NCH MARKETING

Extending the expiration period two to three months

Understanding your consumer to match purchase

can improve redemptions 10 15%.

behavior to tactics. Look at retailer FSC or consumer

What can this mean for your brand? Consider this example.

promotion analysis to understand multiple

For a 40mm circulation FSI with 1% redemption, a 1015%

purchase behavior.

redemption increase means 40,000 to 60,000 more

Analyzing your marketplace to ensure that your tactics

redemptions including new buyers. And since youve

drive the desired market level results. Look at market

already amortized the cost of the space, the redemption

level scanner/panel analysis.

costs are variable (face value and handling only).

Every market does not represent the same opportunity for
Shifting to single purchase coupons can increase

a brand there are trial markets, defend markets, etc.

redemptions by 10 33%.

requiring potentially different approaches. Use the

Again, what does this mean for your brand? Our same

knowledge of your brand to customize your strategies and

40mm circulation 1% redemption FSI could yield an

optimize results. For example: multiple purchase

additional 80,000 redemptions with a single purchase

requirements in high market share areas and single

requirement (with an average 20% improvement). Plus,

purchase in trial markets; or two coupons in all markets, a

there is the additional benefit of increased trial by new

single purchase coupon and another for multiple purchase.

buyers and the repeat among those new buyers all

significant contributors of ROI.

The challenges in todays marketplace are significant. You

By Charlie Brown

know your brands and there are data sources/resources to

Recommendations

help you maximize your efforts coupon clearing agents,

In promotional marketing with

ad agencies, research providers and media companies like

coupons, the characteristics of the

magnitude of the potential for your brands. There are several

Valassis. Use the research tools and wherewithal of your

coupon significantly determine the

key indications that I would strongly recommend:

team to develop a more learned approach to coupon tactics.

offers attractiveness to consumers.

Can your brand afford not to? 

Also known as coupon tactics, these

IN

A SHORT ARTICLE, IT IS VERY DIFFICULT TO CAPTURE THE

Re-visit your expiration date policies. The world has

characteristics can have a direct

changed and policies established in the early 1990s might

impact on the results of

not have relevance today. Recognize that each brand is

the promotion.

different and requires its own analysis your coupon

clearing agent has the data and analytics skills to help frame

Some of the most influential coupon

the opportunity for your brand. Use that resource to tailor

attractiveness characteristics which

expiration date and maximize ROI for each brand, and

marketers have control over are:

perhaps each market, depending on your brands health

expiration dates, face value and the

within a market.

quantity of items which the consumer

must purchase to receive the savings

Use multiple purchase requirements for the right reasons.

discount at the register. The quantity

Multiple purchase requirements can work for certain brands

of items required is also known as

and brand objectives; make sure you do the analysis to

purchase requirements.

align the two, including:

Effect of Tactics = 70% of End Result

USING

A REPRESENTATIVE SAMPLE OF THOUSANDS OF

CPG

To demonstrate the positive results which marketers could

to three months will typically increase redemption rates

objective, this additional investment can be very

see on their redemption rate by tactically increasing the

by 1015%.

worthwhile. Incremental redemption from more attractive

coupons, NCH studied the influence that tactical

attractiveness of their offers, NCH created case studies of

characteristics have on explaining redemption rates.

redemption elasticity. The case studies were designed to

Face Value: Of course, a coupons advertised face value is

Monitoring and measuring the actual redemption results

measure the effect tactics can have on redemption rates

high profile to consumers. In the case studies, an increase

Purchase Requirement: A coupons purchase requirements

seen when changes in variables were made on otherwise

within several categories.

in face value of 20 to 40 cents increased the redemption

can have the largest effect on redemption rates. If a multiple

rates also by an average of 5%. Such a change can be

purchase requirement has been used in the past, reducing

similar offers allowed NCH to determine the effect certain

characteristics also generates more product moved.

characteristics have on actual results. Amazingly, marketers

Elasticity is a measurement of the relationship between any

costly; not only are you getting a larger response, you also

the requirement to buy one on a future promotion can

controllable characteristics account for 70%, on average, of

particular tactical element of an offer and the end result

are paying a higher discount for every one of those

improve redemption rates +10% to as much as +33%.

the results seen in the redemption rate. This included

the change seen in the final redemption rate.

redemptions. However, depending on the promotions

In Conclusion:

variables such as offer duration, face value, purchase

requirements, circulation size, drop season, media vehicle,

Four categories were selected for the case studies. Each had

free product offers, and the brand itself. The remaining 30%

ample representation of mature coupon offers across a wide

of redemption results are influenced by a variety of external

variety of tactical executions, including promotion duration,

face value savings and purchase requirements. The

marketplace factors.

categories included in the study were beverages, sauces,

NCH Coupon
Attractiveness
Index with
Savings Gap

125

100

paper products and shelf-stable foods.

