June 19, 2008
CPGmatters: Retail Study Tracks Behavior of Online Printers
By Jack Grant
Through a special arrangement, what follows is an excerpt of a current article from the monthly e-zine, CPGmatters, presented here for discussion.
Online coupon users tend to be younger, have larger households, and are wealthier and better educated than clippers of newspaper FSIs and the general population. Eight of ten of these online consumers are more likely to print a coupon if it is relevant to their reading content.
That is just part of the emerging picture of today’s online coupon printer that came from an online coupon study conducted by Coupons, Inc. The survey results were integrated with national consumer data from Simmons Market Research Bureau to provide a broader perspective on changing trends in usage and how online coupon users compare with the general population.
Results were presented by Francis Garcia, vice president of marketing solutions for Coupons, Inc., at the annual Industry Coupon Conference recently in Miami. The event was hosted by the Association of Coupon Professionals (ACP).
The data from Simmons shows that online coupon usage now accounts for 22.4 percent of coupon market penetration. One of three (36 percent) of online coupon printers has children under the age of 18 in their household. Nearly half (47 percent) are between 22 and 44 years old – a whopping 28 percent more than newspaper FSI clippers. And online coupon printers are 40 percent less likely than newspaper FSI clippers to be over 60 years old.
Online couponing is reaching larger and wealthier households: 61.2 percent have household incomes of $60,000 or more, compared with 56.6 percent for newspaper clippers and 52.6 percent for the U.S. adult population.
Here are more key takeaways:
- Seventy-seven percent say the value of the coupon affects their willingness
to provide personal information. For a $1 coupon, more than half of online
coupon printers were willing to give their email address and demographic
data. For a $2 coupon, nearly two-thirds were willing to give anything from
email address to postal address; - Most (43 percent) of printable coupons are obtained at general savings
websites like Coupons.com. Manufacturers’ promotion websites are second (31.9
percent), followed closely by manufacturers’ brand websites (31 percent)
and retailer websites (30.8 percent); - Over half of online coupon printers are more likely to click on an ad banner
or open an e-mail if it is enabled with a coupon.
Discussion Questions: What do you think of the potential of online coupons as a customer driver? What do retailers need to know about the difference between online coupons vs. FSI coupons to fully capitalize on their traffic-driving potential?
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One point that this article raises is that consumers/shoppers not only have preferences for brands and retailers, they have preferences for the way in which a promotion is delivered. I have seen this before and also see this in the world of media where there are some people you can never reach with TV advertising but can reach via magazines or online, as an illustration. This form of customer segmentation based on offer vehicle should not be ignored.
Great study and certainly shows the migration of consumer behavior from offline to online. Printing has always held online coupons back: why not take them from the newspaper if you have to print them out? The ability to load coupons onto retail loyalty cards or send them directly to the mobile phone for scanning will significantly impact the coupon industry in the next 3-5 years and brands and retailers will get more strategic about to whom they give coupons and when leading to more targeted promotions for best customers and fewer “cents off” for the generic shopper.
I have deployed FSI for many years with a large number of brands I have worked with, and for the most part, I do it because retailers tend to give in-store support to brands that use FSI. However, for the most part, the printed FSI at best is often a tool that creates a short term lift in sales at the expense of the six weeks or so to follow. Many FSI clippers are simply using coupons for products and brands that they already buy on a regular basis. I do believe that online coupons might be more effective to attract new users for a given product and drive incremental lift.
Retailers need to remember that clippers and printers are very different types of customers. The value proposition has to be focused and relevant to the prospective buyer. As the study suggests, printers may be more well heeled than their clipper counterparts. The potential for online coupons is huge. Tie ins with the loyalty program, coupons loaded onto the actually loyalty card and custom coupons for certain shopping behaviors are just a few of the clever ideas I have encountered. A good opportunity is a tie in with the chain’s own online tools. Using Safeway’s nutrition tools as an example, would be a great way for vendors to promote products fitting the lifestyle category. I can see online coupons eclipsing paper coupons in a few years.
If anyone has additional questions about the survey or its findings, please feel free to contact me directly (click on my name) or post a question here.
The research results confirm the conventional wisdom that in the U.S. consumers are willing to exchange personal information for something of value to them. Printing the coupons is a useful measure of interest and involvement, but how many of these coupons that have been printed have been redeemed?
This is an interesting discussion, considering that just the other day the Baltimore Sun had an article about how there is greater potential for fraud with online coupons and several retailers are trying to restrict their use because they are fearful of fraud. Hopefully newer methods of discounting will be tried that are more secure for the retailer AND more convenient to the consumer.
Coupon readership (measured by eyeballs not distribution) and redemption will grow there are an increasingly effective and efficient promotional vehicle due in large part to:
– more retailers shifting to EDLP and needing an excitement generating vehicle
– improved database tools to identify relevant, behavior changing offers
– lower cost delivery vehicles
– more convenient consumer delivery and redemption methods such as internet identification (Brandcast), paperless ties to loyalty cards (AOL $hortcuts), mobile
First we need to recognize the typically differing objectives of the 3 involved parties:
(1) The retailer objective is first frequency and second basket size – for ANY brand they carry.
(2) The manufacturer objective is first brand market share (brand switching is their highest ROI) through a mix of trail and awareness or stockup – at ANY retailer. FSIs dominate coupon distribution with 89% share and are really trade promotion without needing to ask the trade’s permission.
