How to evaluate a coupon service

How to evaluate a coupon service

Why reevaluate a coupon clearing house at this time? We all operate in an overstored, poor economy where retailers face receding margins and stagnant sales growth.

Changing your clearing house may not seem like a priority issue, but cash flow and competitive positioning are, so it could be time to take another look. Here’s why.

The consumer’s decision to use a coupon triggers the cents-off mechanism. Drug stores average higher coupon face value than other trade classes: the average redemption in grocery is 50-60 cents vs 70-80 cents in drug stores, or higher in discount drug (95 cents) and inner city drug stores ($1.50 average, boosted by cigarette trade). So on top of already slim gross margins, a part of the unit cost is tied up in a coupon.

Result: The retailer needs to get that missing profit back ASAP.

To be sure your clearing house is providing maximum service to support your profits, start by asking questions like: how realistic is your clearing house?

Predatory pricing erodes clearing house profits. This results in operational cost cuts which can in turn equate to poor service. Or, you may be tempted with a come-on of a fraction of the 8 cent handling but end up waiting longer than you should for reimbursement – plus, you may end up forgoing that fraction-of-a-cent advantage tomorrow.

Recently the industry saw clear signs of what happens when a clearing house is unrealistic: extended terms of payment were imposed along with raising rates. Look for a clearing house who will help you sustain your plan. If factors change, NCRS will work out a mutually acceptable program with you personally rather than just send you scrambling.

NCRS Only Serves The Retailer

* Does this clearing house specialize in retail service – or does it also service manufacturers?

* Is it realistic to believe the claim you won’t have trouble from the manufacturer” if a clearing house serves both?

* Will labor-saving corners be cut in the “double count” procedure, first counting for the retailer then cross checking for the manufacturer?

* If two counts don’t match, who gets the benefit of the doubt – the retailer or manufacturer?

* When it comes to chargeback resolution, who does the clearing house represent?

* Which firms use this clearing house – are you in good company?

– NCRS has a strong representation in the drug store industry, serving six of the top 20 chains and 13 of the top 25 in addition to many small chains and independents.

* How does this clearing house rank among the more than 50 players in the field?

– NCRS is number four – and rising.

* What safeguards protect your coupons at the processing center?

– NCRS follows a careful checks and balance system which, along with log numbers and audit trails virtually assures no chance of coupon loss.

* Are you maximizing manufacturer support monies?

– NCRS can help you maximize available funds. For example, the dollars supporting in-ad programs are not from the same “well” as coupon support. One is based on sales funds, the other on marketing funds targeted to build a brand name.

* Is your “clearing house” really an authorized agent? For the retailer’s protection, be sure the clearing house actually processing your coupons is authorized by all of the manufacturers. No new authorizations have been granted in the past few years by the major manufacturers with in-house redemption facilities. Requirements such as annual audits are strict to protect retailer and manufacturer.

– NCRS has been authorized by all manufacturers for over 21 years. In addition NCRS operates and controls its own processing facilities and is also a founding member of the Association of Coupon Processors.

* Does this clearing holise really provide a profitable program?

Two issues determine price structure in coupon redemption: 1) in the standard 8 cent available between retailer and processor, how much does the retailer get? 2) How fast is payment made?

The industry payment average is 45 days – but if the retailer is paid faster, you benefit from improved coupon investment return by decreasing the days you are financing your coupon receivables.

– NCRS offers the flexibility of programs to improve the retailer’s return.

If your answers to this evaluation point to a change of clearing house… well, change isn’t comfortable. But if the goal is bottom-line improvement, then look at a change of clearing house as your pro-active opportunity in a time of limited retail options.

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COPYRIGHT 2008 Gale, Cengage Learning