Quick--how many Susan B. Anthony dollar coins have you got on you?
If you're like most Americans, you have no souvenir from one of the most disastrous coin launches in U.S. history. Even U.S. Mint Director Philip N. Diehl refers to the ill-fated coin as "the Edsel of American coinage."
So why, then, is Diehl even thinking about trying to sell us a new dollar coin starting on March 1?
The simple answer is that Congress made him, by passing legislation in 1997 that required the Mint to produce a new $1 coin. But Diehl admits that he pressed Congress to go ahead. This may be hard to believe, but over the past 20 years the supply of the unpopular Susan B. Anthony dollars--which users found difficult to distinguish from a quarter--has dwindled to almost nothing, driven by an increasing demand for larger-denomination coins for vending machines, subway turnstiles and highway toll booths. People want a dollar coin, it seems, just not the Susan B. Anthony.
In a marketing misstep on the order of the rollout of New Coke or the movie "Waterworld," the Mint made nearly 900 million Susan B. Anthonys in 1979 and 1980, only to fret as they languished in government vaults. People thought they were ugly to look at and irritating to use, so they generally did neither.
Now the Mint is about to roll out another metal dollar, this one designed to look and feel nothing like a quarter. It is gold in color rather than silver, and it has smooth edges like a nickel, instead of the reeded edges that made the Susan B. Anthony handle like a quarter. In place of the stern visage of Anthony, the new coin will feature what the Mint views as an elegant portrait of Sacagawea, the American Indian woman who helped guide the Lewis and Clark expedition.
On a recent day, Diehl requested a test coin from the Mint's vault (for fear someone might spirit one out of the building and make a bundle by selling it to a collector, the Sacagawea was escorted from its vault by two armed guards who watched over it until Diehl gave it back). Intent on proving the new coin is much better than its predecessor, Diehl had a visitor pocket the coin and try to fish it out by touch alone. In two tries, it worked as well as Diehl said it would; the coin was easily distinguishable from other pocket change.
Altogether, Diehl claims, the Sacagawea is such a terrific coin that consumers will use it as they never used the Susan B. Anthony.
Not everyone agrees. "There's extreme skepticism about whether this will work," says James C. Benfield, executive director of the Coin Coalition, a group of vending-machine operators and other coin-intensive businesses that has been pushing the idea of a new dollar coin since 1987. Benfield loves the Sacagawea, chiefly because it will work in any vending machine whose electromagnetic coin analyzer already accepts the Susan B. Anthony. But he's worried it could suffer the same fate as the Susan B. unless the government simultaneously kills the paper dollar, which it is not about to do.
"Every country that has introduced a high-denomination coin . . . pulls the equivalent piece of paper [money], and we're the only country dumb enough not to learn from its mistakes," Benfield says. But polls have shown that Americans are overwhelmingly opposed to doing away with the paper dollar, and parties with an interest in seeing it continue--including the companies that make the paper and ink for the paper dollar, as well as the printers that produce it--have pushed Congress not to discontinue the greenback.
"If you want a dollar coin, fine, but don't take away the dollar bill, because people rely on it," says Judy Leon, a senior vice president at Powell Tate Public Affairs. Leon, whose clients include paper maker Crane & Co. Inc., argues that the dollar coin will succeed or fail regardless of the paper dollar's fate.
If the Sacagawea tanks like its predecessor, however, it won't be for lack of marketing: Everyone who watches TV, listens to the radio or eats cereal is about to get pitched.
The Mint plans a major broadcast and print blitz and is currently testing three TV campaigns, looking for one that will convey a hip image. When it debuted its 50-state quarter program earlier this year, the Mint signed up Kermit as its "spokesfrog" and produced cute TV spots showing Kermit as George Washington. Now it seems to want cool instead of cute.
Stan Collender, a senior vice president at Fleishman-Hillard, the firm the Mint hired to publicize the coin, promises the Sacagawea spots will be "a little on the edgy side--think of a Gap commercial." Dan Rosenthal, president of the Bethesda advertising firm that is preparing the spots, declined to describe them but said they will target young people, who tend to be heavy coin users. In focus groups, customers have reacted well to the spots: "Everybody says it's cool, it's hip, [with] this kind of hip feel for a government agency," he said.
Meanwhile, Cheerios eaters will find a brand-new penny stamped with a 2000 mint date in every box after Jan. 1 and a shiny new Sacagawea in every 2,000th box (the coin will debut in Cheerios boxes before banks begin dispensing it in March). Cheerios, looking for a year 2000 promotion, picked coins. "It'll be really cool for our consumers," enthuses Liv Lane of General Mills, which makes the cereal.
"The United States Mint has made coins cool," bragged Diehl, a former Dallas businessman who was an aide to former senator and treasury secretary Lloyd Bentsen. Diehl, 48, took the Mint's top job in 1994 with a plan to shake up the stodgy agency and drag it into the world of modern marketing.
Coin collectors--a big piece of the Mint's business--say he has generally succeeded. For years, the Mint had a terrible reputation among collectors, who often had to wait months to get delivery of special coins. "If you talked about 'product,' you got a blank stare," says Beth Deisher, editor of the weekly magazine Coin World.
That has changed, Deisher says. Collectors now get coins much faster, and the Mint has begun marketing its collectibles on the Internet, where in just six months sales have gone from zero to as much as $2 million in a single day, according to Mint officials.
The most public sign of change came with Diehl's orchestration of the much-ballyhooed 50-state quarter program, which was designed to appeal to collectors (and create new ones) by debuting a new quarter every 10 weeks or so for the next several years. Deisher pronounces the program "hugely successful," and the Mint, which conducts monthly market surveys, says 90 million people are likely to collect the quarters.
Diehl hopes the Sacagawea will be similarly successful, which would mean fabulous profits for the Mint, which already makes huge margins. For example, a quarter costs only 5 cents to make; the rest is profit, most of which goes to Treasury's general fund to pay the government's day-to-day bills. This "seignorage"--the money governments rake in by making their own money and then selling it to citizens at face value--is nothing new. But the Mint's numbers are breathtaking by corporate standards.
Of the Mint's $2.5 billion in annual revenue, $1.1 billion is profit. That 44 percent profit margin blows away even a top moneymaker such as Microsoft, whose 31 percent margin is none too shabby.
Things may get even better for the Mint. A Sacagawea will cost only about 10 to 15 cents to make, which means 85 to 90 cents will be pure profit. "It's a killer business!" Diehl said with a grin.
A New Coin
Sacagawea (to be issued in early 2000)
Weight: 8.1 grams
Diameter: 26.5 millimeters
Border: Smoother and
wider than conventional coins
Number to be produced: About
100 million next year (will produce enough to keep up with demand)
Cost to produce: 10 to 15 cents (85 percent to 90 percent profit margin)
Looks and feels a lot like a quarter? No
SOURCE: U.S. Mint
CAPTION: Intense marketing campaigns will promote the Sacagawea dollar before its March issue.