(3) The customer’s objective is greater value on relevant products in a coupon delivery vehicle that was easy to find and redeem.
While utopia is “growing the category” ultimately it is more of a zero sum game where technology enabled business process changes (including decisions driven by analytics) will create sustainable competitive advantage.
The typical strategic couponing roadmap includes:
– quality data access (product, customer, profit for both)
– analytical tools and business intelligence
– organizational alignment and business processes
– varied delivery capabilities (including targeted vehicles – direct mail, receipt tape, kiosk, web, mobile)
The good news is captured by a great quote, “The future is already here but unevenly distributed.” – William Gibson.
To answer Camille’s question, the average redemption rate by category ranges from 7 to 21 percent. There is a good set of statistics available in a recent Advantage Update from CMS at http://www.couponinfonow.com
To respond to gafpromise, the trend is actually in the other direction, despite the Sun’s spin on it. Kroger, for example, recently changed its policy to accept printable coupons at all of its banners. The end of the article noted that nearly every store contacted had a policy to accept the coupons. The restrictions, for example on accepting ‘free’ coupons, are recommended by the industry, including Coupons, Inc. We do not produce “free” printable coupons and recommend they not be accepted.
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One point that this article raises is that consumers/shoppers not only have preferences for brands and retailers, they have preferences for the way in which a promotion is delivered. I have seen this before and also see this in the world of media where there are some people you can never reach with TV advertising but can reach via magazines or online, as an illustration. This form of customer segmentation based on offer vehicle should not be ignored.
Great study and certainly shows the migration of consumer behavior from offline to online. Printing has always held online coupons back: why not take them from the newspaper if you have to print them out? The ability to load coupons onto retail loyalty cards or send them directly to the mobile phone for scanning will significantly impact the coupon industry in the next 3-5 years and brands and retailers will get more strategic about to whom they give coupons and when leading to more targeted promotions for best customers and fewer “cents off” for the generic shopper.
I have deployed FSI for many years with a large number of brands I have worked with, and for the most part, I do it because retailers tend to give in-store support to brands that use FSI. However, for the most part, the printed FSI at best is often a tool that creates a short term lift in sales at the expense of the six weeks or so to follow. Many FSI clippers are simply using coupons for products and brands that they already buy on a regular basis. I do believe that online coupons might be more effective to attract new users for a given product and drive incremental lift.
Retailers need to remember that clippers and printers are very different types of customers. The value proposition has to be focused and relevant to the prospective buyer. As the study suggests, printers may be more well heeled than their clipper counterparts. The potential for online coupons is huge. Tie ins with the loyalty program, coupons loaded onto the actually loyalty card and custom coupons for certain shopping behaviors are just a few of the clever ideas I have encountered. A good opportunity is a tie in with the chain’s own online tools. Using Safeway’s nutrition tools as an example, would be a great way for vendors to promote products fitting the lifestyle category. I can see online coupons eclipsing paper coupons in a few years.
If anyone has additional questions about the survey or its findings, please feel free to contact me directly (click on my name) or post a question here.
The research results confirm the conventional wisdom that in the U.S. consumers are willing to exchange personal information for something of value to them. Printing the coupons is a useful measure of interest and involvement, but how many of these coupons that have been printed have been redeemed?
This is an interesting discussion, considering that just the other day the Baltimore Sun had an article about how there is greater potential for fraud with online coupons and several retailers are trying to restrict their use because they are fearful of fraud. Hopefully newer methods of discounting will be tried that are more secure for the retailer AND more convenient to the consumer.
Coupon readership (measured by eyeballs not distribution) and redemption will grow there are an increasingly effective and efficient promotional vehicle due in large part to:
– more retailers shifting to EDLP and needing an excitement generating vehicle
– improved database tools to identify relevant, behavior changing offers
– lower cost delivery vehicles
– more convenient consumer delivery and redemption methods such as internet identification (Brandcast), paperless ties to loyalty cards (AOL $hortcuts), mobile
First we need to recognize the typically differing objectives of the 3 involved parties:
(1) The retailer objective is first frequency and second basket size – for ANY brand they carry.
(2) The manufacturer objective is first brand market share (brand switching is their highest ROI) through a mix of trail and awareness or stockup – at ANY retailer. FSIs dominate coupon distribution with 89% share and are really trade promotion without needing to ask the trade’s permission.
(3) The customer’s objective is greater value on relevant products in a coupon delivery vehicle that was easy to find and redeem.
While utopia is “growing the category” ultimately it is more of a zero sum game where technology enabled business process changes (including decisions driven by analytics) will create sustainable competitive advantage.
The typical strategic couponing roadmap includes:
– quality data access (product, customer, profit for both)
– analytical tools and business intelligence
– organizational alignment and business processes
– varied delivery capabilities (including targeted vehicles – direct mail, receipt tape, kiosk, web, mobile)
The good news is captured by a great quote, “The future is already here but unevenly distributed.” – William Gibson.
To answer Camille’s question, the average redemption rate by category ranges from 7 to 21 percent. There is a good set of statistics available in a recent Advantage Update from CMS at http://www.couponinfonow.com
To respond to gafpromise, the trend is actually in the other direction, despite the Sun’s spin on it. Kroger, for example, recently changed its policy to accept printable coupons at all of its banners. The end of the article noted that nearly every store contacted had a policy to accept the coupons. The restrictions, for example on accepting ‘free’ coupons, are recommended by the industry, including Coupons, Inc. We do not produce “free” printable coupons and recommend they not be accepted.