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.
Discussion Questions
What do you expect from the next generation of digital coupons? What will they need to do to be of greater value to consumers, retailers and brand marketers?
With coupons (or any type of promotion), marketers should consider who they are targeting and who the likely responders will be. High response by the wrong target may be unsuccessful/unprofitable. Traditional coupons tended to reach buyers with some attractive attributes for marketers. Customized coupon distributors may not focus enough on their target and may fail to check that profitable prospects are responding.
The number one thing I’d like to see from digital coupons is the ability to redeem them digitally, without having to clip something and remember to bring it in. Maybe I’m behind the times, but I still receive a ton of paper coupons via the newspaper, inserts, and mailings, and get a lot of e-mail offers that have to be printed, clipped, and brought it.
It would be a lot easier if there were a central repository for coupons on my smart phone that I could just hand to the cashier for scanning. Haven’t seen that happening, yet, but I’m looking forward to it.
Everything Mr. Frechtling mentions here is absolutely correct–coupons need to evolve to show some shopper-centricity and relevance to particular shoppers’ buying habits, preferences, purchase frequencies, etc.–but the evolution in this direction is well underway. Our retail and brand clients create behaviorally targeted coupons every day, and I consider it a forgone conclusion that we are in the waning days of “$0.55 off Brand XYZ Diapers” coupons being sent to every shopper in a store.
If anything, I think the author is selling short the very premise that he introduces, the idea of a future generation of coupons that is *fundamentally different* than the old paper chit that is good for a one-time discount on a one-time purchase.
Why can’t the coming generation of “digital coupons” be brand-specific rewards programs, tied to the individual shopper? Why can’t they accumulate points or airline miles in response to the consumer shifting purchases away from their usual shopping ruts? Why can’t the “G2 digital coupon” be a live auction by brands for the right to be the one to win a place in the shopping basket when the shopper has “cereal” on their shopping list?
The power of digital is (already) that it allows easy differentiation of shoppers, tracking of buying history, and awareness of time and (for mobile) location of each marketing interaction. The future of digital will be the deepening of integration into the shopper’s entire digital life, and the subsequent alignment of marketing to meet the shoppers’, chains’, and brands’ goals, in real time.
Of course, with increased information and control comes increased complexity. Perhaps the greatest challenge of next-gen digital coupons will be to use technology to tame the complexity that technology creates in the first place.
Coupons are one of the most inefficient promotion tools in existence. But we continue to see them as a critical part of the marketing mix.
We are thinking about this in the wrong way. We are thinking about the tool, “coupons.” What we should be thinking about is what they are used for. Is it trial? Is it pantry loading? Is it a competitive purchase?
Once we start thinking about the objective of the coupon, we will determine how to use technology to get those objectives done. And, it may not be what we call a coupon at all. As long as we are thinking about the tool rather than the end objective, we will make no progress electronically. We’ll just make pretty pictures.
I don’t know if it is 2G, 3G or 4G, but my prediction is that coupons electronically or otherwise, will be as obsolete as the horse and buggy.
The demand for coupons on the part of the consumer is at a peak. When it comes to grocery purchases, 7 out of 10 adults point out that “coupons” are the media form that influences their purchase decision. That even tops in-store, which is 54.4% for this retail category, based on the Simultaneous Media Usage Survey (SIMM).
The coupon media form is the top influencer for dining out, as well, called out by 52.5% of adults, with word of mouth being second at 50.4% for the category.
Target and Starbucks are now making the smartphone payment system a go in a number of stores. The coupon application will likely be close behind, as the technology is there.
Coupons are not tops in all retail categories to be sure, but they have a respectable level of iInfluence on Electronics decisions (30.6%), Apparel (30.6%), and Home Improvement (17.9%).
If the media form works, and coupons do, you can be certain that innovators will be developing added applications in the coming year(s).
Coupons are an extremely valuable tool to the marketing departments of large, well informed companies. The days of coupons providing only a means to introduce product and reduce inventory levels are long gone. They are now used to determine both generational and social economic status categories. They now can determine the effectiveness of advertising investments with remarkable accuracy.
Coupons are now used to see what goes on in the internet and corporations are spending big dollars to sort and analyze the tons of new information for their investment interests. Coupons are telling us who buys what and where. They tell us where to sell and how much it needs to cost and the packaging size and type needed. A coupon and a credit/debit card, times millions of transactions a minute, says a lot to those who pay to listen.
I like 2G as a metaphor–clever. However, just as with Boomers and Gen Xers, or Neanderthals and other Homo Sapiens, we will see coexistence initially.
We won’t see the sunsetting of 1G with the arrival of 2G. We will see the evolution.
I don’t believe we’re in the waning days of $0.55 off Brand XYZ Diapers coupons being sent to every shopper because adoption is completely uneven.
Retailers who embrace 2G will create an advantage for themselves without question.
Request a recipe and get coupons for the ingredients.
I agree. Recipes are an excellent place for digital coupons. Providing an offer for a recipe ingredient allows the shopper to save on a solution. It may even auto-create a shopping list. It’s a win-win-win for mfrs-retailers-shoppers.
Digital coupons need to be for a pretty hefty discount to make it actually worthwhile for a customer to give out their personal mobile number to have them sent to them, as well as their email. Consumers do not want multiple coupons “junking up” their inboxes with coupons with very little value.