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by Jon Behm · Published · Updated
Print & save: higher redemption rates are making online coupons the promotional tool of choice for many supermarket retailers.(TECH SOLUTIONS)
Grocery Headquarters October 1, 2005 | Amato-McCoy, Deena M.
While retailers often lose sales because relatively few shoppers bother to redeem money-saving product coupons, the Internet is helping them change their luck. Online coupon programs are spurring customer loyalty, driving store traffic and increasing redemption rates.
[ILLUSTRATION OMITTED] Coupons, whether issued by manufacturers or by retailers themselves, can be an effective promotional tool. Widely distributed through mail, magazines and newspapers, they can promote repeat purchases, build brand loyalty, encourage trial, provide product exposure and attract new customers.
Overall distribution grew a healthy 9% to 342 billion coupons in 2004, according to CMS, a provider of promotion management solutions based in Winston-Salem, N.C. Competitive pressure in nonfoods categories like general household products, health care and body care helped to drive more coupons to consumers. These coupons gave shoppers the chance to save more than $318 billion, CMS adds. here online grocery coupons
“Not many other promotional tools can accomplish sampling and encourage the continuity of a purchase,” says John Irwin, president of the Association of Coupon Professionals, headquartered in Des Plains, Ill.
Tahlequah, Okla.-based Reasor’s features coupons on bulletin boards and shelf talkers, and sends coupons in mailers. Yet these efforts can still fall short in persuading shoppers to pick up a coupon, says Allen Mills, senior vice president of the 12-store supermarket chain.
Over the last decade, coupon distribution has gotten a boost with the help of the Internet. “The online coupon world is driven by the many consumers who are moving online,” says Christine McNicholas, senior vice president of sales and client services for CoolSavings. The interactive marketing services company, based in Chicago, helps manufacturers and retailers deliver electronic coupons.
To connect with their many PC-savvy consumers, supermarkets are posting their weekly specials, recipes and company information online. Innovative retailers are also using their Web sites to deliver electronic coupons.
“Shoppers are finding electronic coupons far more convenient,” says Jeff Weitzman, president and COO of Coupons, Inc. in Mountain View, Calif. “They are finding them online at their convenience, rather than constantly watching for Sunday FSIs, clipping coupons and hoping they do not expire before they can be redeemed.” After locating an electronic coupon, shoppers simply print it out and bring it to the store for redemption. Upon acceptance, the coupons are handled and cleared exactly like traditional coupons There are significant differences between the two media. Online coupons usually have shorter expiration dates. These dates, which are often calculated from the day they are printed, help retailers control their distribution. Electronic coupons also have unique codes, enabling retailers to track them on an individual basis, know when each was printed and determine if it was redeemed.
“Retailers can tie this information into broader database marketing efforts,” says Weitzman. “Chains gain much greater control over the distribution of the coupon, the value of the coupon and the timing of the campaign.” THEFT DETERRENT This is not the case with FSIs. “FSI theft is not traceable,” says Terry Shirley, vice president of sales for Boodle, a San Diego, Calif.-based coupon distribution network that issues online grocery coupons through a network of some 335 newspaper Web sites.
Almost all major CPG companies and some pharmaceutical manufacturers are running consumer-printed programs, and many retailers accept these coupons. For example, Reasor’s accepts SmartSource online coupons. Known as the company that features weekly coupon savings in Sunday newspapers, SmartSource now provides online coupons through the Web sites of its retailer partners.
Cub Foods West, which operates Cub stores throughout Minnesota and Iowa, accepts various online coupons, according to Julie Rodewald, Cub’s promotions manager. Publix Supermarkets, Lakeland, Fla. also accepts online coupons, including those from Boodle. “Newspaper Web sites often have the top or second-highest visitation in a given local market,” says Boodle’s Shirley.
Newspaper Web sites are also a strong way to reach the 18- to 35-year-old demographic. Not only do members of this segment often get their news online, they are more apt to search for electronic discounts. “Thus, it is important to target marketing to them via these sites,” Shirley says.
BANNER ADS Some retailers, including supermarket chains, are placing banner ads on the Web sites of newspapers in their areas. As shoppers click on the banner, a link directs them to the retailer’s Web site, where they can download a coupon tied exclusively to the banner ad. “These programs help to drive new shoppers to the supermarket’s site and it makes the site easily accessible for consumers,” Shirley says.
Chandler, Ariz.-based Bashas’ is working with The Arizona Republic, one of Boodle’s partners. As a regular advertiser on the paper’s Web site, www.azcentral.com, Bashas’ often runs banner ads. “As shoppers click on the banner, they are linked to a page on Bashas’ site that features weekly specials,” says Shirley.
Though online coupons account for only about 2% of coupon distribution, “not long ago, online coupons accounted for 1% or less of total coupons,” says Shirley. “They are definitely growing, and they continue to gain traction at a faster clip.” And redemption levels for online coupons have surpassed those for their traditional counterparts. “Since consumers request them, so to speak, that contributes to higher redemption,” he says.
While redemption levels can be between five and eight times higher than for coupons distributed through FSIs, online coupon distributors like Boodle and CoolSavings cite 15% redemption rates. Grocers hope to increase those rates by incorporating coupon delivery hardware at store level. “Seventy percent of consumers’ final purchase decisions are made in the store,” says Clay Boykin, executive vice president of BetaCorp, an Austin, Texas company that provides self-service kiosks for the retail industry. go to site online grocery coupons
To target shoppers when they are most likely to make a purchase, Reasor’s delivers electronic coupons via in-store kiosks. “By delivering coupons during the shopping trip, we are increasing the percentage of shoppers that will redeem the coupon at the front end,” says Mills.
