• 90 percent of consumers use some form of discount when making a purchase
• The word “free” is frequently used as an incentive to drive sales
• Many coupons exist only in digital form and can be used as a form of payment
• Businesses issue coupons to grow sales and encourage repeat business
Businesses have printed or mailed coupons to customers since Coca Cola placed the first one in a newspaper 1887. The coupon, redeemable for a free glass of its carbonated drink, was a driver of the company’s success. Coca Cola went from being sold by pharmacies in just Atlanta, GA to being sold in every state in the US by 1895, and within two decades, 8.5 million coupons had been redeemed for a taste of the “delicious and refreshing” soda fountain drink.
Coupons Are Ubiquitous
Since then coupons have become ubiquitous. They’ve been advertised in newspapers, magazines and flyers, been printed on box tops, taken the form of stamps, punch cards, certificates, and tickets, and been issued as credit card styled paper or plastic prepaid and gift cards. Coupons are so much a part of the shopping experience that 90 percent of consumers use some form of discount when making a purchase, and increasingly, those discounts are being accessed via the internet.
The advent of the smartphone has made digital coupons more accessible, changing the way discounts are delivered, earned, and spent. Digital coupons offer customers convenience while shopping and give businesses an inexpensive way to incentivize and track sales. They are very customizable and can be delivered to individual customers via email, SMS, or QR codes, posted on social media to target specific demographics, or downloaded from a website by site visitors.
Coupons are a Pavlovian trigger that compels consumers to shop almost against their better judgement. And that’s what businesses count on. They use coupons and discounts as a marketing strategy to acquire new leads and incentivize repeat business from existing customers. And they frequently use the word “free” to drive sales—free shipping, buy-one get-one free, free gift with purchase, free trial.
What is the Value of Free
But does the word free make the offer more enticing or valuable? Consumers don’t always bite when the word free is part of the value proposition; in their opinion what they need is money. If a coupon equals money saved, the coupon has value. Getting something for free, regardless of what it is, doesn’t necessarily mean it has value. It must be valuable to the person receiving it for it to matter.
What if it was free money? Would people take it? In 2014, two MIT students wanted to distribute $500,000 in Bitcoin, a form of digital money, to 4,528 undergrads as part of a research project. To claim the $100 in Bitcoin the students had to complete a questionnaire and review material on Bitcoin. Many of the students did claim the $100 in Bitcoin, but 30 percent still weren’t convinced that Bitcoin was valuable enough for them to spend the time and effort to claim it.
By 2014, Bitcoin had been in use for 5 years, but it was not widely circulated or well known. Today, the function of cryptocurrencies are as misunderstood as head-bent teenagers endlessly scrolling on their phones. From pandemic FOMO to financial ruin, cryptocurrencies are often grist for hyperbolic news headlines.
Not All Cryptocurrencies Are Bitcoin
To start with, not all cryptocurrencies are Bitcoin—Bitcoin is one of more than 70,000 cryptocurrencies that have been issued by various entities. A cryptocurrency is a digital currency that leverages blockchain technology to record and manage the issuance of new coins or tokens, and cryptography to secure them against fraud and counterfeiting. So are all digital currencies cryptocurrencies? This is a misperception and here’s why.
Coupons Are Also Digital Currencies
A digital currency is any money-like asset that can be used as a means of payment, exists only in electronic form, has no physical attribute, and can only be accessed and transferred via a computer or mobile device. By this definition, coupons are also digital currencies for two reasons: (i) they can be used as payment, and (ii) many discounts, rewards, and gift cards exist only in digital form. Not all digital currencies are secured by cryptography, and not all cryptocurrencies are speculative or characterized by price volatility, like Bitcoin. It is important to note that the popularity of digital currencies and coupons is on the rise, as demonstrated by the statistic that more than 50 percent of all coupons redeemed in 2020 were digital.
One of the most well known form of digital currencies are the Starbucks Stars. When consumers use the Starbucks app to claim or spend their Stars, they are using not just a form of digital currency, they are more specifically using a branded digital currency. Coupons, whether in physical or digital form, have become a staple of the twenty-first century shopping experience. Regardless of how the offer is framed—free with purchase or straight up free money (cashbacks)—businesses that issue coupons do so with the aim of growing sales and encouraging repeat business, just as Coca Cola did when they invented the coupon and demonstrated its power back in 1887.
Read The Power of Co-branding to learn more about earning cashbacks rewards.