Using coupons; some recommendations

Hi all,

Currently I live in Mexico. The economy is bad and everyone’s looking for a bargain. The lure of free things helps here.

I have a small internet cafe that I am going to open, by small, I mean one computer to start with, in my house.

I intend to start selling pizza slices within a week and I want to offer coupons for both internet usage and pizza purchases.

What I would like to do, is give a coupon that works like the old Green Stamps or if you’ve ever been to the Jersey Shore, like the arcades they have there. The coupons are worth points and you turn them in for free products.

I need some recommendations for how to structure this. I don’t want to shoot myself in the foot by giving away too much and I don’t want to make it unrealistic for the people to redeem them.

Looking for a good rule of thumb as to how much they should be worth. Do you calculate it on sales / profits?

For example I charge 10 pesos ($0.80) per hour and 6 pesos ($0.47)for 1/2 hour for the internet. How many points should I give for each visit and how many would I need to specify to redeem the points for a free hour?

And how would I do it for pizza? You have to remember it’s brutal trying to make a living here selling food. Especially if you like to use quality ingredients. The ingredient cost here is similar to the USA; often a little higher, but the selling price is only a fraction of the prices in the states.

For example gourmet cupcakes sell in the states from $3.00 - $6.00 dollars each. Here, it doesn’t matter, they don’t understand “gourmet” and the best price you’re going to get on a cupcake is 4($0.32) to 7($0.54) (if your real lucky) pesos for each one.

I have a word, but I’m not sure if it is appropriate or correct. Par value?

Look, the way I see it I could try to add more to this explanation and it would get worse.

Due to my lack of clarity, I hope that there is at least one person that “gets” what I am trying to do :slight_smile:

thanks.

No one has any ideas at all?

I’m sad … I would think that it would be nice if every post should have at least one reply.

Welcome to the Think Tank wizarddrummer!

I must say that after reading your post I am completely confused about what you’re trying to do. You’re opening an internet cafe out of your house, and will be selling pizza slices? And then people will receive coupons to redeem for free products when they purchase internet time or pizza?

Don’t take the lack of replies as a personal slight. My hunch is there just aren’t any people here with experience in what you’re trying to do, let alone experience operating a business in Mexico.

From what I read here you are interested in setting up a LOYALTY PROGRAM. Here is a good place to start. As with any marketing plan you have to know how your customers will respond for the program to be successful. This usually means trial and error.

Good luck with your search.

Thanks for the reply.

I knew that it would be confusing to try and get the point across.

Some info:

In Mexico, you can do what you want most of the time from your house. People are selling all kinds of food, from their cars, door to door, there are two grocery stores on my street that are in residential houses. Each of them have arcade games and they sell regular food like milk, eggs, canned goods etc.

I mentioned two things Green Stamps and the Jersey shore. At the jersey shore they had lots of games; take ski boll or whatever it’s called. You put a dime, quarter into the machine. You get 10 balls and you roll the ball trying to gain the most points in the circular ring. The machine, when you are finished spits out some tickets or a paper with points on it that can be redeemed for merchandise. For example one summer, many years ago, you needed 16,000 points to get a video camera. What I can’t remember is how much money you actually spent, playing the game, to accumulate that many points.

Most people here do not have computers so Internet cafe’s are everywhere.

I’m trying to attract people to come here so that I can get the most amount of usage on the machine and incentive for people to come and buy food, in this case Pizza.

I am sure that over time, the people will get accustomed to the pizza I make and come back because it tastes good. The pizza that is normally made here, by Mexicans, is pizza that most Americans would spit out after trying it. Doughs that are like sponge cakes, sauce painted on by a paint brush, low quality cheese and cooked with the oven open 50% of the time while the pizza cook inspects it every 7 seconds.

I make a decent pie, not as good as the top dogs in Brooklyn, but passable.

The coupons in this dreary economy are for people here that are looking for a bargain so that would come in; use the computer more and buy stuff. I don’t speak Spanish that well so it’s a bit of a strain, people don’t feel as comfortable, so this is why I am looking for another incentive.

I’m trying to figure out how to set up a point system where each time someone buys something they get some points and the accumulated points they can redeem for free food / internet.

I’m looking for suggestion the ratio of points vs the dollar amount that I give away.

For example I’m just making something up off the top of my head. If I sell a 12 in pizza and give a coupon for oh say 25 points then how many points should it take to get a free one?

I don’t know if I have made this clearer or muddier. It’s one of those times that I have a plan or can “see” it in my mind, but I can’t put the specifics together that make it work right. Like I said before I don’t want to lose money and at the some time I don’t want it to seem impossible to get the free stuff.

If you are looking at what to offer as far as a point system think of it as a discount that will be used all at one time.

There is a store here in Canada called Canadian Tire (took a genius to think up that name) that hand out Canadian Tire money if you pay cash or use their credit card. It is an incentive for the customers not to use their Visa which would cost the store 2%-3%. I am sure they build that into the price of their products.

I just used 2500 reward points and $300 to book a flight. The value of the flight was $850 if I had to pay full price. The rewards were earned at 1 per $20 of product purchased and the $300 covered taxes and administration fees. So in this case the value of each point was 2% of the purchase price.

With most rewards credit cards it is the merchant that takes the hit for the reward by paying a higher discount rate. Again this is about 1% of the purchase price.

Using you example of the games that shoot out the tickets. The last time I remember my kids playing those games the $1 valued prize took $10-$20 into the game to get enough tickets to redeem for the prize.

I know this doesn’t give you the soild answer you are lookin for but hopefully it gives you some ideas.

thanks for that reply; um Canadian Tire, yeah that’s original.

Appreciate the info.