The future of coupons has been highlighted by a Daily Mail report which claimed that major brands might stop using them if rising levels of fraud are not addressed.
The Mail story suggests that companies may abandon the use of money-off coupons in the face of massive over-redemption, and calculates that the cost to consumers could be £500 million if all money-off coupons were dropped by brands and retailers.
One major grocery brand has estimated that it has lost in the region of £2 million a year to its biggest customer from misredemption and malredemption of coupons.
The Mail story listed three incidents in which brands have lost between £40,000 and £150,000. In once case, it is understood that a coupon emailed to a selected database was downloaded less than 10,000 times yet around 50,000 coupons were redeemed, 10,000 of them through one small retail outlet alone.
In another case, a coupon giving a small amount off a food product was scanned and then had its barcode, which carries the information about its value, replaced with one worth more than 10 times as much for a non-food product from a completely different company.
Misredemption is the term for what happens when a consumer is allowed to use a coupon for a product he or she has not bought in that shopping basket, or is allowed to redeem a coupon which is invalid for some other reason - beyond its expiry date for example. Technically, retailers can accept coupons in these circumstances but should not then try and claim the money back from the brand which issued the coupon. However, in practice the brands usually end up paying.
Malredemption involves more blatant fraud and can take the form of someone collecting coupons wholesale from newspapers or magazines which have not been sold and which are being returned to the publisher. Sometimes handling houses will be sent bundles of entire sheets of coupons removed from newspapers without any attempt to cut them out individually. This is also believed to be the source of many of the coupons which have been offered for sale on eBay. Malredemption can also be by photocopying or digital manipulation and printing of the coupons.
There are potential solutions to some of the coupon misuse. One would be for retailers to instruct staff not to accept coupons unless they are valid and are being redeemed against products which the consumer is actually buying. Another would be to introduce more sophisticated bar-coding on coupons which would make them far harder to forge.
There is no desire in the promotional marketing industry for couponing to be abandoned and work is being undertaken to find a solution to these issues.
Contact Julia Pockett on 01234 742777 to find out how Ark-H can help with coupon redemption for your campaign.