As shoppers touch the unit’s interactive screen, they are presented with an electronic listing of participating manufacturers. As they choose coupons, a Web-based communication link triggers the integrated manufacturer database and delivers coupons to the kiosk in real time. The shopper prints out the coupons and redeems them during checkout.
Reasor’s first in-store kiosk was added almost a year ago; today, 10 stores have them. The units feature 200 coupons from approximately 40 manufacturers as well as Reasor’s private label line. Boykin says the kiosks can support redemption rates between 10% and 25%. According to Mills, the electronic coupons are doubling the chain’s usual 6% redemption rates.
LOYALTY CARD TIE-IN Supermarkets could further spur these results by targeting coupons to specific customer segments. Cincinnati-based Kroger Co., for example, has teamed up with CoolSavings to tie customized coupons to shoppers’ Kroger Plus loyalty cards. After visiting the “savings” section of www.Kroger.com, shoppers are asked to enter their card number and complete a profile. They choose their coupons, and the electronic discounts are transferred to their loyalty card. The savings are realized when the card is scanned during checkout.
“Kroger is being progressive as they deliver extreme convenience and value to their shoppers,” says CoolSavings’ McNicholas. “They are building more loyalty through their Web site and loyalty card. Delivering coupons in a relevant, timely manner is the next stage of evolution.” RELATED ARTICLE: HEADING OFF FRAUD AS SUPERMARKETS INCREASINGLY ACCEPT ONLINE COUPONS, THEY NEED TO LOOK BEYOND THE BENEFITS AND LEARN HOW TO PROTECT THEMSELVES FROM POTENTIAL FRAUD. DURING THEIR DEBUT, CONSUMER-PRINTED COUPONS OFTEN BECAME THE BOOTY OF CHOICE FOR SAWY COUPON-FRAUD RINGS. AS CRIMINALS PRINTED AND PHOTOCOPIED ONLINE COUPONS, THE DISCOUNTS BECAME SUBJECT TO MULTIPLE, AND ILLEGAL, REDEMPTIONS.
[ILLUSTRATION OMITTED] ONLY TWO YEARS AGO, ONLINE COUPONS THAT WERE ISSUED BY VARIOUS CPG MANUFACTURERS WERE THE SUBJECT OF SIMILAR FRAUDULENT ACTIVITY. THIEVES COPIED THEM AND SOLD THEM THROUGH ONLINE AUCTIONS, INCLUDING EBAY. “RATHER THAN BEING A CASE OF COUPON FRAUD, IT WAS AN INCIDENT OF TECHNOLOGY FRAUD,” SAYS TERRY SHIRLEY, VICE PRESIDENT OF SALES FOR BOODLE IN SAN DIEGO, CALIF. “MODERN TECHNOLOGY IS EASILY ACCESSIBLE, SO ALL [RETAILERS] NEED TO BE AWARE” OF CONSEQUENCES AND SAFEGUARDS.
CASES LIKE THESE HAVE FORCED MANY RETAILERS TO TIGHTEN SECURITY AROUND THE ACCEPTANCE OF ONLINE COUPONS. “THE ONLINE COUPON PROVIDER ARENA IS COMPETITIVE,” SAYS CHRISTINE MCNICHOLAS, SENIOR VICE PRESIDENT OF SALES AND CUENT SERVICES FOR CHICAGO-BASED COOLSAVINGS. “THE COUPON IS NOT THE ONLY IMPORTANT PIECE THAT SERVES THE RETAILER AND MANUFACTURER. IT IS ALSO ABOUT THE TECHNOLOGY DRIVING THAT COUPON.” COUPON AND TECHNOLOGY COMPANIES ARE MAKING SECURITY A TOP PRIORITY. SPECIFIC CODES ENABLE RETAILERS TO IDENTIFY USERS AND MONITOR MISRE-DEMPTIONS. THEY ALSO HELP RETAILERS TO DEAL WITH POTENTIAL FRAUD ISSUES QUICKLY.
WHILE BASHAS’ DOES NOT DISTRIBUTE ITS OWN ONLINE COUPONS, THE CHANDLER, ARIZ.-BASED SUPERMARKET CHAIN DOES ACCEPT ONLINE MANUFACTURER COUPONS, AND IT HAS UMITATIONS IN PLACE TO WARD OFF FRAUD. “BASHAS’ ONLINE COUPON POLICY ALLOWS OUR STORES TO ACCEPT ONLINE COUPONS,” SAYS ROB JOHNSON, CUSTOMER RELATIONS COQRDINATOR. “OUR ONLY LIMITATION IS WE WILL NOT ACCEPT A COUPON FEATURING A FREE ITEM, WE DO NOT ACCEPT PHOTOCOPIES AND WE WILL NOT ACCEPT COUPONS WORTH MORE THAN $3.” SUPERMARKET OPERATORS NEED TO ALIGN THEMSELVES WITH A TECHNOLOGY PROVIDER THAT WILL EDUCATE THEM AND THEIR CASHIERS ABOUT THE VALUE OF SECURITY MEASURES THAT REVOLVE AROUND COUPONS. ARMED WITH THIS KNOWLEDGE, “RETAILERS CAN REALIZE THAT, IDEALLY, ONLINE COUPONS CAN BE MORE SECURE THAN OFFLINE COUPONS,” SAYS MCNICHOLAS.
Amato-McCoy, Deena M.