April 3, 2012
Digital Coupon Users Are Big Spenders
According to research conducted for Coupons.com, a growing number of consumers are seeking out and using digital coupons. These same consumers, it turns out, are highly educated, affluent and big shoppers.
According to the research conducted by GfK Knowledge Networks, digital coupon users:
- Make 69 shopping trips per year compared to 57 for the average shopper;
- Spend $55.05 per trip versus $44.87 for those not using coupons;
- Plan to go shopping within two days of either printing out a coupon from a site such as Coupons.com or downloading the offer to a loyalty card.
The research also showed that some stereotypes associated with coupon clippers do not apply to digital users. Roughly 25 percent of the U.S. population now uses digital coupons and those going online to get their discounts earn more (20 percent higher than U.S. average) and have higher educational levels (37 percent college graduates versus 27 percent of total population) than those who do not.
While the Coupons.com research findings reflect positively on the trend, digital coupons remain a very small part of the overall sales promotion picture for CPG brands and retailers.
According to NCH Marketing Services, a Valassis company, 89.4 percent of all coupons are distributed via free-standing inserts. Digital offers, while growing in popularity, still remain around one percent of all coupons distributed in the U.S.
- New Research Reveals Shopping Behavior of Digital Coupon Users – Coupons.com/Business Wire
- Forever Frugal Mindset Leads to $4.6 Billion Coupon Savings in 2011 – NCH Marketing Services
- Coupon Facts Report Provides Comprehensive Look at Marketers’ Tactics and Consumer Response – NCH Marketing Services
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Discussion Questions
Discussion Questions: In light of differences between digital coupon users and other shoppers, should brands and retailers adjust their offers through this channel? How important is it for retailers to connect loyalty cards to digital coupons rather than have consumers print and clip them?
Poll
I believe the future for growth in digital coupons is more localized targeting based on consumer location to the store, as well as purchase history. Digital delivery of value offers can grow steadily based on a higher level of distinct shopper knowledge. There is so much wasted distribution of coupons through FSI inserts that essentially lower a brand’s gross margin by putting a coupon in the hands of those who may in fact buy your product without one.
We have data and systems that can help us be way smarter as marketers. Why not use them? The shopper will be happy to tell us if they prefer to print them or swipe the smartphone at the register.
You want to take good care of your best customers. Obviously, consumers who bother to research digital coupons, or simply clip coupons are more serious shoppers. They are also people who probably buy a lot of stuff they don’t need because they have money and they have a coupon. Retailers and manufacturers love these kinds of customers who are compelled to buy things they don’t need. These consumers are somewhat addicted to shopping. It’s important to keep feeding them what they want so they keep coming back.
Loyalty cards are not used by all retailers, therefore printing and clipping will be part of the treasure hunt for the addicted shopper.
I agree with Anne on the power of digital coupons for geo-targeting and behavioral targeting. Traditional coupons drive tonnage (of newsprint as well as sales volume) but digital coupons add distinctive precision and intelligence. Some distinctive elements:
1. Through geo-targeting: varying retailer offers based on IP-address, targeting based on user-location from data suppliers, triggering offers based on user-provided information on preferred grocers and the like.
2. Through behavioral targeting: tailoring different offers to different shopper segments, optimizing campaigns while they are running (A/B splits and test and learn mechanics), timing of offers to coincide with purchase cycle.
Digital coupons also offer easy social sharing, which has yet to be a considerable force but is a nice convenience nonetheless.
These capabilities become more advanced with mobile delivery, which provides greater geo-accuracy and closes the loop on behavior. There is no reason why leading brands and retailers shouldn’t at least be experimenting with digital coupons.
It is critical for retailers to shift the channel of marketing to align with how customers are connecting with them and shopping. FSIs are dying a slower death than they should.
If the digital coupon user has more frequent trips and spends more per trip, that should be a beacon for retailers! The adoption rates of smartphones will only drive usage.
