Kroger’s One-Stop Digital Coupon Center

Kroger is moving in the right direction by making it easier for its shoppers to find and redeem coupons, but there are plenty of opportunities for improvement.

For one, the coupons that are presented seem to be untargeted, “mass-selected” coupons. This has several drawbacks. First, it means that manufacturers may not be as willing to offer high face values (for example, “Buy 2 Save $1 on Any Size Kellogg’s Raisin Bran Crunch” is running right now), since many redeemers would have bought anyway, and a high face value would simply undercut the brand’s margins. Second, since offers do not reflect each user’s demonstrated purchase preferences, there’s more chaff for each shopper to wade through. Combined, these factors can significantly reduce the value to non-hardcore-deal-seekers.

For another, the fact that shoppers need to go to a website in the first place means that some of the most valuable shoppers–the ones who are less price-sensitive in the first place–will never see the coupons and will therefore not be influenced by them. Ironically, even in today’s economic climate, the shoppers to whom brands most want to show their offers are often the ones least willing to spend energy looking for them.

So, Kroger’s one-stop coupon site gets a B- from me. It’s well ahead of many other retailers’ efforts (especially in how they consolidate offers from multiple content providers), and the load-to-card capability adds value today and lays the groundwork for future improvements. With the addition of behavioral targeting capabilities (like dunnhumby already does for Kroger with direct mail) and alternative channels for reaching shoppers (which I presume SoftCoin, whose technology runs the site, will be adding soon), then Kroger could earn an A.

Pushing coupons to your mobile phone then scanning them at checkout is an unnecessary burden. I prefer Kroger’s approach because associating coupons with a loyalty card makes them much more transparent. Kroger’s site seems to allow basic filtering and sorting so its easy to find the coupons of interest. They could have used a checkbox to allow consumers to select multiple coupons at once but probably decided on the “add button” so consumers are forced to be more overt in their selections.

After all, the coupons are about affecting consumer behavior so you don’t want them blindly loading all coupons onto their card.

Finally! A digital coupon center seems like the most obvious need in the world, to a shopper. An aggregator site like that is sure to get a lot of eyeballs and attention. Prime spot for vendor advertising and branding.

Next app–download centralized coupons onto mobile device.

Kroger’s digital coupon center is a significant step ahead of the in-store kiosk approach from Sam’s Club we recently discussed here. It’s easy to use, gets customers to the Kroger site(s) and allows them to select relevant offers.

The key to long-term success lies with Kroger’s ability to leverage the data provided (which customers select which coupons) against its in-store transactional data from those same customers.

In order for this to be a win for all parties–Kroger, it’s suppliers and its customers–there has to be measurable value for all. The customer is the easier part as long as the coupons provide meaningful discounts (they do) but for Kroger and the CPG companies there has to be incremental lift in sales and not just in total, but for specific customers. If these discounts only go to existing customers of those products, then it’s dilution, not sales gain.

Of course given Kroger’s investment in dunnhumby, this is unlikely the case and this should be huge for Kroger and ultimately set a new bar for others in the grocery business.

Kroger earns a gentleman’s “C” from me for this welcome but not-entirely-inspiring solution. The ability to load coupons onto the frequent shopper account is a progressive innovation that turns the card into a kind of “virtual wallet.”

But only a subset of shoppers routinely engage in the kind of pre-planning that would lead them to take advantage of the Kroger digital coupon web page. Those that do would be required to redeem manufacturer coupons sourced elsewhere in a separate process at the checkout.

Another limitation: It will be hard for shoppers to remember what coupons are loaded onto their card accounts without a printed list. This seems to me like a barrier to redemption.

A more comprehensive, shopper-friendly solution would link coupon offers to each shopper’s behavioral profile. It would integrate with a shopping list functionality for those who do plan. It would offer multiple modes of interaction in addition to the Web page, including one or more “savings station” kiosks (with printers) located near store entrances and apps for mobile phone users.

All in all, this is a promising effort from Kroger that will need several evolutionary cycles to meet its full potential.

My comments are incremental to those of Messrs. Sprecher and Rubin.

On the surface, the facilitation of coupon gathering is brilliant and I presume that there should be a benefit to loyalty card members for going to the trouble to visit the coupon site and download coupons. It was not mentioned in the post, so I think it must not be part of the introduction, but a later development.

Concerning incremental customer visits and sales, the macro play here is that customers may shift from a competitor to Kroger to take advantage of the new service. That is the bigger opportunity for Kroger as I see it–introduce a service which causes consumers to break the mental “tie” and choose to shop at one of their stores.

There is less surety that existing customers will buy more or visit more often. More than likely, those consumers who are coupon addicts will now just gather more and save more on the same basket purchased.

Using the data from the loyalty card to push coupons selectively to members and then facilitating loading of just those coupons on their cards would be a better path to increasing sales among existing customers.

Nice try, but consumers (in any critical mass) won’t go to a website and filter their way through the selection of coupons and then load them to their card. Too many obstacles. It simply takes too much time and effort.

While this may be a step forward for KR, the offering remains two steps behind consumer benefits. If other CPGs copy this consumer-coupon interface format in order to “get in the game,” it will be wasted capital. My guess is, only a limited number of consumers will utilize this website. Maybe that’s what KR actually wants. KR was able to build the site (internally) inexpensively (saving KR money) and they designed it around “how” they wanted to make it available. But consumer studies over the past several years indicate different needs and wants then what this website “process” provides.

It appears that KR has worked from an internal mindset (what they know/want to actually provide) versus providing what’s optimal for the consumer (consumer survey results). Simplicity, ease-of-use, availability and immediate gratification and benefit. When you do that, KR will gain market acceptance, traction/use, increased sales, fans and loyal customers. Needs: more personalization (you have the data!), mobilization (ready-access), simplicity. Less: generalization (mass marketing), internet based access, (time, effort, aggregation, loading, etc).

Just being a consumer first, “expert” second.