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Comment by red_admiral | Hacker News Reader

The kind of people who ran coupon schemes in the pre-internet days could have told you this.

Back in the day, coupon schemes were things like you had to physically cut out and mail in vouchers from newspapers or magazines, and you got a discount on something like groceries in return. The point of this was market segmentation: you want to get people who (1) otherwise wouldn't buy your product, or at least not as much and (2) without giving it away any cheaper to those who would buy it already. Who goes through the effort to cut out and collect vouchers for a little bit off their weekly shop?

One answer is "poor people". Calling them "much, much worse customers", is a value judgement.

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Another answer is “someone who would slog through some effort to get a tiny bit of a better deal” and these people are definitely worse customers, rich or poor.

Why the downvotes / disagreement? “People using coupons -> worse customers” makes sense to me. The shop isn’t getting more money from these customers.

Not true. A dollar off coupon will encourage purchasing otherwise ignored products.

I buy toothpaste. A dollar off coupon will encourage another brand purchase to a more expensive product that may get repeated.

The shop may get addition money by having me buy other items to save me the time of multiple store visits.

There is a reason why each week a different item goes on sale. That loss leader leads to more purchases

But would you continue to buy it afterwards, or just chase the discounts? Aka:are you truly a "conversion" or just a single discount sale?

Doesn‘t really matter if the discounted price still makes you a profit.

Not continuing to buy doesn't make someone worst customer. What about turn out it is a worst product so they need to offer a discount?

I never buy anything discounted, because if it is such a good item, why did you have tk discount it.

> There is a reason why each week a different item goes on sale. That loss leader leads to more purchases

Except that I, the person who already buys that product, buys nothing, or buys it from another store, because it's no longer in stock when I make my purchases in the evening. (I've since changed to shopping in the morning or early afternoon, so run into sales pricing outages much less frequently, but the general point stands.)

Careful there. People also may also not feel good about being taken advantage off. They may also not feel good about valued less than a little more paying people.

It’s the other way around. Not all coupon users are worse customers (who would refuse a 5$ discount offered during checkout?) - but the worst customers will also go out of their way to find coupons.

But even that isn't so simple, because there are at least three types of people who use coupons.

The first are the ones coupons nominally target -- not people who go out of their way to find coupons. Just ordinary new customers who need an incentive to try the product once and then might become repeat customers. These are actually great when you can get them, but they're not that big a percentage of coupon users.

The second is the, let's say, analysts. Smart retirees who now have lots of free time and can use it to find a good deal. Tech savvy customers who know how to use advanced search features to find the best deal or are willing to set up a scraper to send them an alert. These customers are great too -- you don't make much margin from them, but you make a little, and then they immediately go away and leave you to keep their money in peace. And when you offer a good deal, they will come to you, so your margin is lower but so is your marketing expense.

The real problem is Karens. They don't know how to read but own a fanny pack that says "the customer is always right" and want to spend two hours arguing with you to try to get you to accept an expired coupon for the wrong product over something that has a $0.17 margin.

Some of your "analysts" seem like they can be net loss. I'm thinking someone who only ever buys the groceries that are at least 50% off, having no particular recipe in mind so no need to combine with regular-price items. Grabs them by the truckload when the sale comes, then lives off their freezer for months.

I don't know if it's common to do it so perfectly though.

Spiral cut ham is on intense markdown atm. make room in your deep freeze

That's only true if you issue coupons that exceed your gross margins.

Net margins in many industries are razor thin, a single digit percentage at best. Gross margins are much thicker, because the rest has to go to covering operating expenses like rent and utilities and salaries that don't really depend on how many sales you ring up. You can't allow your net margin to be below zero on average, but any sale that exceeds your gross margin still contributes to the bottom line.

Or to think about this a different way, suppose you have a million dollars in fixed costs you have to recover before you can turn a profit, and you're selling a million units at a gross margin of $0.80 and two million more at a gross margin of $0.20. You're making two hundred grand. But at 3 million total units your average gross margin has to be ~$0.33 just to break even. Does that mean you should abandon all the $0.20 margin sales and only keep the million "profitable" sales? What happens if you do that?

Thanks for the example. It got me thinking.

It's true that a sale at $0.20 profit margin is still a profitable sale, so if the alternative is to not make a sale at all, then better make it.

And... in the case of expirable things like food, even a negative-margin sale is not something to back out of, if again the alternative is to not make the sale at all. That nearly-expired porkchop was already stocked, no way to get back the purchase cost, but you can get something.

But you should not give out negative-profit coupons to begin with for perfectly fine non-expired goods. I hear that.

I guess you would also worry if a customer's behavior forestalls other customers' spending. Like if you have 50% off on bacon but you forgot to set a maximum amount of units, then one customer comes along and buys up the entire supply.

> I guess you would also worry if a customer's behavior forestalls other customers' spending. Like if you have 50% off on bacon but you forgot to set a maximum amount of units, then one customer comes along and buys up the entire supply.

