Question

Topic: Other

How To Calculate Risk/reward On Offering Coupon

Posted by Anonymous on 8/24/2010 at 2:41 PM ET 125 Points
I want to print a coupon in all seminar manuals at a professional education conference and trade show. The coupon would be good for 10% off book purchases in a book and merchandise store set up within the trade show.

Problem is I have to provide a risk/return model in order to convince the CFO it's a good idea.

We have two days when our only customers are those taking seminars and we have had trouble getting them to shop in years past. There is no upfront cost in offering the coupon it will be printed in already to be produced seminar manuals.

Is there a redemption percentage I can expect with distributing coupons this way? Is there any type of calculation I can use to determine possible sales volume increase?
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RESPONSES

  • Posted on 8/24/2010 at 6:28 PM Moderator
    Each situation is different. The target audience, the offer, the merchandise itself, and a number of other factors will affect your redemption rate. It could be anything from a fraction of a percent to 5% or more.

    And there's no way to tell (or predict) what your sales would have been without the coupon, so you can't really tell whether the coupon is responsible for the sale or not.

    The only thing you can be sure of is that each coupon redeemed costs you 10% of the sale. And on low-ticket items, 10% may not be enough to get people to even consider your offer.

  • Posted on 8/24/2010 at 6:34 PM Moderator
    Separate issue: Why do your customers buy from you? What makes you think that discounting the books will increase sales? Are you overcharging for the books already? Is 10% going to make a difference?

    You might be better off simply reminding your customers of the benefit you provide them, the need you satisfy, and how well you understand and address their need. That may be more of an incentive than a 10% discount.
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