By John Karolefski
Through a special arrangement, what follows is an excerpt
of a current article from the monthly e-zine, CPGmatters, presented
here for discussion.
Coupons and other promotions need to break away from traditional mass marketing and engage consumers in order to be effective tactics nowadays. Moreover, CPG marketers need to draw in consumers rather than push out brand messages to them.
“Now, more than ever, promotions are all about engagement,” said Lisa Bradner, a consultant with Forrester Research in Chicago.
That was the key message delivered by Ms. Bradner and other executives speaking at the annual Industry Coupon Conference hosted by the Association of Coupon Professionals (ACP) in Miami. Mobile coupons, digital coupons and other such tactics are part of the new wave of interactive promotional marketing that today’s consumers are responding to.
“Engagement is a necessary first step because – without it – you can’t break through the clutter,” said Ms. Bradner. “But engagement alone does not guarantee a sale. Promotions are a key way to link the two and need to be leveraged in that context.”
In the past, brand marketing was about product consistency, trust, and an understanding of what the price-value equation was; that is, you get what you pay for, according to Ms. Bradner. Engagement was limited to such tactics as FSIs, endcaps, and predictable, timed promotions. The emergence of loyalty programs such as the early Green Stamps and the subsequent card-based frequent shopper programs were the first attempts at connection with consumers.
“We knew what we wanted to do and what the response mechanism was going to be,” she said. “We knew how to measure it, and we could plan that promotional calendar 18 months in advance.”
Today, the end goal – more sales – hasn’t changed, she added, but the tactics have. “Coupons must move beyond ‘one size fits all.’”
Ms. Bradner urged marketers to look into tactics that go from mass media to one-to-one engaged media. The latter means targeted coupons, promotions linked to shopper loyalty data, mobile-enabled targeting, and other sophisticated promotions involving the internet.
“The reason why people are excited about [mobile coupons] is that suddenly you have a device that people carry with them all the time,” she said. “You can connect to an individual or to their data, whether it’s mobile or a variety of other technologies. Think about the opportunities that you have to cut through the mass marketing and treat your customer segments differently. Give them a chance to opt in to you. Give them promotions and offers that say you know something about them and that they are special to you.”
Discussion questions: What hurdles are preventing the shift from a mass media approach to coupons and other promotions to one based on one-to-one engaged media? Will one-on-one marketing eventually become the primary traffic driver for supermarkets?
BrainTrust
Discussion Questions
Poll
Loading …
As Steve notes, segmentation and data analysis are quite important; more important in my opinion than the broad notion of “targeting.” I could write (and have written) a whole essay on coupons and consumer engagement, but briefly:
“Targeting” coupons for CPG may not be as effective targeting other advertising. Demographic and behavioral targeting may not account for the fact that a household typically has one primary shopper. A female shopper is likely to be the primary target for products used by females, males, kids, pets, the old, the young, etc. Her surfing habits may not reflect her husband’s need for low-fat foods, for example. So it makes sense to offer a broad array of coupons to consumers online, and let them choose the ones that interest them.
Segmentation, on the other hand, is important; and running coupon programs that provide reliable, detailed back-end data about the offers consumers took and actual purchase data can help brands do a better job of segmenting their customer base, and can inform and direct all of their other marketing efforts. Today’s online coupon programs do just that.
I agree with Ms. Bradner that engagement is an important goal for brands today. I call this the “New Marketing Cycle” of Awareness, Recruitment, Engagement, Motivation, and Purchase, all informed and driven by Measurement and Learning. Coupons work well throughout this cycle.
Initially, the biggest hurdle will be ROI. One-to-one marketing is a different paradigm; managers will favor tried and true methods that deliver an expected ROI vs. a method that involves unknown risk.
Don’t expect to see the emergence of one-on-one marketing in the space occupied by traditional coupons. It is a limited space for an innovative merchandising tool and it is precisely why I do expect it to become the primary traffic driver.
This is an area that is ripe for a makeover, a complete makeover.
It’s rare to see shoppers with coupons in hand. And no wonder!…the process of benefiting from them–clipping, filing, remembering to bring them, using them, and tossing the expired ones–is too complex for the average time-starved shopper. This is a lot of work for $.35 in savings. Wait until today’s kids are major purchasers; younger customers pride themselves on not reading newspapers, the prime source for coupons.
It’s unclear what the future holds, but traditional paper coupons probably won’t be there.
Data collection, analysis and segmentation along with individual or smaller group marketing being more costly than mass marketing are hurdles. Educating customers, building loyalty and identifying those customers willing to pay more, based on previous purchases is key. Knowing who to send the promotions to will mean pricing and margins are more focused. Balance over retaining loyalty and increasing margins is the target.
