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How do store coupons work?
Home » Advertising & Marketing » Store Coupons » How do store coupons work?Posted by Your Guide on October 11, 2006 9:31 PM
This is one of those classic questions that baffles the mind and has stood the test of time. How could this possibly work, anyway? You mean to tell me I can give this store a piece of paper and they'll give me a discount on my purchase? What's in it for them?
These are all good questions. Let's explore.
It all starts when you receive your Sunday newspaper, which is usually packed full of special advertisements and coupons. You look through the coupons, clip out the ones you want, and then do your shopping during the week. During your shopping trip, you go up to the cashier and hand them your coupons, which they scan or enter and then put into the cash drawer. This is the end of it, as far as you're concerned. But, honestly, this is only the beginning of an unbelievably long process.
At the end of the work day, the coupons in each cash drawer in the store are added up and included in the cash total, to make sure the totals all balance out. The problem for the store is, those little scraps of paper aren't the same thing as cash, so the store is still out of luck. The store has to mail these coupons in to their manufacturer, who will in turn reimburse the store for the money they discounted for the customers. But, even this process sounds far simpler than it really is.
So, what's next? Well, at the end of each week (at least most of the major chains do it this way), each store packages up all the coupons from that week and send them to the store's corporate headquarters. The people at the store's headquarters are truly middle men, as they simply look over the coupons, repackage them, and send them to an independently owned, third party clearing house. And the people at the clearing house have an enormous job on their hands.
The work at the clearing house begins with the workers sorting through every coupon by hand. You can imagine, at clearing houses which are contracted by large chains, that this literally means sorting through millions of coupons each week. The first item of business is to separate the coupons based on the manufacturer which offered them in the first place. Then coupons are separated by examining the bar code on them: coupons with in tact, readable bar codes go in one stack, while coupons with bar codes which have been somehow damaged (torn, smudged, etc.) go in another. The coupons with readable bar codes are placed face up on a conveyor belt which causes them to pass under a scanner, much like the one you would find at the grocery store which originally scanned the coupon. The other coupons, with the damaged bar codes, are tallied by hand. The coupons are then totaled up and added together, and the sum is placed on an invoice. The coupons from each manufacturer are placed with their invoice, and the entire package is then sent to the manufacturer.
There are a couple different options as to what happens at this point. Usually, the manufacturer sends payment for the invoice to the store, and the store then pays the clearing house whatever fee they have agreed on. Sometimes, though, the manufacturer pays the clearing house the amount of the invoice, and the clearing house is responsible for settling up with the store. Incredibly, in order to avoid fraudulent activity, the manufacturer will often tally the total of the coupons one more time, a practice they usually hire their own clearing house for.
So, let's count the steps: The coupon is in your hands, then the cashiers' hands, then the counters' hands, then the headquarters' employee's hands, then the hands of the clearing house folks, then the hands of the manufacturer, and finally into the hands of another clearing house! Isn't it amazing all the trouble that is taken so that you can save a quarter on a can of sweet peas?!
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