- Couponing Then & Now: Mobile technology is changing the way retailers connect with their customers.
The New York Times recently reported on innovations in web couponing technology. Multichannel retailers can now deploy tools to identify the relationship between online research and offline sales. And not just mass population, but individual user data. New single-user web coupons can connect a user’s online behavior – such as keyword searches – with his/her offline purchases, in a way we could only dream about a few years ago. The proposition of matching the right offer to individual propensity is intriguing for retailers in 2010. Hopefully this article will inspire you to consider the potential web couponing has for your business and how to get started.
Background
Marketers have long relied on market and target research gained through couponing, especially around the deployment of promotions. What types of offers or promotions trigger purchases? What’s the least I have to discount to get the sale? Will I start a bidding war when my competitors match my discount?
Measurements were taken, and battle plans were drawn. These types of practices date back to the 1940s and 1950s. But the data was only actionable down to a demographic, not an individual. As the Times noted in its article, the web can crack the code to get to individual behavior and that’s exciting for marketers.
Let’s take a step back and remember the age-old purpose of a coupon.
Why coupon?
If a store really wants to move merchandise quickly, a big splashy ad is a better way to mass-communicate a 20% off sale than a simple coupon. And if a store is willing to sell at 20% off, why not just knock it off at the register? Why have we ever needed those little pieces of paper?
The answer is shockingly simple — a coupon is a measurement device. Marketers use coupons to gauge performance of elements, especially within a print media mix (newspaper, magazine, direct mail). The web is print on steroids, so printable coupons on websites are nothing new. But offline media has nothing on the persistent cookie. A marketer can follow individual paths through display, search, social media and beyond. It works wonderfully. For online purchases. But what about all the online researchers who power down their Macbooks and head to the local Office Depot?
That’s what is so revolutionary about this new web couponing technology. Digital marketers are fully leveraging the power of the web. This isn’t your grandfather’s newspaper coupon. We can now deploy information-packed print-on-demand coupons. We know the behaviors of those who we serve a digital coupon, and we can watch what happens when they buy offline. And it doesn’t have to be printed on the home computer on paper. Mobile phone screens will increasingly have utility in displaying a bar code (QR code) that a store scanner can read instantaneously. The latter is already a way of life in Japan and Singapore.
- Mobile QR (quick response) code, via newlaunches.com
This is the time for retailers to be in full testing mode. Mobile is a long way from mass penetration, but certainly interesting and growing in its importance as a staple of marketers’ plans. Home coupon printing should now be a staple of your research/testing calendar. More than likely, you’re already pixeling your site visitor. Your digital advertising tactics are pixeling prospects. Do those pixels talk to each other? If so, here is one of many ways to intelligently deploy all that prospect data.
Promotional offers used to be deployed en masse – same % off or $$ off for everyone. But what if only some people need offers to convert? Wouldn’t you like some people to pay full retail price? Could you assemble a stable of “micro” offers that are behaviorally generated in a printed coupon? If you’re Borders, does a second book for 50% appeal differently to a heavy customer than a straight up 25% off a single book?
If you use your data to build the right coupon offer and then stuff the tracking code with all the other data of behavior throughout the digital media mix, that is a seriously valuable coupon that Mary Smith is printing on her ink jet to take down to JCPenney. You’ll be proving that there is a measurable path between online research and offline behavior. That helps budgets — your online advertising budget won’t have to prove ROI on ecommerce transactions alone.
Coupon Paradox
The downside of a coupon is that it requires the consumer effort. To ensure consumer participation, we have to provide an incentive do the heavy lifting of printing, clipping and transporting a coupon to the register. So we are forced to offer a promotion juicy enough to ensure high redemption rates. And when we promote, are our coupons observing behavior or substantially influencing it? The rule of thumb is to give away the absolute minimum to ensure maximum redemption.
Should you coupon?
Digital can be a vital enterprise-wide solution. Here are 5 questions you should ask to assess your web couponing opportunity:
- Do you already rely on coupons/promotions?
- Do your business rules allow for the development of a range of promotions that could be offered in coupons (% off, BOGO, $ off, gift with purchase, etc.)?
- Do you think you have enough information to match a range of offers to a range of behaviors of your prospects?
- Does common sense tell you that your online budgets and activities influence offline sales? Have you ever been able to prove online activities benefit brick and mortar?
- Can your infrastructure take in all this data and more importantly, do something with it to improve your business?
Taking Action
If you score highly on potential benefit to your organization, ponder WHY you will deploy a coupon strategy. One key objective might be to establish causality between search/display and offline sales. Even better, be specific about what kinds of sales you’ll be measuring… new customers, existing customer share of wallet, a specific product category, etc. Be wary of the aforementioned coupon paradox. If you’re testing natural consumer tendencies to research online and buy offline – what’s the bare minimum offer to incentivize redemption? If you’re testing the power of online promotion to drive offline sales, you will want to test a range of offers, ideally tied to prospect behavior online.
With a sharply defined goal in mind, your next steps are…
- Optimize your media plan for an offline push. Display and search should be purchase-channel agnostic. If you participate in social marketing, leverage it and reach prospects with your coupon, as well through blogs, social shopping, Facebook and Twitter.
- Build your forecast to accommodate the cost of the coupon. If you’re offering 10% off, your average order/check size will likely be lower, decreasing ROAS. Apply your business rules, how much coupon redemption can your budget afford? Build predictions for the test. You’ll be referring to them when the test is complete.
- Set up a coupon generation program with a partner like RevTrax. Unique user-level coupon codes are vital to matching online searches and display exposures to offline purchasing. It can also minimize coupon pass-around and fraud. Couponing technology can work with you and your marketing team to build business rules and, if applicable, match behavioral media targets and search behavior to appropriate offers.
- Set up a holistic data collection for the couponing efforts. Think about your web analytics, your agency-controlled data collectors, Double-click, Google Analytics and especially your point-of-sale register data system. If they aren’t talking to each other, you need to postpone your efforts, or perhaps scale back the test to something less ambitious.
- Q/A, Q/A, Q/A… can fraudsters beat your system? Are your offers staged correctly with your ad creative? Do your landing pages work? Will the coupons scan at register? Think about a soft-launch before going full bore.
- Analyze mid-stream. If you mobilized your colleagues to help with this test, they will be eager for feedback. Make sure your entire process is inclusive, buy-in helps when the inevitable glitches arise and you need help from allies.
- Your actions at the conclusion of the test are crucial. Did you see success or failure? Half-success? Did the results occur in a predictable way? What’s next? Is it time to roll couponing into your marketing arsenal? Do you need more testing? (Probably – successful retailing is all about perpetual testing!)
- David Randolph, Vice President, Retail & ECommerce at 360i
