Last Updated: March 10, 2021
Key Findings
- Mobile and online coupons have been on track to eclipse paper coupons for over a decade, and the popularity shows: nearly 3 in 4 consumers have downloaded an app for the express purpose of receiving coupons or deals.
- More than 40% of Millennials use coupon aggregators often while shopping online compared to just 33% of Generation X and 20% of Baby Boomers, suggesting that aggregation sites are an effective way to reach younger shoppers.
- Across generations, free shipping is a less attractive offer to consumers than discounts and BOGO deals. Percentage discounts are the most popular type of deal overall.
- Women are more likely than men to use coupon aggregators, so brands for women can expect a greater return from promotions on these sites.
An Updated Look at the Coupon Industry
We first analyzed coupons in 2013 to take a closer look at how the coupon industry works, including information about the most common types of coupon deals by product type, statistics about the then-budding mobile coupon industry, and projections of the explosive growth of online coupons that has come to pass since then. Now, in 2021, we’ve returned to the topic to present fresh findings about the popularity of physical coupons, mobile coupons, and online coupon aggregators.
The Origin and Evolution of the Coupon Industry
Before diving into the state of the modern coupon industry, let’s begin with a brief history lesson: For more than 130 years, coupons have influenced how people shop. The coupon industry began with a savvy businessman’s idea to promote Coca-Cola in the late 1880s. It has since grown into a multimillion-dollar industry in which billions of coupons are redeemed by consumers every year. From paper coupons to digital codes, the coupon industry continues to evolve and grow as technology makes it easier than ever for shoppers to score a great deal.
The term coupon comes from the French “couper," which means “to cut." Paper coupons dominated the industry for decades before the advent of online coupons, with millions of Americans clipping vouchers out of newspaper inserts or direct-mail flyers. Stores placed coupons in dispensers near products, on backs of receipts, and in store circulars. Some manufacturers began placing coupons directly on their products as well.
With the popularization of personal computers and the World Wide Web in the 1990s, coupons became available online. Shoppers could now find and print coupons at home for free. Stores also began programs that offered customers store discounts and personalized savings at the swipe of a loyalty shopper’s card. As more stores and manufacturers realized they could entice people to buy a product simply by offering a coupon, the coupon industry and the popularity of couponing grew.
How the Coupon Industry Works
When using the traditional coupon method, a manufacturer has paper coupons designed, printed, and distributed. The consumer finds, clips, and brings coupons to the store. The store collects the coupons each day and sends them weekly to their corporate office, who then sorts and ships them to a third-party clearinghouse.
The clearinghouse checks and sorts the coupons before sending them to the manufacturer with an invoice. Before sending payment, the manufacturer may recheck the coupons by sending them to a second clearinghouse. The manufacturer reimburses the clearinghouse who then pays the store, or the manufacturer pays the retailer who then reimburses the clearinghouse. Sound confusing and time consuming? That’s because it is.
Changing From Physical to Digital Coupons
In 2021, paper couponing is seen by many as an antiquated system full of inefficiencies. It takes two to 12 weeks to launch a paper coupon campaign, plus four to six weeks to see results. Retailers are ready to ditch the old hand-processing method for a complete digital transformation that would enable them to have almost real-time insights into consumer shopping habits.
Implementation costs, however, have held many stores back from making the change from physical to digital. So, although much has changed in the landscape of the coupon industry since our first analysis in 2013, much else has remained the same. Digital coupon use is on the rise, but paper coupons are still popular among in-person shoppers of all ages.
The COVID-19 pandemic has created conditions in which quick change has been necessary in the retail industry. The recent push for contactless payments and shopping experiences has thrust retailers into modernizing their checkout and couponing methods. According to this recent study of the coupon industry, digital coupon usage and online shopping are both on the rise as the use of paper coupons is in decline.
The study also found that the use of smartphones during a shopping trip has increased, with almost half of all shoppers accessing savings via mobile apps. Digital discounts are an easier way for shoppers, retailers, and other businesses to manage the distribution of coupons, and most consumers are now willing more than ever to engage.
The Success of Coupon Aggregation
The idea of gathering all online discounts into one place was a game-changer for the coupon industry. It’s known as coupon aggregation, and a large slice of consumers enjoy the benefits of being able to browse deals in one location online: about 70% of the shoppers we surveyed reported using coupon aggregators to find codes to apply to their purchases.
Coupon aggregators started as searchable websites that consumers could turn to for discounts. Some require users to sign up for accounts, while others let anyone access money-saving offers. Many aggregators now offer browser extensions to help streamline the process of online shopping with coupons. This technology enables shoppers to access discounts, coupon codes, or cash-back rebates without leaving a retailer’s page.
