Free Coupons Come Back a-Calling

Coupons have been around for a century. Literally. But in the past decade coupon redemption rates have steadily fallen.

As reported in The York Times Magazine (July 27th, 2008) coupon redemptions fell from 4.7 billion in 1998 to 2.6 billion last year. That trend is now starting to reverse. It seems that coupons are no longer a silhouette of an era gone by.

Even with the ten percent drop in gas prices this July, fuel-driven inflation is causing most consumers to feel the pinch of rising prices. And coupons represent a tangible way for consumers to reduce purchasing costs.

Indeed, rising fuel prices, combined with the weak economic outlook has caused an important change in consumer behavior during the first half of 2008. Consumer use of coupons has stopped declining and is now rising.

A good way to observe this change is to look at the electronic side of coupon distribution. According to Hitwise stats cited by the NYT, visits to coupon related websites are up one third over the same period in 2007.

Some coupon website are little more than sham-fronts for affiliate marketing programs. Many of the links are broken or the coupon codes expired; search navigability is limited.

But other sites, such as CouponCabin, CouponMountain, CouponMom.com and others, offer fresh content: daily updated deals for both on-line retailers and brick-and-mortar merchants. Users can search by type of store or product category.

Marketing analysts have come up with a variety of theories to explain why coupon usage is finally rising after a decade of decline. Interestingly enough, rising inflation is only part of the story.

Some market watchers believe that brand loyalty drops in times of economic malaise because consumers prioritize other considerations. So the use of a coupon encourages brand-switching.

Others believe that the use of coupons is not a behavior entirely motivated by economic considerations. According to market research specialist Peter Meyers, also cited by the NYT Magazine, traditional coupon clippers pride themselves on being prudent and responsible in how they conduct affairs for their household.

To the extent that the prevalence of electronic coupon sites have reduced the time and hassle associated with searching for coupons, Meyers theory makes a lot of sense. Use of coupons becomes an empowering behavior that reinforces norms of common-sense, discipline and financial responsibility.

Interestingly enough, the upsurge in coupon usage has been accompanied by similar trends this year in the use of other free services. For example, free telephone directory assistance telephone services have seen a large spike in usage.

As with coupons, free conference calling services have also seen an increase in usage as users change their behavior. Like coupons and telephone directory assistance, free teleconferencing services represent a way to save money. Once the domain of just businesses, consumers are now embracing such conference calling services to facilitate group calls for family and personal reasons.

The one common theme through all of this is that saving money never quite seems to go out of style. That is especially true now with the difficult economic circumstances confronting the vast majority of families.