Consumers still clip coupons, navigating through the Sunday newspaper for cents off on many of the items that they buy. Billions of dollars of savings are realized each year by people that carefully search for, collect, and use coupons. And even in this electronic age paper coupons show no sign of disappearing.
The next time you head out to the grocery store and hand your coupon to the cashier, you’ll be sending that little piece of paper out on a long journey. Fortunately for you, the “cents off” are immediate.
Here’s how coupon processing works from clipping to redemption and beyond.
1. Consumer action. The first step in coupon processing begins with the consumer. An individual finds a coupon by looking through the Sunday newspaper, a flyer, or a direct mail piece. The amount typically starts at 50 cents and can go up to $1, even higher. The consumer determines if the coupon is for a product he or she will buy and chooses to clip it or not.
2. Consumer shopping. The second step has the consumer going to a local supermarket, grocery store or other retail outlet that accepts coupons to redeem it. Coupons are typically redeemed for the face amount, but some supermarkets will double the coupon’s value in a bid to win business. The shopper finds the item and takes it to the cashier for redemption.
3. At the register. The cashier then rings up each item and receives the coupon from the consumer. Although the entire process is often automated, cashiers are trained to examine whether a coupon is valid and that it matches the item purchased. If there is a match, a discount is applied immediately and the coupon is placed in a bag or underneath the cash drawer. If there is no match the cashier will tell the customer who can shop for a new item, use the coupon later or destroy it.
4. Coupon processing. The next step has the cashier logging out his register for the day and counting up his cash. He will then count up his coupons. Typically, coupons are placed in a separate envelope and may be included within a larger cash envelop or submitted separately to the store’s finance office.
5. To company headquarters. The process continues with the collected coupons sent to the store’s headquarters on a regular basis, usually weekly. At headquarters, an individual collects the coupons from the various stores and ships them to a coupon clearinghouse for processing.
6. Clearinghouse processing. Once at the clearinghouse, coupons are separated by manufacturer by hand. If coupons are scannable, they may sit in one pile while non scannable coupons go to another pile. The coupon processing continues as coupons are forwarded to manufacturers with an invoice included.
7. Manufacturer payment. Once the manufacturer receives the coupons, the final leg of the journey is reached. At this point the manufacturer will examine their collection of coupons and verify that the totals match the invoice. If the manufacturer is satisfied with the invoice, payment is made to the supermarket minus the cost to the clearinghouse. Or, the store may pay the clearinghouse directly to settle funds.
The entire coupon processing scenario can take about a month to complete. And if there are problems, bad or outdated coupons are pulled out of the mix and are not redeemed. Although stores typically get less than a dime per coupon, with hundreds of coupons collected daily and many thousands weekly, the fees quickly add up.
Now you know the reason why your supermarket pushes coupon. You also understand how you play an integral part in the coupon redemption process.