An Oral History of the World’s Biggest Coupon

An Oral History of the World’s Biggest Coupon

The F.B.I. found one in the junk drawer at the Santa Monica hide-out of the notorious mobster Whitey Bulger, which goes to show that gangsters are just like everybody else.

There’s probably one or two clipped your car’s visor, and there could be a pile in the lobby of your building right at this moment. God knows your mother-in-law has a folder full of them.

The 20 percent off coupon from Bed Bath & Beyond — a homely and oversize mailer known as Big Blue — is omnipresent, unmistakable and a joy to deploy in the chain’s endless aisles. It’s also an oddball marketing achievement where the promotion became a stand-in for the brand itself.

At the postcard’s height, hundreds of millions of them found their way into mailboxes each year, an enormous logistical challenge that could go wrong up to the moment they arrived at your door. But that made Big Blue a bona fide cultural phenomenon, so familiar it became a basic-cable plot point.

Between its humble beginnings as a one-off promotion and its partial transition into digital distribution, Big Blue birthed an underground market for bargain hunters and pointed questions from Wall Street.

But it’s still a good enough deal that even the company that created it might not be able to kill it off. And it might not want to, either.

This is the history of Big Blue, in lightly condensed excerpts from the people who were there.

Bed Bath & Beyond started simply in 1971 as Bed ‘n Bath, a single store in New Jersey with lots of sheets and towels — and prices low enough that people didn’t have to wait around for a semiannual department store sale.

WARREN EISENBERG (co-founder, Bed Bath & Beyond) I’m standing here talking to my first saleslady.

MITZI EISENBERG (his wife, in the background) Your first good one!

WARREN EISENBERG Len [Feinstein, his co-founder] and I talked about it, and we said that we’re not going to do advertising. No advertising of items, really. We were not going to change prices and run sales. That’s a very costly way of doing business.

And plus, why not just tell the customer that we’ll give you a discount on the item you want — and not the one that we want to put on sale? We’ll mail a coupon, and it will be a lot cheaper.

The founders, Leonard Feinstein, left, and Warren Eisenberg, didn’t want their store to operate like most others.
Steve Hockstein/Bloomberg

BETH GROSSFELD (senior marketing manager, 2006-19) The thing I remember being so intrigued by was that the company had not spent a dime on a branding campaign, ever. There was no big television commercial, no big splash in the newspaper saying we were a cool place to be. There was only the big, blue coupon. The big, blue coupon was our brand.

But not yet. In the early years, the coupons were infrequent, attached to circulars and for offers like $5 off a purchase of at least $15. But then Rita Little, who had gone through the executive training program at the now defunct Abraham & Straus department store chain, came along.

RITA LITTLE (vice president, marketing, 1997-2013) They had probably 60 stores. My mission was to help them get to 100. Saying it out loud is pretty funny.

There was a need for a Fourth of July-type promotion. It was going to be a postcard, probably with some outdoor-living kinds of things on it. And we needed something with a little extra zing. We decided to try 20 percent off one item. I’ll just say that we knew people reacted. It moved the needle.

We had an outside agency, Berenter Greenhouse & Webster. Bill Berenter, he saw the postcard for what it could be, I believe. We went to them and said that we were playing with this little postcard, and they are getting buried in the mail. The agency did all these markups, and they came up with this big, blue thing.

It was big enough that when you put it into a pile of business letters and bills, you can see it behind all the other letters. They came in with a stack of mail, and had it tucked right behind, and sure enough, he was right.

We tried all the hot colors, red, yellow. They were just too harsh. We went with Pantone 2735c.

GROSSFELD I came to know it as blurple. That was my technical term. It’s not a blue-blue, it’s a purple-blue.

LITTLE Twenty percent is a thread that comes through retail discounting, from the beginning of time. Macy’s had it. It’s enough to make you get off the couch if you’re waiting to shop for the pricey item.

WARREN EISENBERG Ten percent, we felt like it was nothing. Thirty percent we couldn’t afford. All decisions in those days were made without having head of marketing talk to head of advertising talking to committees and so forth and so on.

It was the late 1990s. Surely, there was a more sophisticated way to market than a discount printed in a circular? But it was still the early days for the internet, and the company was slow to embrace email marketing. And coupons had proved their worth for many decades.

AMY LASKIN (director of content, 2012-17): If you leave out all the questions of margins and inventory and all of the painful ways it can hurt a business or the brand or train the customer, a coupon straight up drives traffic to get people to buy things.

BRIAN NAGEL (Oppenheimer analyst who covered the company for a decade) I need to buy a blender, so I’m going to take a coupon to buy a blender. But where Bed Bath historically was extraordinarily successful was with their merchandising. While I’m at the store buying my blender, I would buy stuff that I didn’t even know existed. That was the secret sauce of the company.

