Retail Customer Experience: Eight insights for maximizing online coupon use
By Christian Gordun, CEO, Coupon Craze
Through a special arrangement, presented
here for discussion is a summary of a current article from Retail Customer
Experience, a daily news portal
devoted to helping retailers differentiate the shopping experience.
According
to Borrell Associates, online coupon redemptions are projected to jump more
than 50 percent to $12.7 billion in 2010 and to $22 billion by 2014. By definition,
online coupons are codes and special activated links and/or landing pages
for online retailers. They are solely meant for the shopping cart checkout
process and are not valid in brick and mortar stores.
Here are eight key insights
about online coupons that will help prevent customer disappointment and frustration,
protect brand reputation and decrease cart abandonment.
- Think Beyond Discounts: If you have a luxury brand and don’t
want to discount items, there are other creative ways to offer customer incentives,
including free shipping or gift wrapping or throwing in bonus items. You
don’t always need to cut the price!
- Beware of Expiration Dates: These are always a big problem since
some retailers don’t put expiration dates on their offer when it is
in limited supply. Others don’t clarify times (i.e., time zones), but
those few hours can make a difference to a shopper. It’s critical for
a merchant to offer all the details up front and in a clear and concise way
to avoid customer frustration.
- Mix it Up: Don’t keep recycling the same offer over and over
again each month. The monotony will stall sales since users come to expect
the discount. Create urgency with new offer and expiration dates.
- Keep it Simple: Using lingo such as "$10 off after MIR" (Mail
in Rebate) or unclear combinations such as "10 percent off purchase
plus free shipping with $50 purchase" will leave consumers confused
and unlikely to apply the discount. Restriction details also demand clarification.
Clearly outlining details on landing pages will prevent customer disappointment
when they arrive on the site.
- Watch Number and Letter Combinations: Careful using coupon codes
with "0" and "O" in the sequence. People often confuse
the two and usually get upset at the merchant when the discount doesn’t
get applied.
- Test Out Different Offers: Retailers often assume there’s
one coupon that works better for them, e.g. new customer offers, dollars
off, percentage off, free shipping. The flexibility to add and change offers
online is easy though, so never assume only one works best.
- Align Coupons to Company Goals: Is the goal to increase basket size
or raise minimums? Are you trying to clear inventory or reach new customers?
There are many different strategies that can be applied to coupons so always
be sure to test and align with what the company’s goals and needs are.
- Be Transparent with Minimum Price Points: Deals are often listed
as "20 percent off" but when customers get to the landing page
it may say "20 percent off $100 purchase." This can be misleading
to consumers and cause a negative impact on a brand. Always provide as much
information as possible up front so that users clicking through are fully
aware of the amount they must spend.
Discussion Questions: What do you think of the suggestions offered in the
article for maximizing online coupon redemption? Are there other items you would
add to the list?
Online coupons need to be simple and easy to understand and easily redeemed not just online but also in retail stores. Some specialty manufactures overlook the necessity of aligning with coupon clearing houses to be sure that the bar codes work at retail and that the coupon can be easily redeemed and processed once it hits the check stand. This process, if done correctly, can be expensive but remember that the purpose of the coupon is to be used as a marketing tool to generate new trial and increase market share.
So, coupon redemptions are projected to be up 50%–is it time to celebrate? I know a way to get coupon redemptions up to 100% of shoppers: automatically load a coupon code to everyone’s shopping cart right as they check out. Hey, you’ll kill your margins, but coupon redemptions will be up!
Sarcasm aside, my point is a simple one: you have to measure how coupons actually change shopper behavior, and then assess whether those changes are worth what you paid for them. And in order to measure the impact of these coupons, you need to add a 9th rule to the list:
9) Always have a control group.
Whenever you distribute coupons (or any other marketing) to targeted customers, you should always select some of the targeted shoppers who *won’t* receive anything. Then, be sure to track how their buying behavior differs from that of the coupon receivers.
This is marketing 101, but you’d be surprised how frequently it is absent from marketing plans.
