Thursday, November 8, 2012

Use of Digital Coupons Is Widespread But Limited: National Survey

While the vast majority of consumer packaged goods (CPG) marketers include digital coupons among their promotional tactics, most firms are using them in a secondary role.

That was the key result of a new national survey by the Shopper Technology Institute (STI). Partners in Loyalty Marketing (PILM), a Chicago-based consultancy, conducted the study on behalf of STI. 

The study found that 84% of CPGs are now using digital coupons, but 45% reported using them in a “supporting” role because of its limited scale, and 42% said that this is a “toe in the water” effort to test the waters, said PILM’s Tanya Bhothinard, senior director of client service.

The study showed that digital coupons have significant benefits over paper coupons. While 34% of FSI-delivered coupons result in new buyers, 46% of digital coupons attract new shoppers. And while 68% of FSI coupons result in incremental sales, 77% of digital coupons provide additional revenues.

Respondents to the survey reported on factors affecting the success and obstacles to digital couponing. Key success factors included:

  • Ease of use and reach. “We see that the short turnaround time makes digital coupons a great preemptive tool. Because they are so reactive, you can turn them on and off quickly,” Bhothinard said.

  • Attractive demographics. “We see that digital couponing attracts the younger shoppers and they can be used to build a higher lifetime value (LTV). CPGs are using the coupon websites as a way to introduce brands and get trial. We saw that one of the benefits of digital coupons was that it attracts new users much more than FSIs.”

  • Brand building. “Digital coupons have the ability to go viral. With all the bloggers out there, this is a very quick way to promote your brand, while achieving an authentic image. Because it is going viral through bloggers, someone else’s endorsement is promoting your program.”

  • Purchase insights. “The ability to track, not just impressions, but also clicks, provides better insight into the purchasing decision funnel. Because you can track the impressions, you know how many people are printing, and then you can put unique OCR (optical character recognition) codes on your coupons to find out the redemption.”

  • Potential for lower costs. “Some manufacturers see much lower costs than with traditional printed coupons, meaning FSIs, for the most part. And then the cost for versioning is much lower. When you do versioning on paper, you have to go through so many renditions and there is that up-charge. When you do the digital coupon, you just slide things in and out, and it is very easy to do. And then the load-to-card coupons are less prone to fraud. So there is some cost savings there as we see more people move into the load-to-card arena.”

Obstacles to success with digital coupons identified by the study include: lack of distribution control; low unit and redemption volume; limited acceptance; stacking or doubling down, and high settlement costs.


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