BrainTrust Query: How Can Stores Drive Digital Coupon Adoption?
Through a special arrangement, presented here for discussion is a summary of a current article from the Mark Heckman Consulting blog.
In my mind, one of the key deterrents of digital coupon adoption lies in one of its inherent advantages. It’s invisible. Yes, without the muss and fuss of clipping paper coupons, load-to-account digital offers are "clipped" electronically, placing them in the shopper’s account, requiring the shopper only to identify themselves at the store through a card or account number and purchase the said item related to the offer.
Pretty simple. But brands are still balking at the efficacy of digital coupons, all the while taking advantage of the targeting flexibility and, perhaps more importantly, the ability of "capping" the markdown expense by simply "deactivating" the offer once a threshold of coupons have been either redeemed or "digitally clipped."
The fact of the matter is that brands very much like the "advertising equity" that paper coupons and paper circular placements provide, elements that digital coupons do not typically offer.
Accordingly, what we have today are digital offers that "float" invisibly and out of the stream of consciousness of the consumer, coupled with the possibility that the deal could vaporize at any moment at the discretion of the brand making the offer.
So it would seem to me that if we could retain all the benefits of "invisibility," yet provide more tangible reminders and evidence of digital offers, we just might see the engagement rates of digital offers increase significantly.
Enter the retailer. In-store "recognition" may manifest in various forms. It could be an app that senses where you are in the store, or a targeted SMS text message, a printed shopping list loaded at the retailer’s website or at an in-store kiosk, or a number of other new "at the shelf" message venues. But more often than not, this recognition will be a good ol’ sign that breaks through the clutter.
Realizing that targeted offers cannot be signed with item and price as they are often directed to a subset of shoppers, support signage can come in the form of general information about the ability to receive offers by signing up for the program. However, it is important that a digital specific price and item program anchor the digital program. This can be accomplished by the retailer offering and showcasing each week an array of digital deals that either are stand alone offers or, even more effective, bolster existing traditional offers as a "digital bonus." Other more overt options for digital offers are waiting to be created.
Discussion Questions
What steps can be taken at the store level to drive digital coupon adoption? Do paper coupons and paper circular placements hold an insurmountable advantage in driving traffic to stores and supporting “advertising equity” for brands?
If they want to reap the advantages of these promotional offers, retailers need to regularly remind consumers that they are offering digital coupons. Retailers also need to make it easy for consumers to view and select coupons. Brands can help by making the coupons valuable enough that consumers want to seek them out.
As newspaper readership declines, it’s important for retailers and brands to experiment with using digital coupons. By working together, brands and retailers can make digital couponing work.
Geotargeting apps appear to be the best way to alert customers to the availability of a digital coupon. The difficultly may lie in when a mass merchant has 25 digital coupons available, how does a customer sort through the digital noise?
A bridge to that may be to sign the in-store product with ‘digital coupon available—download now” and that can prompt download of the retailer app or other third party digital coupon or wallet.
We ran a test last year that showed mobile users used 4x the number of [digital] coupons than non-mobile users; and mobile users with indoor location technologies (store maps, exact product locations) used 16x the number of coupons.
Coupons going digital is not a standalone change, but rather part of a bigger process that uses other digital technologies. In our case, customers put a list of products into the shopping list so that they can see the product locations, get the most efficient path through the store, and see the offers/coupons related to the products they are interested in and are relevant to them.
For the retailers and the brands, they see the shoppers’ immediate purchase intents as well as past purchases (through the loyalty programs) and can very effectively target customers with their offers/coupons. Brands can increase their exposure by working with the retailers who own the apps.
It’s not so much a loss of traditional “advertising equity” but a shift to a more efficient and effective process for understanding and connecting with the customer through suggestions that they are more likely to respond to. “Brand equity” should be the goal.
Still today, paper coupons have that very tangible advantage of allowing the shopper to hold something physical in their hands. This act of carrying a paper coupon denotes a more tangible value to the shopper…especially for the aging baby Boomers, whom have done this all their lives. I believe that over time, this necessity of holding paper will dissipate as Millennials take over the planet.
The other aspect of digital coupons is that most people prefer to print them off, thereby making them a paper coupon, once again.
As paper offer disappear, all shoppers will migrate more to digital, as they become the only option for discounts. The industry must continue to push in that direction.
The funny thing, is that there are still pockets of coupon clipping clubs around the US.
In the end, the success of mobile couponing depends on our ability to build trust with consumers. And that trust is not growing.
For instance, in a June 2012 survey of 2,000 U.S. and Canadian consumers by LoyaltyOne, respondents told us they are highly reluctant to be tracked via mobile. Only 15 percent of survey respondents said they would be willing to share their exact location via smartphone. That is about the same percentage of people who said they’d be willing to share the number of sexual partners they have had.
Although coupons are digital, people will still want to “see” them. I like how CVS allows you to print coupons in-store with your membership card. You don’t have to worry about rounding them up before you get to the store, and more importantly, you “see” the savings when you’re at the counter. The completely digital can work, retailers just need to figure out a way to make sure shoppers can visualize (literally) their savings being implemented.
This discussion seems to be placing the responsibility of consumer Information Technology awareness and use on the retailers. I am having a little difficulty signing on to that premiss. A look at e-commerce and how it works today will quickly reveal a plethora of poorly designed software applications that will never be improved upon to the level needed for consumer acceptance and use.
