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How to Stop Losing Money From Coupons

Looking at bare shelves and harried cashiers? It's possible that you've been visited by a disciple of TLC's Extreme Couponing, a cable television show that educates viewers about getting cartloads of goods for pennies on the dollar. To protect themselves from losses, some of the country's major food and drug retailers are changing their policies. Retail consultant Bob Phibbs, author of The Retail Doctor's Guide to Growing Your Business, thinks independents should also revisit their policies.

"You don't want to encourage these people to shop with you," Phibbs says. "They're not the people who are going to make your business." To build as big a wall as possible between you and potential extreme couponing losses, he suggests a few simple policy changes.

No buy-one-get-one-free (BOGO) deals with other promotions. The cartfuls of free merchandise extreme coupon users score are often the result of BOGO promotions combined with BOGO coupons. By disallowing such combined promotions, you eliminate that risk, Phibbs says.

Cut the copycats. Limiting the number of identical coupons--perhaps two or four--per purchase or per customer can eliminate buyers walking off with all your inventory for free or at a deeply discounted price. If your point-of-sale system can track it, you may also consider limiting the number of identical coupons customers can use over a specific time period, such as no more than four in a month. However, Phibbs admits, that can be trickier to track.

Related: The Dark Side of Discounts

Accept others' coupons cautiously. If you accept other retailers' coupons, be sure that you apply your own limits to them to avoid paying for the mistakes of your competitors, Phibbs advises. Also, pay attention to expiration dates and other limitations.

Post policies clearly. Whether you're making changes to your policies or you're simply making them public for the first time, Phibbs says they should be posted near your cash register so customers are aware that extreme couponing practices are not welcome in your store.

Don't allow "coupon bullies." Some hard-core coupon users can be aggressive about getting what they want. This can be a drain on your staff, and may require your intervention. "Sometimes you may have a situation where someone is in line screaming that they want 50 of this for the price of one,"

Phibbs says. "Think about what that does to your employee. It ruins them for the rest of the day. Set your policies and back up your employees when they enforce them and you shouldn't have a problem."

Image from Shutterstock.comFotoline

Gwen Moran is a freelance writer and co-author of The Complete Idiot's Guide to Business Plans (Alpha, 2010).

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This article was originally published in the November 2011 print edition of Entrepreneur with the headline: Death by Coupon.

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