Even that's not really the end of the world. Okay, so you've lost a higher margin sale from the customer who wouldn't have had a coupon, but you've still managed to clear out your stock of nearly expired bacon, and the other customer is still standing in your store looking for some breakfast food and might just buy some breakfast sausages instead, or come back and buy their bacon next week.

You might have done better to do things differently, but only a little bit, which is probably true of every reasonable decision anyone has ever made about anything. And maybe you wouldn't -- maybe a purchase limit would have meant you didn't sell out on nearly expired bacon and would have had to throw it out. Sometimes there's no way to know for sure what would have happened in the alternative and you're just happy if you're making money.

Coupon programs are arguably a form of price discrimination[1]. It allows you to sell at a lower price to people who a willing to put in the effort while still being able to sell for more to people who are fine with sticker price.

[1] https://en.wikipedia.org/wiki/Price_discrimination

There is this movie on Netflix called Queenpins, who run a coupon scheme/fraud business.

I don’t have any experience with coupons, but I found the movie interesting.

It becomes more funny once you shift online. Basically every checkout has a "coupon" field.

Now you look for coupons, and some coupon aggregator of doubtful quality pops up.

You find something that works. Or give up. Done.

The coupon sites are usually of doubtful quality because .... Basically all affiliate networks forbid it. It's also the reason why "last click" attribution is horribly broken.

Funnily enough it's now mostly magazins & newspapers that run these coupon sites in Germany.

> The coupon sites are usually of doubtful quality because .... Basically all affiliate networks forbid it.

I wasn’t aware of this, and I’m not sure I understand why this would be the case. Do you have any more information about this?

https://news.ycombinator.com/item?id=39243992

If you’re asking why a referral program would forbid the listing of referral links on coupon sites, I’d imagine it’s because most people visiting a coupon aggregator are already on the website checkout page ready to make a purchase. You’re not referring these customers and bringing someone new to the table.

I used to run an affiliate program for a company and one of the top affiliates who was making a large sum annually from the program before I took over got quite hostile when I pointed out the bulk of their referrals were from coupon sites. They started trying to intimidate us about the backlash that would ensue if we took action and even brought a very physically intimidating person into a meeting for no other apparent purpose other than to be intimidating.

The data was very cut and dry and in blocking coupon sites in our terms as one of the first actions I took in taking it over they lost a very high double digit % of their revenue from the program overnight.

Surprise surprise, overall trials and subscription rates didn't change and channel ROI improved significantly. Goodbye Felicia.

My in laws side of the family still has plenty of grocery coupons active in their area. It’s definitely not a poor person thing. It’s a generational / cultural thing.

Mine are all online now.

So you can activate them before you go.

In the time it would take to pull the scissors out of the drawer, I can just .click() all of them.

I don't even pay attention to the ones I activate anymore, I just get a nice surprise on the receipt.

On a $100 grocery run it knocks off an average of $20.

Actually , the one answer you gave, is a common myth[1]

https://www.investmentzen.com/news/the-surprising-identity-o...

Which makes sense to me - more educated people are those who know how to save.

There's a difference between being frugal where it actually moves the needle and pinching every penny when the effort/scarifice far exceeds any benefit.

What effort/sacrifice was expelled? Flipping through the paper with a pair of scissors? You didn't even need to buy the paper as the coupons were ignored by the majority of those that did buy the paper and would just toss the coupons. It took no more effort than what people expend doom scrolling the socials.

People "waste" time on lots of things. But, yes, coupon-clipping and redemption is a certain amount of effort and I'm not going to bother unless it hits a fairly high threshold for something I'd have bought anyway.

Coupon clipping is not wasting time. Understanding how much you pay finding coupons to reduce that is will save a lot of money. Just the awareness itself will help.

Write on here that it's a waste of time is probably the biggest waste of time. At least it's low effort.

Couponing is a hobby that is practiced by many people who have secure financial positions but get a thrill out of saving a few dollars on stuff they didn't need to buy in the first place. It happens that these sort of people are often pains in the ass from a retail worker perspective. They try to bend the rules by stacking coupons, using expired coupons, twisting what product the coupons are for, etc. They also waste a lot of time rifling through coupons looking for the best one to use, and just generally waste a lot of time and cause grief for everybody near them.

It may not seem like an exciting hobby to you so maybe you think this is made up, but try to remember that there are people who collect stamps or sit around train tracks to see locomotives. One man's absolute bore is another man's nailbiting thrill.

Polish HN readers laughing at the domain ATM ;)

Why?

Mentzen is a Polish politician

It fits my experience, the people I knew used coupons frequently where are all low income. One ended up having quite a large savings from compound interest and another got a healthy inheritance, but their jobs paid little.

I am a multimillionaire and love coupons and good value

In your previous comment you said you wrote "about 1000 games" in your school years.

I wonder if that was a lie too? :)

https://news.ycombinator.com/item?id=39235575

Why would making 1,000 games (that can be translated to many) that lead to a game startup and successful exit would call you to question if the parent was a millionaire.

Successful exits usually are worth millions.

