VOUCHERS: Making coupons count - Vouchers are coming into their own, with more delivery mechanisms and better targeting than ever before. Laura Fields looks at what’s on offer

Coupons have come a long way since they were pushed through letter boxes with ’fingers-crossed’ optimism, generating poor redemption rates.

Coupons have come a long way since they were pushed through letter

boxes with ’fingers-crossed’ optimism, generating poor redemption

rates.



Now, as with every other aspect of marketing, targeting is

everything.



Lifestyle data started the ball rolling. Detailed questionnaires -

asking everything from what soap powder you purchase and how often, to

when your home contents policy comes up for renewal - were sent out by

post and the answers sold to third parties who used the data as leads to

purchase.



Coupons distributed using this type of targeted, data-driven approach

generate up to four times the redemption rate of the old blanket

door-drop method, according to Ian Elwes, ICD’s managing director.



Maybe because of their humble beginnings coupons have always been seen

as rather down-market in the UK, in contrast with their huge popularity

in the US.



In the UK, customer loyalty schemes have proved more popular, but since

most UK supermarkets now run programmes, creating a level playing field,

there is a gap in the market for coupons to fill.



The Catalina electronic marketing system has been used by Asda for some

time, and Somerfield has recently followed suit and can now use this

system in conjunction with its own loyalty scheme.



The Catalina system works by acting as a passive loop between the

checkout and the electronic point of sale (EPOS) controller in every

supermarket.



The checkout talks to the EPOS mainframe, which relays information back,

while the Catalina system takes in all the messages, and when something

crops up on the scanner which has a trigger, it sends a message to the

printer to generate customised incentives along with the till

receipt.



These triggers could be related to a credit card, cash value or

product.



If someone spends over pounds 50 without a customer loyalty card, a

coupon will be handed over to encourage the customer to join the scheme,

or a discount voucher on gin or whisky could be printed for a person

known to spend a lot on wine but never on spirits.



The beauty of the Catalina system, according to Stuart Isbister, retail

director of Catalina Marketing, is that the vouchers are generated at

the till, which saves millions in terms of postage. ’It must cost Tesco

a frightening amount to send out its quarterly statements to its six to

seven million customers.’



He points out that to work, a voucher-generating system must collect

data on an item-level basis. ’Where our system fits in well with a

loyalty scheme is that geodemographic data on an individual can change

extremely quickly.



Dispensing customer savings



Isbister believes that handing out vouchers at the end of a shop is

particularly effective because it influences purchasing behaviour for

the next shop.



Not everyone agrees. Some believe that if you hand out vouchers when a

shopper is leaving the store, the only place they will go is in the bin.

For this reason, some stores prefer to dispense instantly redeemable

coupons at the point of purchase.



Sainsbury’s and Savacentre have recently installed in-store coupon

dispensing machines at all 13 Savacentres and 52 branches of Sainsbury’s

in the south-west, after trials proved the idea was viable. The trials

were conducted in ten market-matched control stores, using the

dispensers in two four-week cycles.



Success was measured in uplift in sales, which averaged out at an 80%

increase, according to Malcolm Preston, managing director of Aspen

Specialist Media - the agency which markets the system with Actmedia,

its US inventor.



The size of a camcorder, the dispenser sits on the shelf next to the

product, offering money-off coupons to consumers, who can act

immediately on the offer.



’It has proved so successful because it is simple to use, immediate

(allowing impulse decisions) and it gives a reason for buying a product,

which perhaps people wouldn’t ordinarily buy,’ says Preston.



Aspen Specialist Media is continuing to carry out research on the impact

of the system, but if it proves as successful as the trials, the aim is

to roll it out to all Sainsbury’s and Savacentres nationally.



A new coupon system yet to hit the UK, but already a top-seller in the

US, is Retail Targeted Marketing Systems (RTMS) Archer.



Unlike the Catalina system and the in-store coupon dispenser, Archer

coupons are posted to existing database customers based on information

drawn from a customer loyalty scheme, which works on an automatic

trigger and alert system.



According to Brian Gormley, managing director of Crawford Computing, it

is only a matter of time until this system becomes indispensable to the

UK retailer.



It can be used on an ongoing basis by retailers under licence from RTMS

and in conjunction with loyalty schemes where members have membership

numbers.



A brand manager wanting to promote a particular line can trigger a

mechanism in the software to isolate the product, either by region or by

store, to send coupons to relevant individuals from the database. The

coupons are then mailed to customers’ homes and when they are used,

details are gathered from the loyalty card and linked electronically to

the coupon.



The transaction amount, coupon and membership number, are loaded onto

the Archer database as part of its daily update load. So, if the brand

manager wants to, he can see instantly how the promotion is going.



When the trigger mechanism is set up, various response limits can be

input, based on response rates, pounds sales per name mailed or average

pounds value per response. If levels fall outside these parameters, the

system alerts the brand manager.



Knowing customer lifestyles



Gormley explains: ’This trigger and alert mechanism is unique - not only

can coupons be generated directly to a key audience, based on known

lifestyle and purchasing habits, but response levels can be monitored

accurately and quickly, leaving the brand manager in control of the

situation.’



To entice browsers to register with their Web sites, companies often

offer vouchers or coupons, which can be printed out in exchange for the

browser’s name and address.



The US is more advanced in this area. Even several years ago, a

satellite-based electronic direct marketing network was testing a system

- VisionValue Network - which could deliver product promotions,

advertising and financial services to shoppers at supermarket checkouts

using print, video and voice media.



Its creator, Florida-based Advanced Promotion Technologies, receives a

fee for each transaction. The system recognises product bar-codes, which

can trigger the creation of a repeat purchase coupon and if the consumer

presses the ’yes’ button, it is printed there and then at the till.



The company also launched the ’Coupon Eater’ system, which reads,

validates, cancels and clears bar-coded paper coupons at the point of

sale. It then converts the information into an electronic signal, which

is transmitted out of the store by satellite.



No doubt these systems will make their way across the Atlantic before

long.



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