Adam Macchia for The New York Times

LITTLE We started to realize that what customers really wanted was the darn coupon. To hell with the rest of the stuff.

We organized our marketing plan to take advantage of the fact that it was a lot less expensive to send a coupon than to produce an entire catalog that had something like a 31-week lead time from a decision to having it in hand.

Initially, we used it very carefully. But then we started to have customers who requested to be on our mailing list.

We started to get requests from stores on the back of paper napkins, scribbled on receipts, the back of fast-food paper bags. We’d get these envelopes stuffed with stray pieces of paper saying Mary Jones at this address, and some people from my office would take them home to try to transcribe them into something we could give to the mailing companies.

Big Blue’s little secret: It’s good basically forever. That expiration date is more like a suggestion.

LITTLE We were a service-oriented organization. A customer walks into a store in the Midwest, she is nine months-plus pregnant and goes into labor. We call the ambulance, hold the door open and she tells us that her coupon is about to expire that night. This actually happened.

And the manager said that of course we would accommodate her. Come back when you’re ready. That was part of the culture. But like all things with good intentions, they do kind of sometimes get out of hand.

LASKIN What I know is that the company line was, “We encourage customers to use the coupons before they expire.” That was the phrase we were always told to say. Any associate would accept any coupon, regardless of date, but that was never an official policy, just so you know.

MITZI EISENBERG People used to keep stacks of them in the car all the time. Down here in Florida, nobody knows who I am, and the woman in front of me in line turns around and says, “You know, I have extra coupons, would you like one?” I love that.

WARREN EISENBERG You should have taken one and ripped it up!

SCOTT HAMES (chief marketing and analytics officer, 2000-18): Word got around, and it became a thing. It was a big issue. But it was also a blessing. If people know they never expire, they keep them. Think about the branding. People come in with five coupons, but they kept them six months. They’ve seen them every day in their purse. That is a huge branding thing.

Soon, Bed Bath & Beyond was sending out nearly a billion pieces of mail a year. The company eventually persuaded Vito Lomenzo, an employee at the ad agency, to start a company and help move all that paper around. A lot of it came from Europe.

VITO LOMENZO (founder, Print Consulting Group) Our larger rolls of paper could go right off the ship and then onto a railroad car. Four rolls could be 32,000 pounds, and some cars could only fit two rolls. The postcards usually moved by truck, but the circulars moved by train more often. The train would roll up to the side of the printing plant, and they have these custom-made trucks that can pick the rolls up and stack them.

LITTLE Behind the scenes, the supply chain became a monster. A good monster, but its own monster. Paper became something that had almost a 12-month lead time at certain times.

LOMENZO I’d take tours of the ship that it was coming in on, though Rita and I worked together on everything, so any “I” is really we. When you have eight million pounds of paper coming across the ocean, you want to know how it’s going to come.

One time, there were 46,000 pounds of our printed, inkjetted postcards that were supposed to go to the post office. Which happened to be right next to a waste disposal plant or whatever they call those things. And, they disposed of it. It was not a pleasant time.

LITTLE The driver said, “I don’t know, they put stuff in my truck and I go to the address they give me.” It was Columbus Day weekend, and I had the day off and was out sailing in the middle of Long Island Sound. And I get this call that the truck never reached the post office. It went to the recycling center, and the postcards were in the soup. Just, gone. This was in Ohio.

GROSSFELD I lived in Queens at the time. You know how apartment mailboxes are? Every so often, there would just be a stack of our coupons on the side. They were supposed to be in the mailboxes. And I would think, oh my god, those are my babies. What do I do?

So I went to my super, and he said, “What do you want me to do?” So I walked around and stuck them under people’s doors. I realized later that it was probably illegal mail tampering.

LITTLE The poor mailmen, what we did to them.

Kristen Bell extolled Big Blue’s virtues in an interview with Conan O’Brien, and Jimmy Kimmel joked that the Best Picture Award mix-up at the 2017 Oscars wasn’t a prank because he’d have put a Bed Bath & Beyond coupon in the envelope. Some TV shows might mention the chain, but “Broad City” took fandom to another level, making the store and the coupon a recurring plot point.

LASKIN Especially the episode where they go to the store. The original episode of the coupon was entirely them. We didn’t pay for it.

I went to South by Southwest. And at the end, they had the “Broad City” women speaking. At the Q. and A. at the end, I got up, with people standing in line at the mic. And I introduced myself, Amy from Bed Bath & Beyond.

The whole audience lost it. They started applauding. I know they weren’t applauding me — they were cheering the whole notion of Broad City’s relationship to Bed Bath. As the applause died down, Abbi Jacobson [co-creator and co-star, “Broad City”] just looked at me and said, “You’re welcome!”

