Everyone but the consumer hates coupons. Manufacturers can never get enough information about who uses them. Retailers feel like they are caught in the middle, forced to disappoint consumers if they don't accept them yet knowing that new technology has made counterfeiting child's play (or at least tech-savvy teen play). Actually, consumers aren't all that happy either. They like the discounts but hate the clipping. Now relative newcomer Zave Networks is offering a way to process POS discounts that should make everyone happy. First, some background...
Point of sale discounts involve three processes at the front end: presentation, validation and valuation. Presentation is how the system is notified that a discount exists. Validation is the process the system goes through to ensure it is a valid offer and that the customer has met the requirements (minimum purchase amount, buy one get one, etc.). Finally, valuation determines the amount of the discount, such as cents off per pound or laddered discounts based on quantity purchased. And there are out of store processes associated with coupons that are also of interest, such as where the customer found it, who it was redeemed by, and reimbursing the retailer.
Much of the talk today is about variations on the presentation process. Traditionally, the customer presented a paper coupon and this is still done for most manufacturer discounts. Zave changes how the coupon is presented and also performs the other steps for the coupons via their network. They use their database to validate the offer, determine the discount amount, and return the total to the Point of Sale. They also know where the consumer "clips" a coupon and manage retailer reimbursements.
The Zave approach takes advantage of the "Network Effect" to bring all the processing into their data center. This allows them to control and monitor the whole sequence of events from the creation of the offer to its redemption. To make this work, each store has to have a broadband connection to the Zave Network. They send the customer transaction and it is quickly processed and the discount returned. Since they are dealing with customer data (although not financial transactions such as credit cards) there is a certain amount of privacy that must be ensured. But by doing all the processing, Zave has taken the burden off the retailer to implement process changes at each store and they can continue to evolve at the data center.
Now Zave Networks has teamed up with ScanBuy to allow customers to collect coupons using their mobile phone. Instead of going onto a website to select the coupons, consumers can take a picture of a barcode displayed near an ad and send it to the Zavers.com site. The coupon is automatically added to the consumer's account and will be applied to their next purchase when they present their frequent shopper card.
Discussion Questions: Do you expect the Zave Network approach to be a winner? Does it make sense for retailers and manufacturers to team up with Zave? Will consumers accept it?
[Author's commentary] I really feel the Zave approach will turn out to be a "disruptive technology" that changes the whole approach to POS discounts. It has the potential to be a winner for all the players. Zave gets paid for their service, manufacturers get better control over their offers, retailers get faster reimbursement, and customers get easier-to-use coupons. Paper coupons are becoming easier to duplicate, but more importantly they are becoming easier to modify into bogus discounts. Retailers are caught holding the bag (or I guess the coupon) when the clearing house rejects a bogus coupon. By tying all the processes together, Zave is putting a firewall around POS discounts that makes them safer for everyone while also providing more data on their use.