Digital Coupons Becoming Core Promotional Element

According to a recent Whitepaper from Jupiter Research, as retail becomes an evermore connected experience, brands and retailers are seeking to extend their engagement with consumers, moving beyond creating awareness and facilitating payment, to a deeper, richer integration of loyalty programs. This, in turn, has seen digital coupons evolve from being means of driving consumers to storefronts, to being a core element of promoting and reinforcing brand loyalty.

 While promoting a product or store still forms a significant part of the coupon’s raison d’etre, the increasing sophistication of digital/mobile coupons, when used in the wider context of a loyalty framework, enables brands to:

  • Enhance engagement with the end-user
  • Track purchasing patterns and behavior at the level of the individual
  • Analyze the relative success of campaigns, as measured against the yardstick of redemption or engagement
  • Deliver targeted, personalized offers based on a user’s purchasing history or location

 Though ultimately the aim is to use the coupon to drive transactions rather than purely heighten awareness, says the report, digital promotions, when used in the wider context of a loyalty framework, enable brands to enhance engagement with the end-user, track purchasing patterns and behavior at the level of the individual and deliver timely, targeted, personalized offers.

 Provided that a promotion platform/API (Application Programming Interface) has been integrated with the retailer ePOS (electronic Point of Sale), that retailer can then capture the Big Data generated by consumer transactions and interactions and determine both the optimal mechanism for engagement with end-users and the nature/timing of offers. Netflix stated in 2014 that more than 60% of its rentals came from recommendations derived from hyperpersonalization data.

 There is a pronounced trend, says the report, from brands and retailers to offer coupons which are based around location-aware delivery mechanisms, be it Near Field Communication (NFC), Wi-Fi or GPS. Coupons with a location element typically enjoy far higher redemption rates than those without, particularly in the form of impulse purchases. If a consumer with an enabled smart device with Bluetooth switched on and is in the proximity of a beacon transmitter, the transmitter will recognize the device and can push pertinent content and information to that device.

 While rollout has been perhaps slower than was originally envisaged, says the report, a number of leading retailers have now begun to deploy beacons in their stores and outlets. Macy’s has been one of the leading retail advocates of beacon technology, with with an early trial of iBeacon with 4,000 beacons installed, says the report. Additionally the report includes the experience of several other retailers:

  • In August 2015, Target confirmed that it was in the process of testing beacon technology in 50 stores across major US markets
  • Although Sephora, Walmart and Walgreens all tested iBeacons in several stores during 2014, none of these has subsequently rolled out the technology
  • Outside the US, there has been some traction in markets such as the UK and China. During 2014, UK retailers House of Fraser and Waitrose began installing beacons in-store
  • In September 2015, beacons were installed in nearly 1,500 Pizza Hut restaurants in China to push coupons, movie ticket prizes, special offers and discounts directly to customers’ smartphones.
  • The jewelry retailer CTF (Chow Tai Fook) installed Sensoro beacons in 237 of its 2,300 stores in early 2015. During the promotion it pushed 34,633 coupons to end-users, of which 71% were claimed. Of these, 59% of all coupons were redeemed, resulting in a sales uplift to CTF of $16 million.

While there are concerns over the cost of integrating Beacon technology at the Point Of Sale, it offers an attractive opportunity to retailers as a means of engaging with consumers in-store, opines the report.  And, though previous research anticipated that consumer adoption would be limited to iPhone users, the last 18 months has seen a spate of activities enabling beacons for Android users, making it a far more attractive option for retailers.

 The report ends by forecasting that, by 2020, beacons will be used to distribute around 1.6 billion coupons to smartphones annually, up from just 11 million this year.

 For additional information from Juniper Research, please visit here.

 

 

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1 comment about "Digital Coupons Becoming Core Promotional Element".
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  1. Andrew Coleman from Rogue Two Marketing, February 26, 2016 at 8:34 a.m.

    With all due respect, it's difficult to take this piece seriously when you misspell the firm sourcing the data in the first line.  (It's Juniper Research, not Jupiter Research)

    And while 1.6 billion mobile coupons sounds like a lot, remember that those offers are swimming in a sea of 310+ billion manufacturer coupons *annually*.

    Not quite the tipping point as portrayed by Juniper findings, or re-summarized here.