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...or they end up with razor-thin profits.
[edited by: martinibuster at 7:51 pm (utc) on Dec 1, 2010]
I don't think ecommerce sites would be using them constantly if they weren't making money off of them.
many people can't calculate their actual costs.
Then they cheap-out on promoting it.
Typically they aren't trying to make 1 sale per coupon.... they are hoping to make 1 repeat customer per coupon.
if that's what you're thinking will be the benefit the data doesn't support the inference.
I guess like everything else in business it's a case of "test . . test . . test", all the while probably "testing assumptions"
Am I the only one here old enough to remember when trading stamps were huge in marketing in the mid-60s? (Top Value, S&H Green Stamps, Plaid Stamps etc). A forgotten fad now. At their peak they were far hotter than Groupon.
They'd go out and buy a car for sticker price, without even attempting to haggle, thereby instantly erasing about 5 years worth of coupon efforts.
Recommended reading: Predictably irrational by Dan Ariely. He has interesting things to say about behavior like that!