2G Digital Coupons Get Personal

There are patterns in digital innovation. The first video game was OXO. It was tic-tac-toe, faithfully reproduced on screen. The first computer-generated animal was a photo-realistic owl in the movie Labyrinth. The first digital publications were internet likenesses of newspapers. All stayed close to the originals.

Then, something happened. Programmers mastered the nuances of digital and unleashed bold breakthroughs. In video games, this yielded Kinect, where you are the controller. In CGI, we have the Na'vi, sapient humanoids as real as anything else on film. In publishing, we have immersive iPad periodicals such as Project and The Daily.

The first generation of digital recreates the original. The second generation creates something new.

Consider digital coupons, which are essentially a digital translation of paper coupons. After digitally clipping, shoppers print and carry them into a store just like they came from an FSI.

Is this the promise of digital couponing? Yes, initially. But translating a coupon from paper to digital is a first generation development. In the second generation marketers will move to personalization.

It all starts with the consumer. So, what will shoppers expect from personalization?

Firstly, they'll expect offers to be available across all digital channels. That is, by messaging and transacting by email, website, mobile, and loyalty card. Kudos to the grocer that sent tailored offers via email. But shoppers on-the-go who don't view offers in their inboxes want to access the very same content from their smart phone browsers.

Shoppers will count on personalization by brand. In most retail channels, consumers are more loyal to their favorite products than their store. But this loyalty varies by individual preferences and category dynamics as well as brand strength. Individual behavior tells us how brand-loyal they are. Shoppers in aggregate tell us how brand-dependent categories are. Both are parts of the equation.

Consumers will expect personalization by category. No beer for those who abstain from alcohol. No infant formula for households that have graduated from diapers and baby food. But this isn't merely de-selection of unpurchased items or blind repetition of past purchases. Shoppers want to be delighted with new ideas. Savvy retailers will apply correlations between wine and craft beer, stage-three baby food and cereal, or locally sourced jam and bakery items.

Shoppers will value personalization that considers purchase cycles. They will appreciate frequent offers for their favorite salad kits, but not window cleaner. Understanding shoppers means noticing the cadence of commonly bought items and serving discounts as shoppers are about to come back in market.

Picture a Gillette Mach 3 loyal user. He won't respond to a Schick offer. He won't respond after he just bought a five-pack of Mach 3 blades. But when that fifth blade dulls, he may respond to a new Gillette Fusion Proglide upsell offer. Give him a digital offer for a new product under his brand when he's ready and you've personalized.

The first generation of digital recreates, the second creates. We are witnessing the second generation of digital couponing today through personalization. And with developments like load-to-card and load-to-mobile, we're sparing paper and trees. The Na'vi would be proud of us.