If 1,000 games can be translated to many, then multimillionaire can be translated to “at least many thousand dollars in net worth”?

The point for criticism of unlikely claims online is that it is hard to know if made up, thereby kinda dubious as an justification for an acclaim of authority on a specific topic..

Another theory, reversing cause and effect, being a multimillionaire would give you enough free time to write 1000 tiny games.

If you make a game small enough, it’s doable over 8 years. If the real number is 100, it’s definitely doable

I'm actually sort of curious why, sometimes substantial, mail-in rebates seemingly largely went away? I haven't seen one in years. A significant customer of a former employer processed a lot of these out of Minnesota.

Probably they were introduced as marketing and when more-preferred customers realized they never mailed anything in, and therefore the rebate price is misleading, it ceased to be effective marketing.

Sounds like it was also the difficulty around “doing it right” which is probably different per seller. https://www.consumeraffairs.com/consumerism/rebate_madness01...

Though they weren't a flash in the pan thing. It's true that their allure for marketing was that a lot of people priced the rebate in and then never mailed for it or violated some term/condition. But they were commonplace for a long time.

Sending outgoing mail is more rare now though? Perhaps when it used to be common to stamp and mail letters then one more wasn’t as big a deal. Now, I’m not even sure where our stamps are or if we have any at home.

Yes, as I wrote in another comment. I know where my stamps and envelopes are but I imagine a lot of people are like "I need to fill out a form and mail it? ROFL. Like that's going to happen. Stuff your rebate. That's fake news."

This is a pure guess, but one of the things a buisness would get out of a mail-in rebate scheme is a customer's contact details, for future marketing (or even to sell on to other companies). Of course, along with the information that "this is the kind of customer who takes part in mail-ins".

That kind of thing can be done far more cheaply, and far more effectively, online these days.

They’re still going strong in the contact lens business. Annoyingly so.

Cost of processing vs most customers ignoring them, based on my experience with the biggest one left that I know of (Menards 11% and the Home Depot equivalent).

I suspect it's some combination of the human processing cost increasing and the idea of finding a stamp and an envelope to get a check (maybe) mailed to them making more and more people roll their eyes and just discount rebates out of hand.

Lots of the manufacturer’s rebates have become instant rebates because of pressure from places like Walmart (who really, really dislikes having to advertise a higher price than possible).

Just an anecdote but years ago when Tiger Direct was still a decent place they offered a mail-in rebate for a product and I sent in everything that was asked for. I asked later about why I hadn't gotten the rebate, and they told me that I hadn't sent in everything that was asked for and wouldn't be getting the rebate. I responded that I couldn't send the things in anymore as I had sent in the originals in the first rebate request, and that if they didn't rebate me I'd never shop from them again. They sent me the rebate. I also never shopped from them again anyway.

Probably not the reason they went away, but I do wonder how many customers were lost from bad rebate programs or rebate program mistakes.

Yeah: when I see "mail-in rebate" I just think "low-key scam". It also now tells me the "real price" of the product is cheaper, and so I feel screwed if I don't intend to put in the effort to deal with the scam, which is a rather different mechanism from coupons.

The difference in those days is that people had to present an actual coupon that they had gone to trouble of cutting out and keeping. The advent of search 'business-name voucher code' brought this to anyone and everyone.

9 out of 10 times, those online coupon finders never worked. You needed to use them pretty much on the day they were posted to the site, otherwise there would be too many redemptions by the time it found it ranked on Google search.

Today it is pretty much actively a scam and you are better off searching for a newsletter subscription that often come with a 15% off code etc.

(I assume the mechanism here is to obscure the coupon enough that Amazon doesn’t get mad you’re selling under their pricing but you let the customer have some of the savings from avoiding Amazon’s commission.)

Lured into a physical shop by a voucher they are likely to by things they would have bought elsewhere, the effort to visit another shop not being justified.

A similar effect happens online with free shipping over a certain dollar amount, which incentivizes getting as many things as you can from a single site.

Alternatively, free shipping (or free shipping at quite a low threshold for what's being sold) is sufficiently normalized that if shipping is not free, some percentage of users will just close the window and move on.

All customers are worse customers in my opinion, and those who seek max value for their bucks are often the worst. But I am always that customer. I harassed my car dealer so much that it took 9 months but he sold me the car for the exact price I have been demanding.

This is a value judgment. You're assuming the author is scheming an elaborate way to be dismissive of poor people.

You just split the entire world of coupon users in 2 arbitrary sections. That's another value judgment.

There are many other reasons to use coupons. Such as: I like a good deal. I like to use coupons. I wanna try something new. I am bored and want to cut coupons. I got this coupon book. This place opened and I'm not sure I wanna try it full price. Etc.

There are so many ways to explore this question.

As for "worse customers", it is entirely possible for a customer to be bad, and for it to have nothing to do with being poor. I recommend studying the user journeys of user cohorts motivated by external rewards, vs those who aren't.

Poor people is just one segment. Honestly, I’d say on average poor people are often not very frugal at all.

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