LITTLE I think “Sex and the City” was my favorite. They had approached us before they had even gone into production, and they really stuck with us. But I will never forget having to try to explain the concept of the show to our two very senior founders.

The whiff of the illicit extended to the real world. Enterprising individuals found that the coupon had cash value — if you got your hands on a stack of them.

GROSSFELD For a long time, there were batches of Big Blues sold on eBay. I want to say that expired ones sold in batches of five for $5 to $7 and the nonexpired ones were more.

I remember laughing and being like, are you kidding me? But at that time, people didn’t know when the next one was coming and didn’t feel like they were getting them all the time.

LITTLE In Queens, at the Rego Park store, there was, let’s call them entrepreneurs. They would take them from apartment buildings, where they had “found” them. And they’d be outside the store selling them for $5 apiece.

They were shut down at least once per week. Howard, the store manager, would go out and chase them away. And they’d be back a couple of hours later doing it again.

Hand out enough coupons and open enough stores, and eventually Wall Street has some questions. On quarterly conference calls, the company started getting asked about how much those discounts might be lowering profit margins.

NAGEL It’s the same way we would ask about advertising on television, except this was one of the primary ways that this company marketed.

Because they were extraordinarily good at merchandising around the store visit, the simple math was this: The products that people were redeeming the coupons on — whatever profit was lost there was oftentimes made up elsewhere.

So the question was: To what extent was it being made up?

LITTLE At the end of the day, you’re eroding your margin every time a customer uses a coupon. That is where you had to fine-tune what you were doing.

I used to think of it as a faucet. You turn it off a little, and you turn it on a little. Because Rita had coupons sitting in the warehouse, if you need a little bit of a boost, you run the faucet and push the coupons down the pipeline.

But Rita’s faucet ran up against internet discounts, and by most accounts the company had invested too little in its website. Between 2016 and early 2020, the stock nearly bottomed out.

The founders departed, and new management arrived. In July, the company said in a quarterly earnings call that it would “both lean into store closures and leverage the significant number of lease expirations coming due.” About 200 stores (including some other merchants that the company owns) are in its sights.

Luke Sharrett/Bloomberg

HAMES Bed Bath used to be perceived as having better pricing than department stores. The perception shifted to it being overpriced unless you had a coupon.

The company used to be known for having the best selection, more than what you’d find in a department store or Target or Walmart.

Amazon took away “best assortment.” And then they said that they could get it to you in a day. Then, it just became about customer service and the shopping environment, and that might not be enough to be a compelling story.

GROSSFELD Until the day I left, the push was always to keep people going into the store. Being online is not the same as going up and down the aisles, and that is what made Bed Bath unique.

The current management has a complicated relationship with the coupon. Executives acknowledge that it is beloved by customers, but say the prior regime didn’t use it in a disciplined way. The chief executive, Mark J. Tritton, said during an investor presentation in October that the company is in the process of “honing down” its use.

Bed Bath & Beyond didn’t make any current executives available to talk about the coupon. In a statement, Joe Hartsig, the new chief merchandising officer, called it “a true icon” and “here to stay,” but that newer customers who shop online are less likely to use it. “Unlike in the past, we’re using data and analytics to offer unique deals on the items they love,” he said.

Former employees thought such criticism of their use of the coupon was overblown. They have no regrets about Big Blue and what it did for Bed Bath & Beyond.

LASKIN How does current management really feel about it? I guess ambivalent might be the best word I can come up with.

There’s so much positive brand equity from the coupon. Whatever financial struggle the company might be having, whatever trouble it’s in, consumers have love for the brand. But shareholders are asking about the coupon, and they can’t seem to get rid of it. They can’t break free of it.

WARREN EISENBERG There is nothing wrong with the coupon. That’s good if it’s in my obituary. It’s not saying anything bad about me.

If we were not using them right, that is something else — not doing a good job of knowing when and where to send them. But you don’t have to be a rocket scientist to figure that out.

LITTLE This wasn’t a fire hose. It was a well-tuned operation where you knew what you wanted, and we only turned the spigot on to give us what we wanted.

I made a clean break, and it’s always best to let the new team do what they do and not stick your fingers in because it is not yours anymore. There are fewer postcards, but they will find a place where they are comfortable.

But the secret was that this wasn’t television. That’s what set the stage and created the atmosphere for it all to happen. As Walmart and Target and Linens ‘n Things were doing things like TV, we went in our own direction.

At the end of the day, I’d do it again.

Published at Sat, 19 Dec 2020 10:00:23 +0000

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Written by Riel Roussopoulos


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