grouped merchandise that added up to a little over $50, and then used a coupon
good for $15 off a sale of $50 or more. Next she grouped another batch of
merchandise to use the coupon that gave her $25 off a purchase of $100 or more.
Her last grouping just used the overall percentage off value.  Three transactions, complete with payment and
receipt, for what would have been one purchase in days gone by.

The moral to the story is that customers receiving
multiple coupons will find a way to get the most that they can out of them.
It’s up to each retailer to work through the variables that impact margins,
operations and ultimately brand identity.

While it’s relatively easy for strategists to calculate
coupon impact on revenues, there’s more to the house of cards. What are the
impacts on service delivery when most customers ask for more than one, and
often three or four transactions? What happens to the brand experience,
critical to the brick-and-mortar experience, when long lines are slowed by
customers working the coupon system to the max?

Nobody believes more than we do at Yaffe that providing strong
values are critical to retail success these days. However, protecting
threatened margins and providing a good in-store experience is just as
critical.

Don’t forget that the entire experience – especially at
the store level – will impact hard-won brand identity. Maybe positively, maybe
not. That’s why you have to look at every tactic to drive sales from multiple
angles to see not just how it fits into the entire marketing mix, but into the
whole brand experience as well.

What do you think? Have you seen similar tactics being
worked around by customers at the store level? I’d love to hear from you.

Michael Morin, curious about customer behaviors

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