It is sad to say that IT will see another corporate apocalypse in favor of many new start-up companies that understand today’s consumer needs and design a system that works for now. And so on, and so forth. Or so the IT story goes….
I have to quibble a bit with the vocabulary used. Ideally, digital coupons would be “seamless” to the shopper. The problem with them today is that they are mostly “invisible” (in the bad way). I agree with Max that retailers currently need to work harder to remind consumers that digital options are available, because, as Todd said, this is a bigger change than just digitizing something that was once paper. It requires changing the shopping process—and just like any other massive change, it’ll take a lot of time and a lot of retraining and education to make it stick.
In the UK, the biggest barrier is the large scale adoption of mobile coupons by retailers rather than consumers.
In the large grocery stores where couponing is king, a push back on investment in hardware (e.g., capable scanners) due to the financial implications means that progress in this area is stalling. When mobile vouchers are accepted in these larger stores, it will then enter the mainstream. Hopefully around the same time mobile payment will start to be accepted!
From a consumer perspective, research that we have carried out shows paper coupons to be an unattractive medium… especially with the younger audiences who are championing mobile services such as vouchercloud. With an increasing demand for mobile engagement it seems a simple, direct, trackable and scalable approach that can drive increased purchase in store as well as support brand equity.
Paper coupons and paper circular placements are now dated and will start to reflect on the brand. Brands that start using mobile media touch points will be the innovators that benefit from increased footfalls, sales and loyalty in the future.
It is an interesting discussion between brands and retailers. Two completely different objectives with digital coupons. Brands should be focused on building loyalty, giving a consumer a great experience with digital coupons and tracking the purchase via that coupon.
I agree with some of the comments that manufacturers and retailers will have to work together to get foot traffic/basket increase to brand initiatives. As for invisible, we use both redeem digital and “Send to Email for Print Later Use” at the individual level. As for being invisible at the mass level, using social sharing is a great way to get the point across.
I’ll share some data from one account in hopes that someone in this thread will start using real data instead of guessing what shoppers are doing with digital.
Grocery retailer “X” for the past month had 73,937 unique visits which generated 737,257 page views. Total in-store customer count for this same period was approximately 1,720,000 shoppers. That equates to 4.3% of the retailer’s customer base accessing their web site… When asked the question, “What steps can be taken at the store level to drive digital coupon adoption?” the question might be rephrased to address a more fundamental question: What steps are being taken to drive customer interest in retailer websites?
Digital offers should be available in the aisle as well as online to reach today’s media-fragmented consumer; paper, online, mobile, in-store are all part of an omni-channel strategy to promote and connect.
Manufacturers and retailers need to handle digital coupons better. If some tangible value is lost in providing digital coupons, it can be regained through creativity. Paper coupons at my house tend to sit in a drawer and never get used. Digital coupons that I can call up at will do get used.
Giant Eagle handles digital coupons well. Because it offers more than coupons. You can see your gas credit balance, create a shopping list and pre-select coupons you want to use at the store.
Brands could combine coupons with loyalty programs. In addition, paper coupons typically have an expiration. Why not give digital coupons an expiration and offer to set reminders for customers who want to be reminded a couple days before it expires.
Combining digital coupons with loyalty programs, shopping lists, payment options and other value will have Smart phone shoppers using digital coupons more and more. If retailers and manufacturers do it right, they will stay top of mind and do not have to fear the loss of the tangible benefits.
This is a cultural issue. Although the article doesn’t mention it, digital coupons thrive on the Internet. The key audience for these are younger age groups rather than older age groups. As our younger generations become more prevalent and their numbers increase, this will cease to be an issue.
We analyze the redemption rates of all digital coupons issued by our customers and have found that digital coupons have a higher redemption percentage than similar paper coupons. No surprise there based on convenience alone. We’ve also found that situational-based offers (both out-of-store and in-store) utilizing location, buying history, and other personalization technologies positively affects redemption, taking it to another level.
Retailers may benefit from an inventory or an “as-is” document of their engagement capabilities and solutions (including the very important mobile capabilities) then define which pieces they still need to complete a shopper engagement solution. Analytics, situational targeting, execution, in-store engagement, etc. should all be reviewed rather than just focusing on a single aspect such as digital coupons.
I believe that digital coupons actually have the advantage over printed coupons. Besides being more environmentally friendly, they are easier to store, keep track of and organize. Furthermore, done right, they’re much easier to target to the right consumer.
I think at the store level it is important to remind and explain to customers how they can access digital coupons. Furthermore, geotargeted apps can be highly valuable to remind consumers about the coupon when they are in the area (no more forgetting your coupon at home or forgetting that it is stashed in some back slot of your wallet or purse).
Finally, I think making coupons accessible online is also really important. Allow your coupons to be distributed by coupon/deals apps/websites.
To grow digital coupon usage, retailers need to convert physical traffic to virtual traffic at the point of decision. Past beliefs that the rising tide of digital adoption would deliver digital coupon users haven’t panned out:
Instead, reaching shoppers at the point of decision takes two forms.
The first is in-store reminders, which is well-addressed by previous comments and includes signage, SMS, newsletter prompts, and geo-fencing.
The second is on-coupon reminders, which encourage clippers of paper coupons to download mobile apps or visit mobile sites for even more value. This is not only effective for FSIs but also for on-shelf and checkout (Catalina) coupons