Beginning with the typical characteristics for the category,

were offered.

80

76
69

100

66

94

64

1994

1995

1996

56

54

1997

1998

59

61

61

57

59
52

1999

2000

2001

2002

52

58

2003

Index of Coupon Offer Characteristics: Duration, Face Value and Purchase Requirements,
as Indicator of Consumers Propensity to Redeem
Index of SAVINGS GAP between advertised face value and actual per item discount

Over time, many marketers have shifted toward coupon

Coupon Expiration: Expiration date is a particularly

tactics that have lowered the attractiveness of their offers

influential characteristic by providing consumers more time

to consumers. As a result, they have suppressed the

to use the coupon. The results will vary naturally by a

redemption rates on their own promotions, as well as the

categorys typical purchase cycle, but consistently NCH saw

averages seen across the industry. The NCH Attractiveness

that a minor increase in a promotions duration (4 weeks)

Index reveals how dramatic the change has been over the

increased the redemption rate by an average of 5%.

past decade.

Extending the typical expiration date by an additional two

The NCH Coupon Attractiveness Index is a numeric measurement

of the marketer-controlled tactics, which are a strong influence on
consumers propensity to redeem CPG coupons. Those tactics are
expiration date length, face value savings, and quantity of
purchase requirements.

THESE CASE STUDIES, ALL OTHER ENVIRONMENTAL EFFECTS ON

redemption where held constant, and only the tactical

changes to characteristics were measured. Out in the
marketplace other factors could derail or further accelerate a
promotions results. These factors include competitive
activity, retailer support, product distribution/availability,
etc all factors which may be out of the marketers tactical

results were then studied when more attractive characteristics

94

IN

Measurement of
Coupon Attractiveness

NCHs attractiveness model uses the strength of each individual

characteristic and then combines the positive and/or negative
effects for an overall yearly result.
The index is visually shown as a bar on the chart (left) and
compares the current year to the base year established when
coupon volumes were highest in the United States. Note that the
coupons marketers are issuing today are only about half as
attractive to redeem as they once were. This is a major cause of
the declining redemption rate.
The attractiveness index showed a slight improvement in 2003 as a
result of no further shortening of average expiration dates in the
industry and the increase in average face value issued last year.
However, the increase did not make up for the 26% share of all
coupons that continue to have multiple purchase requirements.
Thus, when the true discount per item is considered, which is not
growing at the same pace as the advertised face value, a
Savings Gap for the consumer becomes apparent. In 2003 the
face value printed on the coupon grew eight cents, yet the
discount per item only grew seven cents. The gap in actual
savings per item purchased grew to a 12 cents difference, up
another penny from the year prior.

control during a coupon promotion.

However, these case studies do indicate that there is much

within a marketers control that can be managed to drive
improved redemption rates. The offers duration is a
particularly easy characteristic to change. Simply extend the
expiration date on an offer youre already committed to
running, and youll see a better response from consumers. 

Contact Us: For more information on this study, request a copy of the
Redemption Rate Whitepaper at info@nchmarketing.com or contact
your NCH or Valassis representative.

In 2003 the Savings Gap per item worsened, reducing the actual
savings once again for the consumer, as shown in the trend line
on the chart. The declining actual discount consumers receive
when purchasing products using coupons impacts redemption
results, and can be directly linked to the marketers ROI on a
coupon event.

Effect of Tactics = 70% of End Result

USING

A REPRESENTATIVE SAMPLE OF THOUSANDS OF

CPG

To demonstrate the positive results which marketers could

to three months will typically increase redemption rates

objective, this additional investment can be very

see on their redemption rate by tactically increasing the

by 1015%.

worthwhile. Incremental redemption from more attractive

coupons, NCH studied the influence that tactical

attractiveness of their offers, NCH created case studies of

characteristics have on explaining redemption rates.

redemption elasticity. The case studies were designed to

Face Value: Of course, a coupons advertised face value is

Monitoring and measuring the actual redemption results

measure the effect tactics can have on redemption rates

high profile to consumers. In the case studies, an increase

Purchase Requirement: A coupons purchase requirements

seen when changes in variables were made on otherwise

within several categories.

