On October 18, Yordan Sölter presented his research on ”Effects of Minimum Purchase Amount Restrictions in Coupon Promotions” at the Annual INFORMS Conference in Indianapolis, Indiana, USA. Co-author of the working paper is Prof. Dr. Arnd Huchzermeier and Prof. Dr. Christian Schlereth (WHU).
A key question for retailers in running promotions is how to avoid granting discounts without generating (sufficient) incremental revenues. To add to the empirical couponing literature, we run a field experiment with >1.5 million customers in cooperation with a retailer. Based on a randomized allocation of coupons in the field experiment, we estimate the effects of different levels of minimum purchase amount restrictions for redeeming a coupon. Moreover, we explore optimal targeting policies based on prior transaction histories.