Offers can become far more targeted digitally, versus traditional paper coupons. However, I’m not all that impressed with the findings in this study. The gap between the groups of shoppers isn’t all that large. I do believe this gap will widen after more adoption in the marketplace. I think retailers and manufacturers need to make the digital coupon “clipping” process even more intuitive and rewarding for the shopper. There should be more “exclusive” benefits of being in a coupon “club” of sorts with digital coupons. The feeling of exclusivity is compelling … even if “exclusive” means a million other shoppers get the same offers. Perception can be reality.
Loyalty card redemption has three benefits: 1) it makes it easier for the consumer and 2) it helps prevent fraud since it ties a personally identifiable record to the coupon redemption and 3) it makes retail redemption through the POS system much more straightforward.
FSIs have declined slowly because for consumers printing and remembering the coupon isn’t that different from clipping it (it just allows them to find more coupons), for manufacturers digital coupons pose fraud challenges that have not been completely overcome and for retailers mobile redemption without a loyalty card is still very tricky. The industry needs to resolve all these issues for digital coupons to become the de facto medium.
As for adjusting offers — to Anne’s point if you’re able to target offers to your best customers, understand that they buy you at full price not just “on deal” and can be fairly certain there will be little to no breakage than inevitably coupons will shift to more focused on loyalty, less focused on trial. Anne is spot on about the waste and inefficiency, but there are still holes in the existing distribution, redemption and clearance model that are not completely resolved.
It is vitally important that retailers with loyalty card programs not only provide their shoppers with digital coupon capabilities, but they should also provide a significant amount of their own content to drive these valuable consumers to their website and on to their stores. Waiting for the brands to provide all the content is a mistake.
But the “kabuki dance” between brands and retailers typically goes something like this: “CPG brands get interested in providing content when they can access a large number of high volume retailers covering key markets across the country. In turn, retailers will engage new programs when an agent can bring them lots of offers, (from new sources of funding, not touching their current trade funds).”
So it goes with digital coupons. With just a few exceptions, retailers that are now offering digital “load-to-card” coupons are relying mainly on the brands for the content and thus far, brands are providing limited content. Digital consumers are frustrated, but they are not about to wait patiently.
These shoppers not only skew towards large baskets and frequent trips, as the research indicates, they are also way out in front of both retailers and brands in both their acceptance of digital coupons and their understanding of how to use the technology to become a more savvy shopper. They will flock towards retailers who adapt early to digital. A caution to early adapter retailers: make sure you have a good stock of loyalty cards available, your membership ranks are about to grow!
Digital coupons will allow better targeting and can be 100% trackable. Manufacturers and retailers should immediately adjust their programs and processes to take advantage of the features of digital coupons.
Having worked with coupons in some way or other for the bulk of my career, I’ve got to say that I’m very impressed with digital coupons. Sure it’s underdeveloped now and faces the critical mass required for success as described by Mark Heckman — we started slow at Catalina Marketing. But what a concept. Loading discounts to a card (not the actual loyalty card but to the retailer’s database record for the card) is clean, simple, and all the other attributes listed in previous comments. (BTW, this is not a load-to-smartphone concept yet, keeping in mind that few retailers have the kinds of scanners that can communicate with them.)
Mark’s comments about retailers providing their own content is also dead on. Move primary customers around in the store to departments they don’t often visit. Use any number of algorithms to entice them to the high-profit fresh departments. Introduce secondary shoppers to private label. Etc.
The kicker, of course, is that retailers don’t want to pay for ANYTHING. And without brand participation in the early stages of digital coupons, they’re going to have to fund the program themselves. But finally, loyalty cards will start fulfilling some of the promise for which they were designed.
It’s hard to believe that digital couponing only makes up 1% of total coupons; you’d think it’d be a greater percentage with the influx of technology these days.