One downside to using a coupon aggregator is that the promotional codes don’t always work at checkout. It’s also difficult for one aggregator to have every possible online discount listed as some promotions are unique to a retailer’s or another aggregator’s website. As a result, some shopper’s still feel the need to search around to make sure they’ve found the best deal possible.
Online coupon aggregators tend to be more heavily used by younger people, especially Millennial shoppers. According to a previous study, more than 90% of Millennials use coupons and show a preference toward digital formats. Most millennial parents also agreed that they would shop online more if they could use more coupons. Women are also more likely than men to use online coupon aggregators, suggesting that brands who market heavily to women could expect greater-than-average conversions from shoppers on aggregation sites.
The Most Popular Coupons
As we covered in the brief history of coupons above, the industry has its roots in food, beverage, and grocery coupons. Even the “Extreme Couponing" fad of the late 2000s and early 2010s centered on grocery discounts, and our recent study confirms that frequent coupon users are most often on the hunt for food and beverage coupons. That top category, followed by clothing/apparel and beauty/health products, is a trend among frequent users of both physical and online coupons. This finding suggests that the most popular coupons are ones that offer savings on necessities.
We broke down the most popular coupon categories among frequent users of physical coupons and online aggregation services. In general, the popularity of each category of coupons was even more pronounced among aggregator users than among physical coupon users.
For example, frequent users of coupon aggregation sites reported regularly seeking out deals on clothing and apparel, beauty and health products, and personal electronics at significantly higher rates than their physical coupon fan counterparts. The “food and beverage" category is a notable exception: 79% of frequent physical coupon users indicated regularly seeking deals in this category as opposed to 77% of coupon aggregator users.
The Best Promotions
The final item we wanted to examine within the coupon industry was the popularity of different types of deals. We asked coupon users of all ages to share their opinions with us. Which promotions would attract the most people to make a purchase? Which deals would they simply pass over as not good enough? Take a look at the interesting results below.
Overwhelmingly, people selected percentage discounts as their favorite deal type and rebates as their least favorite. When looking to entice buyers, even a 20% discount will almost always be more attractive than the delayed savings of a rebate. In what may come as a surprise to readers, free shipping also ranked in the bottom half of the table. Perhaps growing consumer awareness of the complicated retail strategies behind free shipping or its growing availability has decreased its value in the eyes of consumers.
Preferences surrounding deal types remain mostly consistent under various demographic breakdowns, with one interesting exception: Baby Boomers are much more likely than their Gen X or Millennial counterparts to prefer “buy one, get one" sales. Gen X also shows a greater preference for flat-rate discounts than other generations (although it’s a close call for them—BOGO sales are nearly as popular).
Rebates could be low-ranked overall because they’re often seen as difficult and time-consuming to redeem. It can also take weeks or months to receive the rebate money, which delays the gratification typically felt when taking advantage of a money-saving deal. Our survey suggests that there’s room for improvement if retailers want to use rebate offers to encourage spending.
Current Coupon Trends
Since their inception more than 100 years ago, coupons have been a major driving force for changing buyer behaviors and creating revenue. The coupon industry is always evolving as it seeks to better serve and understand consumers. Physical coupons, though still popular among shoppers of all ages, are on a downward trend as digital couponing techniques improve and more online offers reach more buyers.
With the rise of e-commerce and mobile technology, it’s no surprise that digital coupon usage is increasing among consumers. It’s predicted that mobile apps will soon account for nearly 80% of all coupon redemptions as more paper coupons are phased out. The value of digital coupon redemptions is also expected to surge up to $91 billion worldwide in the near future. With thousands of deals at their fingertips, modern consumers have unparalleled access to coupons so they can save money like never before.
Our Data
Data used in these analyses were collected from a survey of 1,007 consumers located in the U.S. 54% of respondents were female, 45% were male, and less than 1% were nonbinary or reported an unlisted gender identity. 55% of respondents were millennials (born between 1981 and 1997), 28% were Generation X (born between 1965 and 1980), 11% were baby boomers (born between 1946 and 1964), and 6% were members of other generations. The median income bracket of respondents was $35,000–$49,999/year (16% of respondents), while the mode income bracket was $50,000–$74,999/year (24% of respondents). Median income displaced downward from mode by the 11% of respondents who reported an income of less than $10,000/year. All respondents included in the analysis passed an attention-check question. Demographic breakdown analysis was limited to sample sizes of 100 or more respondents.
The main limitation of this survey is the reliance on self-report, which is faced with several issues, such as exaggeration, telescoping, and recency bias. Our sample is not perfectly representative of the general population by age; millennials and Generation X are overrepresented.
Information about the history and origin of the coupon industry collected from sources provided by WNYC, the NCH website, and TIME.