This drill is intended to help you with making crisp clean contact with your chip shots. A chip shot is intended to be struck with a slight descending blow, making contact with the ball just prior to making any contact with the turf. This drill provides you with immediate feedback as to whether or not you are doing things correctly.
I suggest using your 7, 8 or 9-iron on a medium length chip shot off a fairway lie for this drill. Place a penny or small coin 3 to 4 inches in front of the ball, and another coin 3 to 4 inches behind the ball.
Players chipping incorrectly will either miss the coins altogether, or more commonly hit the coin behind the ball and miss the coin ahead of the ball. If this is the case, then you are striking the ball after the club has reached the bottom of its arc, or you are allowing the club head to pass your hands before impact.
If done correctly, you should strike the ball cleanly with a descending blow, missing the first coin, hitting the second coin, and preserving a relatively straight line down your left arm and the shaft of the club. This drill tells you that your swing is correctly bottoming out just after impact.