Couponing is about redeeming a great deal, as long as the process to do so is not too demanding. Sure, consumers have been clipping and filing for decades. But with the advent of emerging technologies like mobile apps, couponing is now easier than ever for consumers. And surely, they’ve spoken out for it.
So I think yes, brands and retailers should adjust their offers through digital, which also, by the way, allows for localization. If you serve a coupon while someone is in-store, you can personalize the message down to that actual store. Consumers are looking for personalization and localization, as long as it doesn’t overstep privacy boundaries.
In terms of loyalty cards, they work well in some instances, depending upon the brand. I think if any marketer can launch a campaign that instills equity in the brand and maintains the consumer base while growing it, it’s a go.
So a company that does digital coupons touts digital coupon users as better than other shoppers, making more trips and spending more. Methods were not revealed, just their footnote “Digital coupon households were identified using 150 unique coupons in 49 item categories printed from Coupons.com digital coupon network.”
I’d think smart marketers would consider the source before rushing to court the digital coupon users.
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I believe the future for growth in digital coupons is more localized targeting based on consumer location to the store, as well as purchase history. Digital delivery of value offers can grow steadily based on a higher level of distinct shopper knowledge. There is so much wasted distribution of coupons through FSI inserts that essentially lower a brand’s gross margin by putting a coupon in the hands of those who may in fact buy your product without one.
We have data and systems that can help us be way smarter as marketers. Why not use them? The shopper will be happy to tell us if they prefer to print them or swipe the smartphone at the register.
You want to take good care of your best customers. Obviously, consumers who bother to research digital coupons, or simply clip coupons are more serious shoppers. They are also people who probably buy a lot of stuff they don’t need because they have money and they have a coupon. Retailers and manufacturers love these kinds of customers who are compelled to buy things they don’t need. These consumers are somewhat addicted to shopping. It’s important to keep feeding them what they want so they keep coming back.
Loyalty cards are not used by all retailers, therefore printing and clipping will be part of the treasure hunt for the addicted shopper.
I agree with Anne on the power of digital coupons for geo-targeting and behavioral targeting. Traditional coupons drive tonnage (of newsprint as well as sales volume) but digital coupons add distinctive precision and intelligence. Some distinctive elements:
1. Through geo-targeting: varying retailer offers based on IP-address, targeting based on user-location from data suppliers, triggering offers based on user-provided information on preferred grocers and the like.
2. Through behavioral targeting: tailoring different offers to different shopper segments, optimizing campaigns while they are running (A/B splits and test and learn mechanics), timing of offers to coincide with purchase cycle.
Digital coupons also offer easy social sharing, which has yet to be a considerable force but is a nice convenience nonetheless.
These capabilities become more advanced with mobile delivery, which provides greater geo-accuracy and closes the loop on behavior. There is no reason why leading brands and retailers shouldn’t at least be experimenting with digital coupons.
It is critical for retailers to shift the channel of marketing to align with how customers are connecting with them and shopping. FSIs are dying a slower death than they should.
If the digital coupon user has more frequent trips and spends more per trip, that should be a beacon for retailers! The adoption rates of smartphones will only drive usage.
Offers can become far more targeted digitally, versus traditional paper coupons. However, I’m not all that impressed with the findings in this study. The gap between the groups of shoppers isn’t all that large. I do believe this gap will widen after more adoption in the marketplace. I think retailers and manufacturers need to make the digital coupon “clipping” process even more intuitive and rewarding for the shopper. There should be more “exclusive” benefits of being in a coupon “club” of sorts with digital coupons. The feeling of exclusivity is compelling … even if “exclusive” means a million other shoppers get the same offers. Perception can be reality.
Loyalty card redemption has three benefits: 1) it makes it easier for the consumer and 2) it helps prevent fraud since it ties a personally identifiable record to the coupon redemption and 3) it makes retail redemption through the POS system much more straightforward.
