Home : Blog : June 2013
Online Coupons - Getting It RightJune 17, 2013 by Brand Algorithms
Discount coupons have always been used by brand-owners for tactical sales momentum or stoking-consumer-interest activities. Traditionally delivered in the printed format, as a newspaper insert or as a direct mailer or as a gift, the discount coupon has a proven record in generating a sales bump in a flagging marketplace, and in enticing consumers to experience a brand they were aware of, but weren't sufficiently invested in.
Discount coupons are enjoying a significant uptick in use thanks to their easy circulation, courtesy the online medium, and thanks to changes in consumer behaviour following the economic downturn in Europe and the USA. Online coupons range in adaptation from the traditional product discount coupons, to coupons delivered on mobile devices, to daily-deals site coupons; with the delivery and execution models varying significantly among them.
Innovtive Practices in Online Couponing
The facility within the online universe to distribute coupons instantaneously and at negligible cost, has meant that online couponing offered the potential for more innovation in the practice of issuing discount coupons. Two such innovations have been social couponing and mobile couponing.
The history of online coupons is tumultuous all due to one company: the daily-deals (social couponing) site Groupon. Groupon rolled out an innovative business model that delivered a discount based on the number of consumers that signed up for the promo, rather than one that offered fixed-rate discount coupons to individual consumers; akin to the network marketing of coupons. The model allowed Groupon to offer retailers (that signed on) a rush of new customers, and consumers a variety of discounts that could be availed, at a time when the world economy had tanked.
Quite before Groupon's spectacular market capitalisation flameout in 2013, however, a Rice University (Houston, Texas, USA) study, back in 2011, found that 66% of the 150 businesses surveyed reported that Groupon promotions were profitable; but, more than 40% of the organizations said that they wouldn't run a Groupon offer again.
Another social couponing site, SocialTwist, follows a model that encourages users to share in order to receive a better bargain: for example, a consumer can turn a Rs. 500/- coupon into a Rs. 2,000/- coupon just by sharing it with four other consumers.
Finally, there is mobile couponing. Mobile couponing allows an additional level of customisation, not available to standard online coupons, in that the delivery of coupons can be tied to the location of the consumer (geo-fenced promos). So, rather than broadcasting the discount to a group of targeted consumers, promo information is made available only to those consumers in the targeted group who are in the geographical vicinity of the discount-provider.
The widespread deployment of mobile couponing has been held back by the difficulty users face redeeming mobile coupons. Up until now barcodes were used, which were scanned from the mobile device screen by the PoS device, to redeem the coupon, but the process is slow and prone to error. With NFC (Near-Field Communication) technology now being featured in all smartphones, the technology issue of redeeming mobile coupons looks set to be resolved.
Why It Is Important to Get It Right
Online couponing is becoming a key component in a brand-owner's customer acquisition and retention strategy. Some figures below highlight the importance of the tactic:
Online Coupons - Some Good Practices
This section is not about the best practices behind discount couponing - when to issue coupons, how frequently, working out worst-case costs for the programme, etc. - but rather about some practices that brand-owners can look at implementing when rolling out an online coupon programme.
Authored by: Sam Oommen Thomas