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.
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?
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.