in face value of 20 to 40 cents increased the redemption

can have the largest effect on redemption rates. If a multiple

rates also by an average of 5%. Such a change can be

purchase requirement has been used in the past, reducing

similar offers allowed NCH to determine the effect certain

characteristics also generates more product moved.

characteristics have on actual results. Amazingly, marketers

Elasticity is a measurement of the relationship between any

costly; not only are you getting a larger response, you also

the requirement to buy one on a future promotion can

controllable characteristics account for 70%, on average, of

particular tactical element of an offer and the end result

are paying a higher discount for every one of those

improve redemption rates +10% to as much as +33%.

the results seen in the redemption rate. This included

the change seen in the final redemption rate.

redemptions. However, depending on the promotions

In Conclusion:

variables such as offer duration, face value, purchase

requirements, circulation size, drop season, media vehicle,

Four categories were selected for the case studies. Each had

free product offers, and the brand itself. The remaining 30%

ample representation of mature coupon offers across a wide

of redemption results are influenced by a variety of external

variety of tactical executions, including promotion duration,

face value savings and purchase requirements. The

marketplace factors.

categories included in the study were beverages, sauces,

NCH Coupon
Attractiveness
Index with
Savings Gap

125

100

paper products and shelf-stable foods.

Beginning with the typical characteristics for the category,

were offered.

80

76
69

100

66

94

64

1994

1995

1996

56

54

1997

1998

59

61

61

57

59
52

1999

2000

2001

2002

52

58

2003

Index of Coupon Offer Characteristics: Duration, Face Value and Purchase Requirements,
as Indicator of Consumers Propensity to Redeem
Index of SAVINGS GAP between advertised face value and actual per item discount

Over time, many marketers have shifted toward coupon

Coupon Expiration: Expiration date is a particularly

tactics that have lowered the attractiveness of their offers

influential characteristic by providing consumers more time

to consumers. As a result, they have suppressed the

to use the coupon. The results will vary naturally by a

redemption rates on their own promotions, as well as the

categorys typical purchase cycle, but consistently NCH saw

averages seen across the industry. The NCH Attractiveness

that a minor increase in a promotions duration (4 weeks)

Index reveals how dramatic the change has been over the

increased the redemption rate by an average of 5%.

past decade.

Extending the typical expiration date by an additional two

The NCH Coupon Attractiveness Index is a numeric measurement

of the marketer-controlled tactics, which are a strong influence on
consumers propensity to redeem CPG coupons. Those tactics are
expiration date length, face value savings, and quantity of
purchase requirements.

THESE CASE STUDIES, ALL OTHER ENVIRONMENTAL EFFECTS ON

redemption where held constant, and only the tactical

changes to characteristics were measured. Out in the
marketplace other factors could derail or further accelerate a
promotions results. These factors include competitive
activity, retailer support, product distribution/availability,
etc all factors which may be out of the marketers tactical

results were then studied when more attractive characteristics

94

IN

Measurement of
Coupon Attractiveness

NCHs attractiveness model uses the strength of each individual

characteristic and then combines the positive and/or negative
effects for an overall yearly result.
The index is visually shown as a bar on the chart (left) and
compares the current year to the base year established when
coupon volumes were highest in the United States. Note that the
coupons marketers are issuing today are only about half as
attractive to redeem as they once were. This is a major cause of
the declining redemption rate.
The attractiveness index showed a slight improvement in 2003 as a
result of no further shortening of average expiration dates in the
industry and the increase in average face value issued last year.
However, the increase did not make up for the 26% share of all
coupons that continue to have multiple purchase requirements.
Thus, when the true discount per item is considered, which is not
growing at the same pace as the advertised face value, a
Savings Gap for the consumer becomes apparent. In 2003 the
face value printed on the coupon grew eight cents, yet the
discount per item only grew seven cents. The gap in actual
savings per item purchased grew to a 12 cents difference, up
another penny from the year prior.

control during a coupon promotion.

However, these case studies do indicate that there is much

within a marketers control that can be managed to drive
improved redemption rates. The offers duration is a
particularly easy characteristic to change. Simply extend the
expiration date on an offer youre already committed to
running, and youll see a better response from consumers. 

Contact Us: For more information on this study, request a copy of the
Redemption Rate Whitepaper at info@nchmarketing.com or contact
your NCH or Valassis representative.

In 2003 the Savings Gap per item worsened, reducing the actual
savings once again for the consumer, as shown in the trend line
on the chart. The declining actual discount consumers receive
when purchasing products using coupons impacts redemption
results, and can be directly linked to the marketers ROI on a
coupon event.