The modern history of American business can be told, at least in part, through coupons. Businesses have offered deals since the dawn of time, shaped by technology and culture. Let’s consider a few different species of “the deal,” from coupon crazes to the modern megastore loyalty program.
Licked by Stamps
One of the very earliest loyalty programs was S&H Green Stamps. In the late 1800s, the Sperry & Hutchinson Company started distributing stamps to merchants that they could then give to customers who licked and pasted them in booklets and traded them in for merchandise at Green Stamps stores or through catalogs. Each booklet held 1200 stamps, equal to $120 in purchases. America was doing a lot of licking.
Green Stamps bloomed into such a craze in the ‘50s and ‘60’s that the company claimed it issued more stamps than the U.S. Postal Service. But by the 1980s Green Stamps had gone to that great coupon book in the sky. What happened?
Customers no longer saw them as a perk to be grateful for; instead, they saw them as a right, and woe to the grocery store or gas station or department store that did not hand them out. And competition exploded. There were blue stamp companies, pink stamps, gold stamps, plaid stamps. Stores printed their own stamps. Ultimately, the whole stamp craze ran out of gas.
Lesson: Your perk has to be seen as a reward, not as an entitlement. Stamps were fun to collect for years. But the recession in the 1970’s slowed them down and the field grew cluttered. They weren’t worth the effort to paste, store, and redeem. The less work required of the customer, the better.
What Can Be Learned from the Door-to-Door Salesman?
The internet has pretty much taken over as the preferred outlet for delivering deals into your home. Still, every year a salesman came around our neighborhood selling discount laundry punch cards. The cards were about the size of a credit card and had little squares on them, some worth $5, some $1, a couple of squares worth half off an entire order. With the card you also got 20 percent off your shirts at participating cleaners. It was discounting our laundry bill in advance and the cards never expired. The laundry didn’t sell the cards; a sales promotion company did all the leg work. What made it really work? The guy came to our door to remind us it was time to buy again. A classic middle-of-the-road, low-tech program that could run for as long as the cleaners want to keep it going.
You might recoil in horror from how IRL this approach is, how much it relies on somebody actually knocking on doors. But as I said above, the internet has taken over the task of delivering door-to-door deals. Groupon and others now have these same kinds of offers, after all. The point is to present useful discounts and deals where the customers actually are. To keep the customer’s location in mind is paramount. Brands that offer deals via push notification to customers actually in a store have taken this to a new level. So think locally and offer deals accordingly.
Lesson: No matter what your business or how you distribute the perks, customers will return if the loyalty deal offers real value, is easy to use, and easy for the merchant to administer.
D Is for Disaster
My neighborhood coffee shop embarked upon a short-lived experiment in rewards that might’ve worked if it hadn’t required some light secretarial work.
Probably because nearby Starbucks had a free-coffee loyalty program, the owner of this small shop thought he had to have one, too. Instead of an electronic swipe card like Starbucks, though the cafe had a small file box on the counter. Regular customers kept a card filed under their name in alphabetical slots. When you purchased something you got a sticker to put on the card and after 10 stickers you got a free coffee. The problem was you had to paw through the As and Bs and Cs to find your card and then put it back. It was a disaster. Finally the owners threw out the cards. But! It didn’t affect business at all. The owner hadn’t recognized that a lot of us went there because it wasn’t a Starbucks.
Lesson: Any “loyalty program” has to be worth the effort and managed automatically. More importantly, a business should understand what makes it appealing over competitors.
The “Everywhere Approach”
Bed Bath & Beyond runs a stupendous rewards program. It sends out millions and millions of those familiar blue-and-white discount coupons. They arrive in the mail, over the internet, in flyers and magazines. Most of us wouldn’t dream of going to the store without them. Recently, a woman in front of me at the cash register opened her purse to reveal at least 50 of the coupons, neatly folded as if they were cash. I’d wager she never shopped elsewhere if she could help it. But why all the printing and mailing? Why not just put up signs in the aisles that say “EVERYTHING 20 PERCENT OFF”? Anais Nin famously said, “We don’t see things as they are. We see them as we are.”
Is this possible for a small business? Direct mail is pretty unlikely, but [exciting developments in automation] allow you to create email campaigns that track customer behavior and offer the right deals at the right times.
Lesson: Perception is reality. At Bed Bath & Beyond we know we’re saving as we’re spending because we have the 20 percent coupons in our purse and pocket to prove it. The message isn’t waiting there in the store. It follows us everywhere. Make sure customers know they’re being offered a deal, and that it feels like a deal. And that they see it, of course.