Ah, one of my favorite topics. You need three things to successfully transition to more targeted promotions. Well, four, because the first thing you need is to get over the cultural bias around blasting everybody and planning on a promotion based on breakage (the number of people who DON’T redeem the coupon).
First you need good customer data–harder than it sounds because lots of retailers have customer data, but few have GOOD customer data. Second, you need to be able to measure the success and failure of your promotions, not at the top-line level of sales but on how many specific people you made the offer to vs. how many people redeemed it. And third (and in my opinion the most important), you need a way to capture consumers’ preferences about the offers they want to receive. Nobody seems willing to let go control and let consumers dictate the brands or categories they want to receive offers from, but if you’re going to get personalized, you need to bite the bullet and just do it.
Why would you need a huge amount of promotion optimization algorithms–or even customer purchase history really, for that matter–if you could just ask your customers and have them tell you what offers they wanted? I know that’s extreme, but while everyone seems to be afraid that consumers will decide to opt out of any and all offers (and are these people high redeemers anyway?)–but the truth is, it will give you a more valuable base of opt-ins, and a better relationship with those people if you could promote to them based on their preferences, rather than what the retailer or brand wants.
My sense is that “grocery” shopping is so culturally ingrained that most shoppers are not going to get to the point of really relying on their mobile devices to build a list of offers they want to respond to based on one-to-one offers that are micro-targeted. So many grocery categories are in-store decisions that I don’t see a near-term wide application in this channel
That said, I believe the potential is actually substantial for other categories and retail formats. Two examples–if Callaway or Odyssey knew me well, they’d know I’m in the market for a few specialty clubs, and I’d happily store an offer on my PDA so I wouldn’t miss out on a demo event or a purchase incentive.
Likewise, Apple has already engaged my son for life with their products, individualized service and now a few text messages to offer hands on support to upgrade to MobileMe tomorrow! He’s so loyal to this brand, and he RAVES about how they know just how to reach and cater to HIS WANTS AND NEEDS. One good offer and his wallet is open for sure!
I’m enthused about the potential for mobile coupons, but the promising mobile coupon schemes presently on the market are missing an essential element: near-field communications (NFC). That’s the “tap-and-pay” contactless technology already embedded in some smart credit cards like Visa’s PayWave, American Express ExpressPay cards, and the familiar Mobil SpeedPass.
NFC-enabled phones are coming on like a seismic wave in Europe and Japan, and it’s a matter of 18 months or so before the chips are built into all standard cellphones here in the U.S. Combined with electronic wallet technology, NFC can support contactless coupon capture, storage and redemption as part of a secure POS payment process.
How will this engage consumers? By slimming down or entirely replacing their wallets; ensuring greater security than standard credit cards; and delivering targeted offers to shoppers that are tap-convenient to “clip” and redeem.
As you do your routine shopping chores in the next few weeks, take note of how many retailers, convenience stores and quick serve restaurants already have “tap and pay” NFC readers installed at the checkouts. They are not being used a lot yet, but critical mass is approaching rapidly, and I predict that cellphones will be a prime delivery method for contactless coupons.
I see this as a core issue for grocery stories today. It goes to the category of understanding your consumer and responding to their needs. Part of the message of doing coupons is saying to the consumer that the grocery is aware of the current market conditions and that it affects it has on the consumer. “Gas prices are up and so we are going to offer a way to keep your prices down” is a powerful message to send. Even if the consumer does not use coupons, they can appreciate the “engagement.”
Coupons need to be approached to fit better with the new economy and the different age we live in today and with the newer, more current lifestyle of the working public. For the most part coupons are seen less progression and change than most other means for CPG marketing.
I would just add that in reading this thread I’m struck at how mass-marketed CPG companies and retailers are trying to adapt to an increasingly segmented consumer. As these companies continue to consolidate in their pursuit of volume and economies, isn’t the future ripe for emerging CPG companies and retailers who, in fact, define and capture a segment? In that event, the issue isn’t how to target different segments through promotional activity; rather it is building an entire business and marketing model around capturing a given segment.
Isn’t this really what a retailer like Trader Joe’s is all about? Don’t they have some of the most loyal customers around?
Amazon markets to individuals. Trader Joe’s markets to a group that it defined. Both are successful. Most supermarket chains and department stores market to everyone who gets a newspaper. If the desired audience is truly that group, OK, your marketing dollars are well-spent. But it’s unlikely that newspaper readers are a profitable audience for all the FSIs and ROPs I see.