I remember when we used to talk about “breakage” in coupon offers and mail-in rebates. And now we’re talking about maximizing redemption, which is fantastic. I agree that all of these things help make it easier for people to understand the offers they receive and how to redeem them. Hopefully, this will lead to more targeted offers, and more relevance for consumers.
I thought the 8 points were excellent and in fact, all the points/practices could also be used for brick and mortar stores as well.
Keeping the coupon offer simple and constantly refreshing the offer were two points I would focus on. Coupons for online retailers should be designed to drive traffic to the web site, create trial and repeat visits. Once a person struggles with a coupon offer or is unclear of what the real savings are they don’t return.
I would consider adding a 9th point and that would be to back up the coupon with another offer when the person checks out online. Michael’s, a brick and Mortar craft store does an excellent job at this and I think the practice could be used for online retailers as well. When you check out a 40% off any one item coupon is presented at the bottom of your receipt. It can be used the following week and is only valid for 7 days. The offer creates repeat visits and purchases and I think the online world could take advantage of the same approach.
Rule Nine might be something like: Customize your coupon efforts by customer so you are creating an incentive to buy rather than just a way to erode margins.
The helpful hints provided in the article are common sense for the most part. The bigger challenge is to offer incentives to shoppers that do not result in unwarranted discounts. If the shopper was going to purchase the product anyway, why give a coupon? This occurs more often than retailers may admit. Non-discount offers can grab attention just as effectively. Building the brand value and reputation of the product or retailer first drives loyalty and diminishes the need for money-off coupons.
I am going to take this conversation to the other side of the fence and talk about what the consumer is looking for.
I think the main thing is variety in the coupons. Don’t make them think they are seeing the same thing every week.
I have been enjoying a weekly conversation between my wife and our friend. Each week they discuss what they have seen of interest, where they saw it and why it is a good deal. They now know what each is looking for, and make sure they know where to find it. All this has done is significantly reduce our spend on a weekly basis. Isn’t that the objective from both sides? One wants the bargain sale and the other wants the traffic plus the other items purchased. I see win/win.
By using different types of offers and tracking responses, retailers will be able to discover which consumers respond to which kinds of offers. That makes tailoring offers to consumers possible which should be very effective in the long run.
Point #1 – Think Beyond Discounts – is critical, and so often overlooked. Marketers need to be more creative in leveraging how the coupon can drive basket size or repeat business, without eroding margins, which in many cases are razor thin before discounts.
We really need to pay attention to Ben Sprecher’s comments. No one should be trying to increase coupon redemptions until they can explain how their strategy will help the bottom line–otherwise they might be doing nothing more than killing their margins.
His suggested rule #9 regarding Control Groups makes great sense, though as consumers share coupons and codes online, it gets much more difficult to keep the results clean.
To answer the challenge question, it all seems elementary and a bit dated.
I’m with Ben above; if the goal of coupons is to “just” move more merchandise, then you are basically training consumers to buy only when there is a coupon. IF you are seeking to learn more about the consumer and what they want/need, a properly crafted coupon can be very effective.
I think we should be exploring the increase in redemption and what is means during a recession. Am I more loyal or engaged by the brands I used coupons on in the last 24 months? Probably not.
The eight points outlined will help ensure a positive experience. Technical difficulties, expiration dates, all the things that might prevent a shopper from having a transaction that meets expectations need to be addressed. For example, certain large box stores promote like crazy with circulars, texts, etc. But when you get to the store there is a huge lineup for folks getting “rain checks” or the cash is backed up because of coupon questions that needs manager intervention, and similar issues.
More importantly, as others have discussed quite well, the point is to increase sales and customer base, not just move merchandise. Many shoppers are quite savvy and adept at finding good “deals,” so great coupon offers should be part of a strategy to build loyalty, introduce new items, create larger baskets, encourage return trips and build the brand.
Customer insight, loyalty marketing insight, and shopper marketing are all necessary to make these programs effective.