Coupons: Where Do We Go From Here?

Mike Grimes
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Last week, a Retail Dive article on the impact of coupons for getting shoppers in the door and into the checkout line really caught my eye. The piece focused on the findings of a recent study which found that coupons are still popular with shoppers and can help drive loyalty, footfall and increased customer spend.

The Market Inefficiency

That’s not a mind-blowing revelation, but what really struck me was that although there were over one billion redemptions during the first six months of 2017, the rates of redemption for coupons actually declined by more than six percent.

We often think of coupons as something that only the most price-conscious shoppers consider as a major part of their shopping journey. And why wouldn’t we? It takes a lot of time and commitment to sort through the mail to find relevant offers or hunt them down online. With nearly 90 percent of all distributed coupons coming in the form of free-stand inserts (FSIs), the consumer pool naturally leans to those with a lot of free time and very tight budgets. Still, with 90% of coupon distribution, FSIs only make up 34 percent of redemptions. The market continues to change at a rapid rate.

That doesn’t mean coupons are going away. In fact, 72 percent of coupons used in 2016 were found to have a direct impact on shopping behavior. They encourage people to buy a particular item or more of a particular item, incentivize them to spend more the next time they shop, and encourage shoppers to return more often… a retailer/shopper win-win.

So why are the numbers dropping at a six percent clip?

This Decrease in Overall Redemptions is a Good Sign

Simply put, the decline in the number of coupons is a sign of increased intelligence and efficiency among retail marketing teams. They are just being more strategic. Instead of mass blasts, marketers are learning to be more precise with their targeting, and shoppers are responding.

As marketers and retailers learn more about each shopper’s actual behavior, they can limit the amount of spam, and increase the number of relevant offers for each potential customer, driving engagement and redemptions.

Coupons Must be More Than Discount Flyers

As stated above, and as the narrative generally states in retail broadly, making coupons (and any other shopper communications for that matter) more effective all comes down to personalization. Collecting data on shopper behavior from all touchpoints – online, in-store, mobile, social media, etc. – allows retail marketers to create a single, unique view of each customer’s preferences and habits. Once you have this, you can create customized content that is significantly more likely to stimulate engagement, action and generate sales.

What’s needed are the tools to enable connecting your marketing teams to customer data in order to really understand their preferences and communicate accordingly. It’s essential to ensure that messages and offers are targeted to your customer. This allows you to move away from inefficient mass promotions, to offers and messages that are relevant to each and every customer. This will improve engagement and ultimately, generate long-term loyalty.  

You should also integrate them into your other marketing strategies, especially loyalty programs, for example, sending custom VIP offers to your most loyal customers. Even better, coupons can be as dynamic as your business is. You can integrate them into your ecommerce strategy, in-store experience, mobile applications and both printed and digital receipts. Executed effectively and intelligently, targeted communications help eliminate operational silos and perceptions of silos amongst your shopper base.  

Coupons are, on their own, useful for driving sales. In combination with other marketing initiatives, they become a powerful marketing channel allowing you to create in-store campaigns in minutes that can be switched on and off for ultimate flexibility.

One thing is clear from the data: as an industry, retail is still not using coupons efficiently. Fortunately, there are some market leaders like the UK’s Waitrose and Marks and Spencer who are showing us the future of the practice. Follow their example and make intelligent couponing a part of your business.


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