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Many small businesses use coupons as part of their promotional programs. The more common ones entitle the bearer to some benefit, such as a price reduction on a particular product or service. Others reward frequent customers for their loyalty. For example, a coffee shop may give each of its customers a card that is punched when a pound of coffee is purchased. When the card is completely punched (perhaps after 10 or 12 pounds), the customer gets a free pound. Be sure that your pricing supports the cost of this type of promotion.

Don't forget that only a small percentage of coupons are actually used. Newspaper coupon redemption rates in the grocery, drug, and mass merchandise industry average between 1 percent and 5 percent. Redemption rates for other coupon delivery methods (e.g., mail, magazine, newspaper four-color inserts) vary widely, but still amount to less than 10 percent for most products.

Coupons attached to the product itself are the ones that are most likely to be used, with redemption rates of 20 to 50 percent. However, these coupons tend to be redeemed by existing customers, so if your intent in distributing coupons is to get new customers, find another way to get them to your targeted audience. One good thing about coupons is that it's easy to monitor the results: you'll see every one that comes in.

A coupon should be good for at least 10 percent off the retail price of the product to attract buyers' attention and increase sales, with a 25 percent discount off retail considered more effective for mass market disposable consumer goods.

TIP!: Coupons come in many forms, but the one thing they must have in common is an expiration date! If you forget this, you'll live to regret it.

Advertising Age magazine keeps up with these trends and a host of other topics which may be of interest to you as you think about advertising and promoting your business. If your local library doesn't have a copy, you can get one by writing to Crain Communications at 360 N. Michigan Ave., Chicago, IL 60601.

A rebate is similar to a coupon, except that it is not honored at the time and point of purchase. Instead, the customer must complete and submit the rebate form, generally by mail. Rebates on automobiles are not, in fact, true rebates in this sense of the term. If you had to send a proof of purchase form to the auto manufacturer to get the $600 "rebate," that would be a true rebate.

Chamber "U" is a web resource center designed to provide relevant and useful information. Its contributing authors are business practitioners offering information, knowledge and advice based on their education, training and business experience.

If you are a member of the Nashoba Valley Chamber of Commerce and would like to be a contributor to Chamber "U", please email your request for consideration to director@nvcoc.com

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