FSIs have declined slowly because for consumers printing and remembering the coupon isn’t that different from clipping it (it just allows them to find more coupons), for manufacturers digital coupons pose fraud challenges that have not been completely overcome and for retailers mobile redemption without a loyalty card is still very tricky. The industry needs to resolve all these issues for digital coupons to become the de facto medium.
As for adjusting offers — to Anne’s point if you’re able to target offers to your best customers, understand that they buy you at full price not just “on deal” and can be fairly certain there will be little to no breakage than inevitably coupons will shift to more focused on loyalty, less focused on trial. Anne is spot on about the waste and inefficiency, but there are still holes in the existing distribution, redemption and clearance model that are not completely resolved.
It is vitally important that retailers with loyalty card programs not only provide their shoppers with digital coupon capabilities, but they should also provide a significant amount of their own content to drive these valuable consumers to their website and on to their stores. Waiting for the brands to provide all the content is a mistake.
But the “kabuki dance” between brands and retailers typically goes something like this: “CPG brands get interested in providing content when they can access a large number of high volume retailers covering key markets across the country. In turn, retailers will engage new programs when an agent can bring them lots of offers, (from new sources of funding, not touching their current trade funds).”
So it goes with digital coupons. With just a few exceptions, retailers that are now offering digital “load-to-card” coupons are relying mainly on the brands for the content and thus far, brands are providing limited content. Digital consumers are frustrated, but they are not about to wait patiently.
These shoppers not only skew towards large baskets and frequent trips, as the research indicates, they are also way out in front of both retailers and brands in both their acceptance of digital coupons and their understanding of how to use the technology to become a more savvy shopper. They will flock towards retailers who adapt early to digital. A caution to early adapter retailers: make sure you have a good stock of loyalty cards available, your membership ranks are about to grow!
Digital coupons will allow better targeting and can be 100% trackable. Manufacturers and retailers should immediately adjust their programs and processes to take advantage of the features of digital coupons.
Having worked with coupons in some way or other for the bulk of my career, I’ve got to say that I’m very impressed with digital coupons. Sure it’s underdeveloped now and faces the critical mass required for success as described by Mark Heckman — we started slow at Catalina Marketing. But what a concept. Loading discounts to a card (not the actual loyalty card but to the retailer’s database record for the card) is clean, simple, and all the other attributes listed in previous comments. (BTW, this is not a load-to-smartphone concept yet, keeping in mind that few retailers have the kinds of scanners that can communicate with them.)
Mark’s comments about retailers providing their own content is also dead on. Move primary customers around in the store to departments they don’t often visit. Use any number of algorithms to entice them to the high-profit fresh departments. Introduce secondary shoppers to private label. Etc.
The kicker, of course, is that retailers don’t want to pay for ANYTHING. And without brand participation in the early stages of digital coupons, they’re going to have to fund the program themselves. But finally, loyalty cards will start fulfilling some of the promise for which they were designed.
It’s hard to believe that digital couponing only makes up 1% of total coupons; you’d think it’d be a greater percentage with the influx of technology these days.
Couponing is about redeeming a great deal, as long as the process to do so is not too demanding. Sure, consumers have been clipping and filing for decades. But with the advent of emerging technologies like mobile apps, couponing is now easier than ever for consumers. And surely, they’ve spoken out for it.
So I think yes, brands and retailers should adjust their offers through digital, which also, by the way, allows for localization. If you serve a coupon while someone is in-store, you can personalize the message down to that actual store. Consumers are looking for personalization and localization, as long as it doesn’t overstep privacy boundaries.
In terms of loyalty cards, they work well in some instances, depending upon the brand. I think if any marketer can launch a campaign that instills equity in the brand and maintains the consumer base while growing it, it’s a go.
So a company that does digital coupons touts digital coupon users as better than other shoppers, making more trips and spending more. Methods were not revealed, just their footnote “Digital coupon households were identified using 150 unique coupons in 49 item categories printed from Coupons.com digital coupon network.”
I’d think smart marketers would consider the source before rushing to court the digital coupon users.