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Let's Talk About Coupons!

Fall is upon us and it means big sales are coming up this quarter, and this also means businesses tend to give out coupons. But how do we measure if our campaigns are working?


It is both important to check your company’s industry benchmarks as well as internal historical data to see how well a campaign is doing.


Coupons are constantly being handled by companies looking to bring in customers to purchase their products or use their service. There are three coupon metrics that look at usage, cost, and how much of actual sales involve a coupon.


Let’s take a look at some formulas below:


Redemption Rate

This is the percentage of coupons that are being redeemed by customers. The formula is as follows:

Coupon Redemption Rate (%) = Coupons Redeemed (#) / Coupons Distributed (#)


Cost for Coupons

This metric adds up all the costs for a coupon and allows the marketer to get a macro and micro visual of how much expense may be. This includes distribution, pricing, and redemption costs for the coupon promotion. Below is the formula:


Total Coupon Cost ($) = Coupons Redeemed (#) * Cost per Redemption ($) + Coupon Printing and Distribution Cost ($)



Rebate % Sales with Coupons

This metric shows how many sales are completed with the use of the coupon. Another name for this metric is Percentage Sales with Coupon and the formula is as follows:

Percentage Sales with Coupon (%) = Sales with Coupon ($) / Sales ($)


Let’s take a look at an example for each metric:


Nike gave out 100,000 coupons in their catalogue to the Guildford area. Out of these coupons handed out, 25,000 people came in to use them before they expired a month later. It cost Nike $20 per redemption and the printing charged totaled to $10,000 for all the coupons. These coupons generated about $450,000 in sales within that month and Nike’s total revenue within that time period was $2,000,000.


Coupon redemption rate = 25,000/100,000 = 25%


Total Coupon Cost = 25,000 x $20 + $10,000 = $510,000


Percentage Sales with Coupon = 450,000/2,000,000 = 22.5%



We hope these metrics help you and your business when it comes to the handling of coupons. Questions about marketing metrics? Contact us today at info@cogrowmarketing.com



Reference:

Bendle, N. T., Farris, P. W., Pfeifer, P. E., & Reibstein, D. J. (2016). Marketing Metrics: Third Edition. Upper Saddle River, New Jersey: Pearson Education, Inc.


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