Tuesday, August 29, 2006

Games Supermarkets Play

I went to a supermarket yesterday. Near the register, there was a big sign: "new triple coupon rules:" and it went on for about a page.

That's inefficient, don't you think? If you use some basic principles of game design, you won't have to put weasel limits on your offer.

There are three elements of game design which maybe could be used for coupon games. First: controlling what coupon offers to make in order to keep the twinking controllable. The reason there are so many restrictions on triple coupons is simple: the supermarket can't afford to give things away for free, so it limits coupons in a million ways. It would be smarter to issue more intelligently designed coupons.

Second: persistant world. Some places already do similar things, of course - like remembering what you've purchased and giving you offers and rewards based on how much of what kind of things you've bought. But that's pretty minor: by utilizing gambling and "random" rewards, you could probably addict hundreds of homemakers to buying stuff and hoping for interesting rewards. You could even have "sales" where it's not the price which goes down, but the reward potential which goes up!

Similarly, coupons could be affected by your "status", giving better percentages the more you buy. (Actually, it would be a U-shaped curve: in the beginning, lots of rewards are needed as well.)

I don't know the best way to do it, but stats are always fun. Maybe you have a "gourmet" stat, and a "bargain hunter" stat, etc. You raise the stats by buying stuff. Obviously, company accounts need another algorithm.

You'll still suffer mudflation, but seasonal sales where someone can spend their stats, permanently, for good deals... that will push people back down, allowing them to work back up towards the reward asymptote instead of simply sitting on it.

Third: socialization. Right now, supermarkets don't have a way to get your friends to buy from them. They could come up with a way. Maybe coupons come in pairs, and if some other card-wielder uses the second in the pair, they get a bigger discount. Or when the second is used by some other card-wielder, you gain points in a stat. The more times that second card-wielder has used your other coupon, the less effect it has. You'll need some method to limit people simply signing up for new cards over and over...

It could just be as easy as putting a "who referred you" on the card sign-up. Then you could do it pyramid-scheme style: when that new person gains stats, the referrer gains a fraction thereof. Or gets coupons, if you're afraid of that potential. This keeps people from benefitting from signing up for new cards over and over.

All the world's a game, eh?


kestrel404 said...

OK, a few points of note:
Supermarkets don't make coupons. Coupons are printed by manufacturers, and supermarkets are re-imbursed for the value of those coupons.

Some supermarkets double low-value coupons (99 cents or less, usually), to make them seem more worthwhile to customers. Since supermarkets get re-imbursed for the value of the coupon, they only lose the value of the coupon in profit, but often on a sale that would not have been made if the coupon had not been a factor. In other words, they still make more profit doubling coupons than if they did not. This assumes that the value of the coupon is MORE than the profit they are making, which is generally true.

Tripling coupons are a special offer, require their own coupons (so that you cannot triple every coupon you use), and are even more limited than doubling coupons. These are produced entirely by the supermarkets. The logic that applies to doubling coupons also applies to tripling them, but it is far more likely that a tripled coupon will lead to a loss of profit. Loss leaders can still show a profit if they lead to additional sales, however, so triple coupons are used as a draw, and a marketing tactic.

All of this goes out the window when coupons match up with sales.

Sale items already have their profit margins reduced by the grocery store in order to draw customers. Coupons are still almost always honored on sale items, despite the fact that even a doubled coupon on a sale item ends up making that item a loss-leader. Tripled coupons on sale items often lead to free items. The page of text posted in stores generally is legalese saying "We won't give you money for buying items just because the tripled value of your coupon is greater than the sale price of an item". It also explains why you can't buy fifty newspapers for $.50 a piece and use all those triple coupons at the same time to get a free grocery cart full of groceries.

Why do I know all this and why is it important? Because my Grandmother-in-law gets fifty newspapers a week, and all the coupons that go with them. She then clips all the coupons. And sale shops.

And you know what? All those rules posted in grocery stores are completely ignored by the employees more often than not. The employee who is being payed five dollars an hour to ring up your groceries does not care that you just bought a hundred bottles of bleach and ten pounds of beef for a combined price of fifteen cents (-$.10 per bottle of bleach, $10.15 for the beef). They don't give a hoot that you're getting two dozen cans of tomato sauce (-$1.50 each), three mops (-$.20), and a brand new TV (~$50 on sale) for twenty dollars after tax. Because it happens. On a regular basis. Which is why stores feel the need to put up those signs.

(Yes, your ideas have merit - some of them are even done already - but most of them require far more explanation than either the executives that have to give them the OK, or the customers who would have to use them, would care to read/listen to. And you would STILL find people who could use the system and a bit of social engineering to get everything for virtually free.)

Craig Perko said...

Ah, but those manufacturer coupons have to be accepted by any given supermarket brand. For example, Costco might have a coupon for Tim's Baked Beans, but that same coupon isn't valid at, say, Price Chopper.

I would think a little negotiation might be able to create wise couponning.

Anyhow, thanks for the extra data. I thought the computers automatically caught the sillyness, but I guess not.

In my eyes, that makes these rules even sillier...