We love coupons. We love to collect them, use them, and reap their rewards. But have you ever stopped to think about what happens to that coupon after it leaves our hands? I find it is fascinating what the process is after the coupon goes in the register. I thought some of you might be curious as well so here is a breakdown of the life of a coupon.
The birth of a coupon comes when a manufacturer decides they want to offer a coupon. They contract a design agency to create the coupon for them and get it out to consumers. Once it has been created they release the coupon to the public. This can be through Sunday Inserts, online, in magazines, booklets, ads, and in the store as tearpads, peelies, and blinkies.
This is where we come in. We hunt down and grab those coupons. We hold them until the perfect deal comes up and off to the store we go. We grab our products and head to the register. We hand over those coupons and head on home. But the coupon’s journey has only just begun.
The cashiers tuck that coupon away in their drawer until the end of their shift. At the end of the day they tally the coupons and place them with all the other coupons from the store. The cashiers must treat the coupons like cash and their balances have to match up. Some stores do further documentation at the store level – totals, value, manufacturer’s, etc. At that point the stores are done with them and end them on their way. They pack them up into bags or pouches and send them off to their corporate offices. Depending on how many coupons they receive and their schedules, this happens either once a month or once a week.
Once the coupons arrive at the corporate office they are consolidated with coupons from other stores and sent to a coupon clearinghouse. Clearinghouses are companies contracted out by stores to sort and coupon the coupons for them. In the first step they are sorted out by clean and clear coupons versus torn, damaged, and unreadable once. The clear coupons are each individually placed on a conveyer belt wit the bar code facing upwards. Computers then read the coupons, calculate out the values, and sort them by manufacturer. All the while they need to keep the coupons for each store separate so they know who gets reimbursed what, and by whom.
The damaged coupons are taken to a separate area where each one is hand check by a person to get the value and sort them appropriately. The total value of the coupons for each manufacturer for each store is calculated and an invoice is sent to the manufacturer. Manufacturers at this point can also request that their coupons are sent back to their own clearinghouse so they can recount them. Finally the coupons themselves are sent off for recycling.
The manufacturers use the invoice to calculate payment to the stores. Each store is paid the value of the coupon plus an additional 8 cents per coupon. The stores will then pay the clearinghouse. Alternately some manufacturers pay the clearinghouse, which in turn pays the stores minus their fee.
Accounting is maintained at each step of the process to ensure each store is reimbursed correctly and that no fraud is committed along any of the steps. Auditing can also occur at any level to confirm that all is legit. The accounting is also used by the manufacturers to determine if the coupon was a successful promotion.
It’s amazing the journey a coupon takes from start to finish. The whole process takes months to complete and covers immense miles. Who knew?
Just for fun here are a few more interesting facts for you: In a given year approximately 300 million coupons are redeemed. Does that sound huge? Well amazingly only about 3% of all coupons printed are ever redeemed. Approximately half of the coupons redeemed come from the Sunday Inserts. Printed coupons are seeing the biggest rise in redemption – now up to around 10% of all coupons redeemed. And guess what – the number of coupons released to consumers is going up, at a 10% increase each year. Ironically, the percentage of coupons redeemed is going up at almost the exact rate! As the popularity of couponing increases the manufacturers are responding with even more coupons. Interesting to see.
All detailed information from these sources: coupons.com, NY Times, NCH Incorporated, Journal of Food Distribution Research, and Vlassis.